Don’t Be a HENRY

“Do not save what is left after spending, but spend what is left after saving.”  — Warren Buffet

Spending money has never been easier. The entire premise behind online shopping is you see it, you like it, you buy it with one click. Add in the pressure to live up to lavish social media lifestyles, and it feels like you can’t turn off the money gun. Collecting a fort-sized pile of cardboard boxes in front of your doorstep will not help your finances. In a world of ever growing inflation and pressure to spend, fight against becoming a HENRY.

The term HENRY stands for “High Earners, Not Rich Yet” and refers to those who bring home high salaries but don’t have much left after taxes, schooling, housing, bills, etc¹. If you make one million dollars then spend one million dollars, are you still a millionaire? This lack of proper budgeting has repercussions down the line. American savers on a whole only have 78% of the income needed to cover expenses during retirement. This is with more than one-third being in the red on preparedness to maintain their current life style². To make matters worse, Generation X (40-54 years old) is the least prepared for retirement, but is one of the closest to it³.

We are not financial experts, but we go out of our way to listen to those who are. Saving is important, but it is not enough to simply stuff money under your mattress. There is an inflation factor of an average of 2.5%/year. If you spend $100 today, that same item would cost $343.71 in 50 years⁴. To become both financially stable and prepare for retirement you need a combination of savings and investing practices. Don’t chase the lavish, and often fake, lifestyles on social media⁵. It’s never too early to go through your financial and retirement checklist⁶. Contribute to 401(k)s and Roth IRAs. Prioritize paying down any debt. Build an investment portfolio over the course of your career⁷.

Again, we are not financial experts, but we know enough to understand that life costs money. It’s your life, so we strongly encourage you to talk to financial experts about spending, lifestyle expectations, budgets, and retirement. The equation is simple. If you don’t save money for retirement, then you will have to work until you die. Don’t do this, HENRY. Plan ahead and be prepared.

Action: Review your spending against your budget/savings plan. Review your retirement goals. Consult a financial expert on both.

Further Reading:

1. High Earners, Not Rich Yet (HENRYs) Definition
2. Fidelity Research: America’s Retirement Preparedness Level Declines Amid Continued Volatility
3. Retirement Preparedness of Generation X Compared to Other Cohorts in the United States
4. The Current Inflation Rate is 3.4%. Here’s Why It Matters
5. HOW TO KNOW IF YOU’RE A HENRY (HIGH EARNER NOT RICH YET)
6. Looking forward to a comfortable retirement? Saving is a great start.
7. How to Structure Your Retirement Portfolio