Are you a HENRY? If the term is new to you, HENRY is an acronym for High Earner, Not Rich Yet. It describes younger, high-income professionals who have the potential to accumulate wealth in the future. This post is for the HENRYs.
You may know the basics when it comes to how to budget and spend less than you make, but do you know how to use your money to help accomplish your long-term goals? You’re working hard for your income. Here are 4 tips to help ensure your money will return the favor down the road.
- Leverage Your Savings
Don’t assume that the money you’re saving now will have zero growth in the future. There’s earning power in investments. Structure your savings into a well-diversified investment portfolio that can handle short-term market swings and provide relatively consistent long-term returns.
- Seek Financial Advice
Investments are only part of the big picture when it comes to your finances. Taxes, insurance, stock options, estate planning, and retirement planning are just a few of the many areas to consider. That’s a long list, and the big picture may look a little blurry at first. If you’re feeling overwhelmed by your options, a financial guide or coach can help sharpen the picture and help you understand how all the pieces fit together. It’s important to note that an independent advisor has more flexibility to assist you in all areas of your finances without being bound by common product or service limitations. This allows them to offer solutions that are best suited for you.
- Plan for Taxes
It’s easy to think of taxes as a once-a-year task, which is why quick and easy solutions like TurboTax are popular. But when the numbers start increasing, it’s important to find a tax professional that can help you not only minimize mistakes but also see the big picture. Tax planning is about understanding the tax implications of your high income, investments, retirement vehicles, and more. A tax professional can work alongside your financial guide to help ensure your strategies are tax efficient.
- Stick to the Plan
Life can be unpredictable. It’s easy to keep your head down to get through day-to-day tasks and lose sight of long-term goals. There are also purchases and circumstances that can quietly eat away at the financial structure of your life, unnoticed until the damage is done. Think of them as financial termites, and there are 3 to watch out for:
Again, life has its ups and downs. It’s easy to fall into the trap of reactionary spending – when you just pay the money if and when something comes up. But this can impact your savings. Work with your financial guide to make sure the way you spend doesn’t affect your long-term goals.
It’s easy to get excited when the market is hot, but it’s important to fully understand the risks involved and invest an appropriate amount. We all want to “buy high and sell low” but when we invest emotionally we often end up doing the opposite.
Forgetting Safety Nets
Most everyone has insurance for their car and home. But do you have enough life insurance? If something happened to you today, would your family be taken care of financially? Ensuring your family doesn’t take a financial hit can help you stay on track with your long-term financial goals.
As a HENRY, you may not be on the radar of typical wealth managers or financial advisors yet, but for the independent financial guides at Gates Pass Advisors, you’re always welcome. Here’s to living your best day, every day.
If you would like to speak with Esther or Erik about this subject or any other related finance subject:
CFP® , Certified Financial Transitionist®
Founder and CEO, Gates Pass Advisors
BOOK A CALL with ESTHER
CFA, Certified Financial Transitionist®
Associate Advisor, Gates Pass Advisors
BOOK A CALL with ERIK