Regarding HENRYsSubmitted by AssetGrade, LLC. on October 21st, 2013
submitted by Patrick Cote on October 22, 2013
HENRYs, (High Earners, Not Rich Yet), are a group that can probably use some help. The definition may vary a bit, but for these purposes, let’s assume that they:
- Earn more than $100K per year
- Have less than $1M in investable assets accumulated
Why would HENRYs need help? The biggest reason is to avoid the lost opportunity - many HENRYs will never reach $1 million in investable assets because they never had appropriate financial advice along the way.
For many folks, especially in parts of the country with a low cost of living, HENRYs may not garner much sympathy since it might be easy to have a comfortable lifestyle with $100K in those locations. However, in the higher cost regions, particularly the coasts, the higher income may not go very far. Ask many families in the higher cost locations and they will tell you that a six-figure income still disappears quickly with a “middle class” lifestyle. Adding children to the equation makes the money disappear that much faster.
What many HENRYs do not realize is that with a relatively small effort, they can increase their odds of being in better financial shape down the road. To get started, the critical factors are generally:
- Getting rid of expensive debt
- Maximizing the most attractive savings [for example, making sure they get the full company match in their employers’ 401(k)]
- Keeping some emergency cash
- Saving something for their kids’ college
- Being intelligent about investing – particularly being well diversified
These guidelines might differ for each family, depending on their situation. However, they can make a difference to start to head in the right direction.