Have you heard about HENRYs? An acronym for “High Earners, Not Rich Yet,” the term has risen in popularity in recent years and refers to those who have acquired a healthy income, namely six figures, but have no solid financial planning to grow their savings for the future.
The HENRYs are at an important crossroads – their current financial choices can either set them up for failure or provide security for the rest of their lives. If you or someone you love is a HENRY, discover why working with a financial advisor can help you succeed financially well into the future.
Prioritize your spending
For those not used to having financial freedom, coming into a sizeable income can be an adrenaline rush. Suddenly that $80,000 car you’ve had your eyes on for years is within reach. But before you hit go, you may want to pump the breaks. Consider these questions:
- Do I want to buy a house?
- Can my partner quit his/her job, leaving me as the sole income provider of the household?
- Do I need to save for my children’s education?
- Can I truly afford what I want?
A financial advisor can help you prioritize what is important to you as well as navigate the full impact of your purchases. For example, buying a house includes expenses such as state taxes, utilities, insurance, and more. An advisor can help determine what that will do to your overall budget.
Plan your retirement
Many people make the mistake of thinking that 401K planning is enough for retirement. However, without financial planning, those who work for 30+ years making six figures often find they aren’t able to keep up with their lifestyle in retirement. What’s more, many employees wait to get help when they’re only a few years shy of retirement. At this point, it may be too late for a plan that meets your expectations.
However, with the help of a financial advisor, many HENRYs have gone on to accumulate more wealth – and even retire early! An advisor will help by factoring in your long-term spending to devise a retirement plan that works for your lifestyle.
Get confidential advice
HENRYS often gain access to social circles where people may have been used to wealth for a long time. For this reason, they often report feeling embarrassed to ask their circle for advice on investing, saving, and getting their assets in order. While they resist asking their new peers for advice, their less-earning peers may not have the experience to offer what they need either.
A good financial advisor offers a strictly confidential relationship to help you find your footing and grow your wealth. Over the years, their familiarity with your history, your goals, and your plans will help you navigate questions as they arise.
Avoid money drains
Some HENRYs may unknowingly set up financial plans that can turn out to be money drains. Financial advisors have a term for this: “financial termites.” This refers to overlooked losses that aren’t initially noticed until they cause evidential damage.
A financial advisor can look at your spending history as well as your assets to see if there’s a “pothole” causing you to lose money. For example, owning a vintage, luxury car will need ongoing maintenance with very expensive parts that can take a chunk out of your savings. The list of “financial termites” is endless and a good financial advisor will help direct attention to them, so they don’t add up.
HENRYs have the potential to live the lifestyle they deserve in retirement. A financial advisor can help.
At Gates Pass Financial, we provide confidential, personalized financial coaching to help you learn more about your assets so you can be confident about the future.