You might’ve heard the term Henry before, but do you know what it means?
Henry stands for “High Earner Not Rich Yet” and generally encompasses those who are earning a six-figure income, living a fairly lavish lifestyle but not paying proper attention to their spending habits. A Henry also has a strong chance of becoming wealthy in the future, though they currently have taxes and other essential living costs that leaves them with little to spare on luxuries – the ‘rich but skint’ effect.
If you’ve nodded along with any of the above, you might be a Henry.
Where did the phrase originate?
Nearly 20 years ago the term Henry was first used in a Fortune magazine article by Shawn Tully, but the term has since evolved to include high earners who are typically millennials. They can be split into two main categories:
- High income, spending with abandon
- High income with expensive commitments, such as rent or mortgage
Primarily, a Henry is classed as ‘working rich’ because pursuing a lavish lifestyle and the related living costs means if a Henry were to stop working they’d no longer be rich. This is due to low material wealth.
What can you do if you’re a Henry who wants to have future financial stability?
There’s no need to panic if you’ve been reading this and it applies to you, but the sooner you take action the better.
I come across Henry’s all the time as a financial adviser in the City and seen first-hand the growing wealth of the younger generations in London – a lot of Henry’s have the money, but are unsure what to do with it, and we’ve helped a lot of them along the way.
Millennials now make up one third of the UK’s population, yet according to a poll, only 12% of such individuals are saving towards their retirement, in comparison to 18% of the population as a whole.
Building a strong foundation means that your financial future will be more secure, so starting now is essential.
Here are some quick tips to manage your financial future:
- Get personal protection in place to ensure you have a backup plan and peace of mind in case something goes wrong.
- Have three months’ worth of net expenditure in cash as a financial buffer.
- Maximise your work matching pension contributions and take advantage of salary sacrifice.
- Start investing into an investment ISA on a regular basis to make your money work harder for you.
How should I get started?
- Make saving a priority.
A good savings habit is essential to getting a firm foothold towards making better financial decisions in the future for both you and your loved ones. One simple way to achieve this in a less time-consuming fashion is to set up automated, regular transfers from your current account into a high yield savings account, or begin to set up a regular investment ISA. It’s not about the amount you’re saving, even small amounts can over time add up due to compounding interest – the habit of saving is the important part.
- Set long-term goals
Once you’re in the habit of putting money away, you can then consider longer-term goals by saving via a variety of methods. Whether it’s a deposit for a house or your dream holiday, you can look into options such as investing in stocks or bonds, which may deliver a higher return. This can get complicated quickly, though, so don’t hesitate to seek professional advice if you’d like to know all options available and suitable for you.
- Maximise your pension
Pension planning is absolutely essential in getting the most out of your retirement, as it gives you a clear structure to follow. Speaking to a financial adviser can help you to get a roadmap to your ideal life financially, ensuring you max out your pension plan to its full potential. You will have specific goals you wish to reach with your retirement, which is why seeking professional advice can make a huge difference in your ability to achieve your goals in the time period of your preference.
You don’t have to completely step back from your current lifestyle in order to thrive financially and become wealthier. It’s important to note that it’s what you do with your wealth that counts, so if you’d like to take a step towards your dream lifestyle, just ask.
James McPartland is a Managing Partner at Porta Wealth, based in Bank, London. He specialises in helping City Professionals to plan their future by creating bespoke, goals-based, financial plans.
Porta Wealth Management LLP is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website.