In the world of finance, HENRY is an acronym that stands for “high earners, not rich yet.” Although the phrase may appear mostly self-explanatory, there’s a bit more to it than meets the eye.
The term was initially coined by Shawn Tully, who first used it in a Fortune article in 2003. The article discussed the alternative minimum tax (AMT), a tax that was considered as being particularly aggressive against individuals earning between $250,000 and $500,000 per year. From that point forward, HENRYs became a term commonly used to describe a younger demographic who were earning six figures per year.
The defining characteristics of a HENRY were delineated in more detail by New York Post reporter Melkorka Licea in an article published in 2020. In the article, Licea described HENRYs as individuals with high incomes but low savings who do not see themselves as “rich,” although their income and standard of living are way above that of the world’s population.
HENRY stands for “high earners, not rich yet.” HENRYs earn a sizable disposable income and tend to spend it to facilitate a lifestyle beyond their means; they spend their money almost as soon as they make it.
HENRYs have three notable characteristics: they believe or feel that they have little to no wealth, they have a greater-than-average income, and their savings are basically non-existent.
Because of their considerable disposable income and being on the path to establishing future wealth, luxury brands target HENRYs with their marketing.
The Three Key Characteristics of a HENRY
Three primary characteristics define a HENRY. The characteristics are:
Feeling of/belief that they have little to no wealth
A substantially greater-than-average yearly income
Limited or non-existent savings
Little to No Wealth
HENRYs might also be referred to as the “working rich.” They typically work hard and regularly but spend their income on what most of the middle class and lower class would consider a lavish lifestyle. Because they tend to spend their substantial income as fast as they receive it, HENRYs tend to feel like they are in the same basic circumstance as the bottom of the middle class or even the lower class, just working hard and living paycheck to paycheck.
HENRYs frequently overlook the fact that their income goes toward supporting an extremely high standard (and cost) of living. Instead of budgeting and saving part of their income, devoting it toward investments in things such as a home, stocks, or savings accounts, they “budget” by buying or renting discount designer goods and using credit card mile rewards for extensive travel. HENRYs typically live above their means and struggle to balance their lifestyle with their financial assets.
A Greater-than-Average Income
HENRYs tend to earn an annual income that is significantly greater than the national average. The middle class is generally considered the middle ground when it comes to national income. The Pew Research Center defines the middle class as individuals/families that earn anywhere from two-thirds to twice the median income for households. As of 2016, the median income in the United States was just over $60,000, meaning middle-class Americans earned anywhere from $40,000 to over $120,000.
Almost 40% of millennial HENRYs believe they are part of the middle class, but that’s only because their beginning income starts around $100,000. The reality is that most HENRYs earn closer to $250,000 – more than twice the highest level of individual annual income that pegs someone as falling in the middle class.
Limited or Non-Existent Savings
As previously noted, while HENRYs tend to receive a substantial income, they typically spend it quickly. It means that these individuals rapidly burn through the money they make, leaving not much of anything to put into savings.
It’s also important to note that HENRYs, in addition to failing to save money, tend to accrue significant debt. Because they typically live above their means, they constantly utilize credit and work towards paying off their debts. Their ongoing debt includes a cost that almost all millennials deal with: student loan debt, a sizable amount that typically takes years to eradicate.
HENRYs are Targets for Luxury Brands
As individuals with a growing amount of disposable income and the potential for considerable wealth in the future, HENRYs are prime targets for marketers of luxury brands. HENRYs, in reality, are transitioning from living above their means to reaching a place of establishing real wealth.
Luxury brands market directly to HENRYs to establish a sense of familiarity, comfort, and brand loyalty. If they can establish a strong relationship with a HENRY, they stand to benefit from the wealth the HENRY accumulates in the future. Because there are many more HENRYs in the world than there are ultra-rich or high net worth individuals (HNWIs), the HENRY demographic is ideal for companies selling expensive goods and services.
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