The term “Henry” or “High-earner not rich yet” was coined by Shawn Tully of Fortune magazine back in 2003 to describe individuals with an annual income of US$250,000–US$500,000. Melkorka Licea wrote in her article with The New York Post in 2019 that Henrys — referring to millennials earning a six-figure income annually with re-adjusted estimated value of US$100,000–US$250,000 ($134,696– $336,739) — are finding themselves financially strapped as their expenses creep up while their saving remains stagnant.
While income is commonly used as a gauge to determine a Henry, I have observed that different articles may have varying criteria. Hence, identifying a Henry can sometimes come down to a matter of spending habits rather than income alone. With a higher disposable income, Henrys often become the targets of luxury brands, travel companies and marketing campaigns that encourage them to spend excessively.
With the constant stream of enviable posts of extravagant lifestyles on our social media feeds, one might find themselves questioning “Why am I working so hard and feeling so stressed up for?” I wouldn’t call it keeping up with the Joneses as even friends and acquaintances may also fall into the category of a Henry.
If you have watched Bling Empire on Netflix, you might notice that people of similar status tend to hang out in the same circle. Can you imagine the power of a single Henry encouraging another Henry to save and invest for retirement instead? Talk about the multiplier effect!
A Henry might end up having little in savings for contingencies, not to mention being sufficiently prepared for retirement. As cliché as it may sound, I make it a point to advise my clients to “Pay yourself first” before everybody else (merchants, travels, liabilities). You need to set aside capital to generate passive income that can sustain the lifestyle you want not just for today but for tomorrow as well.
To avoid becoming a Henry, the issue is not just about how much they should set aside but rather how much they should start paying themselves first. They may start with a certain percentage of their income and gradually increase that allocation as their earnings continue to grow. This approach helps to create a subconscious receptiveness to building wealth.
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To illustrate this, let me draw a parallel of this concept to that of driving. When you are used to driving a specific route every day, you may find yourself subconsciously following the same route even if you have made a mental note to try a different one today. Similarly, assisting my Henry clients to adjust to subconscious wealth-building habits is my end goal; starting from structured routines and providing encouragement to foster these habits.
Lastly, a significant portion of Henrys have children and are often the first role models for them. Through leading by example, wouldn’t it be more likely for their next generation to be capable of building their own wealth and be responsible for their personal wealth management?
Melkorka Licea made reference to an article by Hillary Hoffower, “While there are certain markers to identify Henrys, such as someone earning over US$100,000, they are ultimately defined by how they live their lives: They live a comfortable lifestyle above their means and struggle to balance while saving for the future. It is a combination of habits that puts them on a slow path to wealth building and leaves them feeling financially strapped.” Unfortunately, genes might not be the only thing that is passed on to the next generation. Subconsciously, the financial suffocation will also be “inherited” inevitably.
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To put it simply, Henrys often lead extravagant lifestyles, primarily supported by their earned income. However, unforeseen circumstances such as retrenchments, illnesses or old age can unfortunately abruptly disrupt and potentially end this lifestyle if the earned income is not converted to capital to generate passive income to further build wealth.
The greatest advantage of a Henry is the high disposable income they possess. When this income is re-directed from spending on liabilities towards asset building, they can accelerate their wealth growth and achieve financial independence at an earlier age. Ultimately, Henrys have the freedom to make choices and decisions that would shape their financial futures.
Henry Tan is a wealth manager with Phillip Securities
