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As current and former federal employees we are familiar with acronyms. Every agency has its own acronym; I worked for IRS (Internal Revenue Service), I have friends who have worked for FBI (Federal Bureau of Investigation), SEC (Securities and Exchange Commission), ED (Department of Education) and more. There are many financial acronyms as well, we have the SECURE Act (Setting Every Community Up for Retirement Enhancement), CARES Act (Coronavirus Aid, Relief and Economic Security), DINK (Double Income, No Kids), and now there’s a new one; HENRY (High Earnings, Not Rich Yet). This article is directed at all of you HENRYs out there.

Many HENRYs find themselves in their position through no fault of their own. Consider a young professional in the early stages of their career; among other drags on their financial status, student loan payments are likely to take a large bite out of their earnings. However, if you’re in your Thirties or Forties and still have not started building a nest egg for your future, you’re likely a HENRY and should be concerned.

But wait, you say, “What about my children’s education?” “What about buying a principal residence?” Those both are admirable goals, but ask yourself, “Out of my children’s education, my principal residence, and my retirement, which one won’t a bank give me a loan for?” Also consider the fact that education does not have to cost an arm and a leg; state schools are less expensive for in-state students and setting up a 529 Plan or a Coverdell ESA can help you save (relatively) painlessly. My niece had all four years at a state school paid for with a prepaid tuition 529 Plan and was able to enter the work world with no college debt.

When it comes to your principal residence, you don’t want to buy so much house that it is hard to make the mortgage payments. A house that will comfortably fit you and your family is all you need. You want to find an area with good schools and adequate municipal services that isn’t too far from work. Mortgage rates are low now, so, if you already have a home, you should look into whether you could save money by refinancing. Don’t fall into the trap of thinking of your home as an investment – unless you plan on moving to a lower cost of living area or downsizing after you retire. Home value is just “funny money” because you have to live somewhere. If your home has increased in value, so have similar homes in your area.

If you can’t pay for your wants without relying on credit, you might need to consider your lifestyle. Is an annual vacation to Disney World more important that building up your next egg? Do you always have to have the latest electronic gadget? If you don’t live within your means, you’ll be a HENRY all your life.

Even if you’re in the early stages of your career and don’t planning on being a HENRY for long, don’t ignore saving. Put at least 5% of your salary into the Thrift Savings Plan in order to get the government match. More is better, but 5% should be the absolute minimum. Don’t think that you can’t afford to do it. In the long run, you can’t afford not to do it.

What about readers who don’t have the HE (high earnings) part of HENRY? All of the above items apply to those who are not rich yet, regardless of their earnings. Do whatever you can to prepare for your future while maintaining an acceptable standard of living.

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