Wealth is different from income.
All we have to do is look at the plight of high-earners, not-rich-yet, or HENRYs.
The term was coined more than a decade ago in Forbes.
It’s used to describe the one-percenters who don’t feel rich… because they aren’t.
The definition of a HENRY is a household making between $250,000 and $500,000 per year.
But they are burdened by the cost of sending their children to the best schools… and having homes and cars to keep up with the Joneses… Throw taxes into the mix, and the HENRYs are struggling financially.
Now, HENRYs make up an important segment of the economy. They’re the professional and entrepreneurial class of our country. The doctors, attorneys, CIOs, marketing managers, etc.
The HENRYs are the strivers.
They made their way into the top 2%, even the top 1%.
And what they discovered was… they didn’t have enough.
They learned the hard way income is not wealth.
Too Little Too Late
The plight of the HENRYs reveals a lesson for Americans of all income brackets.
One that shouldn’t be overlooked or forgotten…
Money is fleeting. And when you’re high on the hog, you better take steps to prepare for when times are lean.
As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.”
The astonishing fact is, almost half of American haven’t started saving for retirement.
Even more troubling is that more than a quarter of Americans between 50 and 64 aren’t saving for retirement.
And of those who have done anything, the sums are paltry… 28% have less than $1,000 squirreled away… Meanwhile 33% of U.S. adults carry more credit card debt than their savings.
Only 16% of Americans have emergency funds to cover 3 to 5 months.
The simple fact is…
Americans aren’t doing enough.
And that’s across all income brackets.
How do you break this trend? How do you ensure you’re not the next HENRY?
Two Immediate Steps to Take
Over the last several years – with wars, a global pandemic, skyrocketing job losses, skyrocketing inflation, and general social unrest – we’ve learned emergencies are quite common.
And some could argue maybe even more so in our current environment.
That means you have to look at for No. 1… You.
Because no one else is going to.
So, to avoid becoming a HENRY or suffering their fate, here are two steps everyone must take immediately!
No. 1: Pay yourself first. You can’t put planning for your future on the back burner. It doesn’t matter what age you are or what income bracket you belong to, if long-term investing isn’t one of your top priorities, you’re going to struggle and probably not reach your goals.
If you tell yourself, “Oh, when I make more money, I’ll be able to invest…” That’s wrong. That’s the mentality that the HENRYs had. And now that they make more than 98% of Americans, they’re still struggling.
Having enough to invest isn’t about income. It’s about mentality.
No. 2: Have a plan. A goal without a plan is nothing more than a wish. Understand what your financial goals are and what your investment needs to gain each year to achieve that. That sets your timeframe, and it sets your risk tolerance.
And do you know what a byproduct of that is? It helps eliminate fear and panic… especially in the near-term.
For example, if my time horizon is 30 years, tomorrow’s market move doesn’t bother me. Nor does the next six months or the next year.
Investors who are in a constant panic – who react to every negative tick – don’t have a plan.
A clear, thought-out plan also prevents you from meddling too much. You can let your winners run. And you can sell your losers with discipline.
You can be wealthy without having a high salary. Saving and investing money correctly are the two most important steps you can take… No matter what your income level might be.
Just ask a HENRY.
Wealth is a mindset,
Matthew
