Are You a HENRY?
By Jared Andreoli, CFP®, CSLP®
If you’re a physician just out of residency, you might be a HENRY—a high earner, not rich yet.
Coined in 2003 by Shawn Tully in a Fortune magazine article, the term refers to the growing number of Americans with a six-figure annual salary but little or nothing to show for it. These high earners, typically Millennials pulling down $250,000–$500,000 a year, spend their money as soon as they get it to support their lifestyle.
Unfortunately, new doctors (fresh off three to eight years of residency, four years of medical school, and four years of undergraduate studies) often find themselves mishandling a high income, struggling with student loans and other debts, and paying high taxes. Consequently, they’re unable to save or invest, delaying the dream of financial independence that a high salary often promises.
Does this describe you? You’re not alone. Nearly half (48%) of Americans earning at least $100,000 a year and 36% of those earning $200,000 a year report living paycheck to paycheck.
Fortunately, you don’t have to remain a HENRY. At Simplicity Financial LLC, we can give you strategies for building wealth to help improve your financial future.
Being a HENRY Can Be Risky
While you might earn a high salary, maintaining the lifestyle of a HENRY can be risky business. Consider these possible issues:
Delayed financial goals: Putting off saving for a home or retirement
Job loss: Finding yourself unprepared for a stint of unemployment
Lifestyle creep: Endangering your financial future with mounting debt
A single financial hiccup could spell disaster if you don’t do anything about your HENRY status. The good news is that you’re not doomed to this fate.
How Not to Be a HENRY
If your bank account is full just once a month when your check hits, you need to build real wealth, which means increasing your net worth—owning more than you owe. The idea is to get your assets (cash, properties, retirement, and investment accounts) to exceed your liabilities (mortgage, student loans, car loans or leases, credit cards).
Here are some best practices to get you started:
Review Your Financial Situation
Sitting down and taking a comprehensive look at your financial circumstances can help you better understand your income, spending habits, debts, investments, and tax liabilities to see how they align with your financial goals.
Pay Off Debt
Once you have a better grasp of your financial situation, you can begin working on paying off your debt. Start by making all your minimum payments on time (and all the time), and pay more on your highest-interest credit cards to save money over the long term.
Start (or Increase) Investing
As soon as possible, begin building emergency savings, which should comprise three to six months’ worth of expenses. Once you’ve done that, you can put your money to work for you, setting up automatic contributions to your employer’s 401(k) or retirement plan. Consider investing in stocks and bonds as well.
Set Clear Goals
Write down clear, specific financial objectives that align with your overall situation and trajectory. Tie each of your goals to a time frame, such as buying a house in three years or retiring in 25. The more detailed your goals (and plans for meeting them), the better.
Create a Plan
To help bring about sustainable, long-term change, devise a detailed plan to increase your income, reduce your debts and expenses, and boost your savings and investments. A skilled financial advisor can be an invaluable ally during this process.
Following through on these steps can be tough, but a little discipline, planning, and foresight can go a long way toward helping you build true wealth for a more stable financial future.
Hand Your HENRY Woes Over to Simplicity Financial LLC
Are you ready to leave your HENRY status behind? At Simplicity Financial LLC we understand the unique financial pressures physicians face, especially those who are recently out of residency. We can help you perform structured financial planning to begin living a lifestyle that unlocks the door to your bigger goals.
Get started by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.