What’s a HENRY you ask?
HENRY is an acronym that stands for “High Earner, Not Rich Yet”; an individual (specifically millennials) that earns within the T20 income range but is inclined to spend rather than save or invest.
Initially, the term was tagged to younger earners (again, MILLENNIALS) but they can simply be any age. It’s not defined based on their year of birth, but on their income and spending habits. HENRYs earn their income mainly from their full-time jobs. As soon as their income hits their bank accounts, it will be used to purchase all the fine things in life and leave little to no money left each month for either savings or income-generating earnings.
Gucci? LV? Say no more.
Although HENRYs earn a handsome income, they actually don’t believe they are wealthy rather, firmly classify themselves as middle class if you ask them to rate their financial status. It’s not that these HENRYs don’t know the importance of saving or investing, they just prefer to live life to the fullest now and deal with the adult stuff (budgeting for savings, planning how to invest the extra income, etc) later on. HENRY, minta sedar diri 🙃
So are you a HENRY?
1. Do you spend freely or more than you need to?
2. Do you live paycheck to paycheck?
3. Do you find yourself accumulating a massive credit card debt?
If your answer is yes to the questions above, you probably are 😲
Relax, it’s not a terminal disease but don’t be in denial, though 🙊
Here are just 4 baby steps you can take to pull yourself out of these situations as a start:
1. Paying down debt.
The number 1 rule in being financially free is being debt free. Most often, HENRYs have student loans, auto loans, credit card debt and such to pay for and it could take years to settle them. One effective way to shorten the repayment period is to pay higher than the minimum payment required, especially on debts carrying high interest rates. *cough*credit card debts *cough*.
2. Find ways to save.
Paying for rent that costs half your salary? Move to a more affordable house. Ordering food online everyday? (Dining out would cost a lot more but that’s not really an option right now, huh?) Cook at home. Subscribed to a monthly membership that you barely use? Cancel it. Small changes go a long way.
3. Track YOUR SPENDING.
You’re probably spending freely or unconsciously because you’re unaware of your purchases. An efficient way to see your lifestyle purchases is actually just tracking them. HeyAlfred groups all of your purchases into categories and even warns you before you overspend!
4. Invest, bro.
When you get a hang of saving money, learn to invest it after. The 3 most common and low-risk forms of investments in Malaysia (or anywhere, actually 🤔) are Unit Trust, Fixed Deposit (FD), and Investment-linked Insurance Plan (ILP). However, it’d be better if you consult a financial professional before deciding on anything to understand your risk appetite (the level of risk you can tolerate) as it can get a little tricky.
So HENRY, it may be difficult to suddenly start saving when you’re so used to spending freely but it isn’t impossible. Just taking small steps can bring you from “Not Rich Yet” to “Now Rich, Yes”.
Do you have friends who are HENRYs too? Tag them in our social media posts!