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No, we haven’t asked your name. And we promise we are not trying to mad you.
Henry is not an insult. This is a nickname given to a particular demographic in the personal financial world. If you earn a decent income, but you feel like you’re not building enough wealth, you might be Henry.
What is Henry?
Henry is an acronym for “high incomes, not yet rich.” But what does that mean to be a high income? The definition depends on who you ask.
I sifted through the Reddit forum and pulsed what users say about Henry’s. People post anonymously, so they cannot check their individual experiences or circumstances.
In Reddit on R/Henryfinance Subreddit, Henrys is defined as “usually earning a high income between $250,000 and $500,000, but not saving or investing enough to be considered rich.”
Net worth is another important number to consider.
Trevor Ausen, a certified financial planner in Minneapolis, Minnesota, says Henrys often have “somewhere between negative net worth up to about $1 million, thanks to student loans or early career costs.”
Having income or net worth above these numbers tilts the scale towards “rich.”
Who is a typical Henry?
Henry’s is often a business professional, doctor, lawyer and high-tech employee with stock compensation, Authentic said.
Many people live in places like New York and the Bay Area, he adds. There, a high cost of living can be difficult to accumulate wealth even with a high salary. They are usually in their 20s, 30s, or 40s.
In some cases, Henry was also the first person in his family to earn a higher income. That could involve additional pressure to provide financial support to relatives and generate wealth for generations.
How do you know if you’re Henry?
Now that we know what Henry is, let’s see if it fits the bill.
“If you feel you’re just going through financially, you might be Henry,” said Flavio Landivar, CFP in Miami, Florida.
If you are, you might be Henry:
Earn above average income (usually from the six-digit range to the lower range). I live in a high-cost area. Spend the majority of your income on expenses such as housing, student loans, childcare, and discretionary costs. Don’t be financially secure.
But not all Henries are the same.
Student loans and living expenses eat up their income, so many people struggle to build wealth, while others are actively saving, says Authentico.
“They only earned high incomes in a short time and didn’t have the time to actually build those assets and save enough where they could be considered rich,” he says.
Authentic says his Henry clients generally have too much cash. After making the most of your 401(k) or other retirement account, they don’t put any extra money in to work in an investment account.
If you park a lot of cash in a general savings or checking account, that’s a sign you might be Henry.
“There’s certainly debate about the amount of emergency funds, but essentially there’s argument that someone should have, but after some point it starts to become as inefficient as possible,” Authentic says.
What does Henrys care about?
Like most people, Henry wants more money and greater financial freedom. Online discussions at R/HenryFinance and other forums focus on lifestyle creep, career growth, investment options and strategies to minimize tax burden.
Henry is also looking for quick guidance and security that they are on the right track.
“These young professionals may be settling in their careers, gaining responsibility and spending less leisure time than before,” said Yesenia Realejo, CFP with Tobias Financial Advisor in Plantation, Florida, in an email interview.
“They might start a family, buy a house, or save for their kids’ college. There’s a lot to do with their plates so you might find they’re saving, but there’s no planned financial direction.”
Is it good or bad to be Henry?
If you’re Henry, you might get stuck. It may seem like you haven’t made enough progress towards your financial goals.
However, it is important to emphasize Henry’s “Y.” You are not rich yet – that doesn’t mean you will never be rich.
“By focusing on smart planning, cost management and long-term goals, Henry’s has the great opportunity to build true wealth in the future,” said Landiber.
“But without that focus, it’s easy to pin your salary to your salary despite your high income.”
Start by creating or revisiting your financial plan. If you’re not sure where to start, consider getting help from a financial advisor. When you get rich, it may happen sooner than you think.
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Lauren Schwarn writes for Nald Wallet. Email: lschwahn@nerdwallet.com. Twitter: @lauren_schwahn.
The article is you Henry? It originally appeared in Nerdwallet.
