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HENRYs earn six figures and still feel broke

Just because you make six figures doesn’t mean you’re rich or even think of yourself as middle class. When you eat avocado toast for breakfast, go on international vacations, make $200,000 a year, but have very little in your savings, you may be a Henry.

The personal finance term, Henry, refers to someone who is a “high earner not rich yet.” Shawn Tully invented the term in “Fortune” in 2003. These high-earning young professionals may be making a lot of money, but they haven’t yet acquired wealth. This guide will go over who these Henrys are and where their money is going.

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Meet the HENRYs

The “high earner not rich yet” person today are often millennials. These HENRYs have expensive tastes, habits, and lifestyles, but they haven’t yet acquired wealth. Think of someone who earns over six figures. Even 10 years ago, these earners may have been thought of as wealthy. Instead of saving, owning homes, investing, and building a portfolio of wealth, these people spend like the wealthy and live a luxurious lifestyle.

Millennial HENRYs have expensive tastes. This high-income group likes to take international vacations, rent luxury homes, and pay for expensive group fitness classes. They may have dog walkers, drink $10 cocktails for brunch, and won’t sacrifice their luxurious lifestyle.

While a HENRYs may seem frivolous, they do have budgets in some areas. A HENRYs will likely shop at a discount, rent luxury clothing, and use credit card points for travel.

They don’t consider themselves wealthy

“Despite having a great job with a high salary, many HENRYs don’t consider themselves wealthy. The New York Post reported that this group often feels strapped for cash. Their high cost of living combined with student loan debt can make many feel like their just isn’t enough money left for building wealth.”

Part of what characterizes a HENRYs is that they feel like they have no material wealth and that they have very little savings. Much of their earnings go into bills, debt, and cost of living instead of investments and building wealth. Many HENRYs feel as though there isn’t enough left to save for retirement, buy a home, or invest their money.

Part of the reason for this is that these high earners may feel pressure to keep up with a lifestyle shared by other wealthy individuals, but they do so at their detriment.

According to the Economic Policy Institute report, to be in the top 1 percent of earners in the United States, you need to have an annual income of $421,926. If you’re a dual-income household making over $200,000 each, you could be in this bracket.

Despite this, after living expenses, student loans, and a lavish lifestyle, there might not be enough left over to save or invest.

HENRYs can’t stop working

“If you’re a HENRY with very little savings, you may not be able to stop working and still keep up with your cost of living and expenses.”

Someone who isn’t able to save also isn’t able to take a break from working. Without an emergency fund, liquid assets, and a low cost of living, it can be almost impossible to lose your income.

HENRYs may not be able to keep up with their financial obligations if they ever stop working or make a career change where they earn less money. One thing to keep in mind is that a HENRY’s location will also play a role in what their finances look like.

Someone earning the same amount in two different states will be taxed differently, have different costs of living, and they may also be influenced by other people and their peers differently.

A deeper dive — Related reading from the 101:

These five steps should get you on the right track.

You may want to reconsider how you’re approaching planning for retirement.