You might wonder how someone earning a quarter of a million dollars annually wouldn’t be considered wealthy, but there’s a relatively new socioeconomic category known as the “HENRY.” And if you’re someone with a lucrative career who, for whatever reason, isn’t yet affluent, you could be one.
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Keep reading for a closer look at HENRYs, what the term means and the unique opportunities and challenges this group might face.
HENRY is an acronym for “High Earners, Not Rich Yet.” The term was introduced in a 2003 “Fortune Magazine” article by Shawn Tully, and it’s meant to describe people who earn high incomes but still struggle to build wealth due to high expenses.
It’s a paradoxical financial dynamic for people who are perceived to be affluent but don’t experience the benefits that are commonly associated with the accumulation of wealth.
HENRYs typically earn significant salaries but aren’t able to hang on to much of their money. Despite their impressive earning potential, a substantial portion of their income is eaten up by things like taxes, student loan debt, housing expenses and other essentials. HENRYs have little to no savings and are asset-poor, a position that leaves little room for wealth-building investments.
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There’s no official checklist for being considered a HENRY, but the term is usually applied to anyone who has an income between $250,000 and $500,000 but minimal savings and investments.
Even if they have begun to invest, they haven’t had the time or opportunity to amass substantial amounts of personal wealth.
Lifestyle does, of course, play a part in the HENRY designation. You can live beyond your means no matter your budget, and HENRYs are no different.
Many luxury brands have recognized HENRYs as a promising market segment and are aggressively pursuing their marks. High-end luxury goods like designer handbags, jewelry and exclusively priced wristwatches are being increasingly marketed toward HENRYs. Though they may not be technically wealthy, their discretionary income can support premium purchases, even if they may not be the wisest investments.
HENRYs have been called the “working rich,” and their perceived wealth primarily comes from a steady income rather than from stock investments, real estate or other accumulated assets.
