HENRYs (High-Earners but Not Rich Yet) remind me of the poor rich and famous.
They are prime examples since they spend to impress people (fans) they donât know with money they donât have. Welcome to the club. Itâs NEVER free of charge.
If you have some time to kill and decide to do a brief background check on the outrageous salaries your favorite celebrities earned in your favorite overrated movie, you will quickly notice they look better off than they really are. Welcome to Hollywood and the internet.
Although we cannot deny the power of Google with its earnings estimates and comprehensive database, over 50% of personal financial information ranging from salary to current net-worth is most likely not updated or completely off.
As a stealth wealth frugal minimalist, the last thing I want to do is impress people. I only impress myself. This is for safety, bliss, and level of comfort purposes in a big city. For some reason, Iâve always had a distaste for logos, flashy brands, and advertising. Maybe itâs because I am a woman and have been pushed by salesmen far too often. Or I must have great taste!
To be clear, showing off is separate from putting your best foot forward. I always strive to be my loudest cheerleader not worst critic with my character, empathy, and personality but not with my items or appearance. Assets are completely different since the most appreciable assets are usually invisible such as knowledge, portfolio (business), investment returns, health, relationships, and good luck. The second greatest asset is tangible. It is real estate, a sector that has returned ~18% yoy since 2021.
Similar to the Dotcom bubble with VCs pouring capital into unprofitable stocks, prior to the Housing Crisis, millions of Americans looked like millionaires off paper since they could take out a mortgage on a property they were very well aware of they couldnât pay back. Itâs devastating to realize homebuyers went into financial ruin, a.k.a foreclosure for strangersâ approval and justification. Thankfully since the 08 recession, banks and mortgage lenders have installed stricter lending protocols, credit, and background checks to make sure 08 doesnât repeat. Luckily, Americans report being in the best financial situation of their lives due to tighter spending and monetary and fiscal stimulus due to the pandemic and are forced to put down a larger downpayment with less leverage otherwise the house will be taken in no time in this low inventory hot bidding war overpriced frothy environment! At least thatâs a good reason to become more financially stable and prepared. You need more on hand to spend more.
Sadly, history shows the unfaithful reality and complexity built behind human psychology and the appeal for looking too good.
Truth be told, people want to work with those that look, speak, and act like them. Itâs all driven by psychological comfort. In this case, making sure you tailor your body language, personality, clothing, and style of speech to someone elseâs to obtain a deal, commission or prized connection can be helpful but âfaking it till you make itâ is overboard.
Consume Now, Figure It Out Later
HENRYs are individuals who are on the brink of anything.
They have bucket loads of discretionary income, from their main career which earn them roughly $250-$500k per year yet once taxes, expenses, and liabilities are deducted, retirement savings, contributions for investment and businesses, and a level of basic comfort are squeezed.
This high-earning group of the population seems to be already wealthy due to their tax bracket. After all, they earn a top 10%+ income. They engage with luxury brands, prioritize their health, but below the cruises and face masks, they are easily fooled. They own âtoxicâ debt which includes car, clothing, credit card debt, and have a high working income but not accumulated income. You should be proud to fulfill your civic duty of paying more in taxes for working harder but for most HENRYs, this isnât ideal given they are relentless and frivolous spenders. They strive to live in the present to the point where they could file for bankruptcy or foreclosure if their income slips or their spending exceeds a couple thousand.
This is not a comfortable or RICH way to live.
Consumers are extremely misleading partly because they are misled. The U.S. has the highest income and wealth inequality for this reason. I recently wrote about the tactics and marketing gimmicks the wellness industry puts helpless obese broken consumers through. From diet fads to lofty promises, they are paying markup for services and products they know wonât seal the deal or be realistic to follow through with in the long run yet they persist and continue to pay for it since it sells too well! Welcome to the $20B self-help industry. It goes hand in hand with everything in life, especially with our finance and the drainage of energy we put towards pleasing others.
Thatâs the world we live in. Partly fueled by social media addiction, photoshop, filters, body-shaming culture, dieting, models, and vein.
The Case of the Broken Celeb
Why is it so hard to be internally rich for ourselves?
Letâs look at celebrities who are horrible at this.
Success to them means attaining what they want.
Real success means giving, growing, and fulfilling your ultimate goals regardless of monetary value.
Celebrities are constnalty in the public eye and scrutinized. They must put their best foot forward and look all glammed up even while getting into their Range Rover or shopping at Erewhon to buy a $20 smoothie. HENRYs are obsessed with this lifestyle and havenât realized that benign truly financially free and flexible doesnât rely on the W2 income, rather the portfolio and passive income through businesses and investments instead.
HENRYs are short-term gratification thinkers. They arenât aware nor realize the more W2 income one earns, the more taxes they pay and up to ~32% tax bracket, with your level of lifestyle, you are burning more than earning.
As the old adage goes, âitâs not how much you make, itâs how much you keepâ is throw out the window for HENRYs.
Instead of maxing out their tax-advantaged retirement accounts, aggressively saving and investing, investing in themselves outside of work or the classroom, setting up alternative non-correlated income streams, and taking care of their mental and physical heatlh, they hustle for the W2 income and expand their lavish lifestyle as much as possible preventing themselves from ever attaining a truly rich lifestyle.
Life can be rich or wealthy. It can be fruitful or bitter.
HENRYs tend to fall into the top 10% marginal tax bracket of 32% or above for short-term capital gains, 15% capital gains. They earn around $170-$25k to be in this tax bracket and are solely reliant on that income. If weâve learned one thing during the pandemic, itâs that being reliant on only one income source is a dangerous move. Preparing for the worst, hoping for the best is vital especially when a hefty income can derail you from whatâs important.
HENRYs, celebrities in particular are drilled into their specialty and talent. Thereâs nothing wrong with this and in fact, they can thank their focus for rewarding them with a juicy income, but they have trouble looking outwards to more efficient and time-saving investment opportunities, most notably through the stock market.
Although it will be difficult to find a definite answer on whether or not a top paid singer has a brokerage account or any additional income sources via the web, itâs likely they arenât tuned into it nor may not even know what it is. This isnât all problematic since those who arenât involved with their finances due to lack of interest, knowledge or time hire portfolio managers, agents, assistants, secretaries, etc. to handle all their personal matters themselves. This is all good and well until the lack of financial literacy kicks them in the head one day and they now need to rely on their investments and alternative income sources to keep them afloat. The entertainment, media, TV/Broadcast, and journalism industry is notorious for being a one-hit-wonder career. When you are popular at age 15 you can earn more in a week than a CEO of a Fortune 500 in a year but rarely does it stay consistent and the same. Plus any bad press is actually bad press. Your reputation is constantly on the line since you are in the public eye. Even if you walk in the park, if the tabloids are against you, they could turn it into a crazy untrue story and your next gig could be in jeopardy.
Now, no pay is guaranteed, even the market is volatile. Thatâs what you sign up for but at least you can adjust the diversification and allocation components. Investing is for the good and bad times. You donât just jump in when the market is at an all-time high. If you need more cash on hand, raise your rent for your rental property, hustle harder with your side-hustle, or write more blogs to increase your earnings potential. You have more control over yourself and your earnings than any company or audience will provide to you, even if it means a large payout once and done. Celebrities fall into this trap. They donât realize nor look to the future and succumb to the realization that they most likely wonât be as popular in their 50s as they were in their 20s. It is the most volatile HENRy lucrative salary example for those who tend to be the most financially illiterate becuase of the grind and delay in reasoning.
Everything happens in NYC. This is a terrific place for uncovering the hard truth and reality of how people really live. It is one of the most expensive cities in the world with a median average income of $100k and home price of $1.5M so one would expect plenty of HENRYs here. A non-native city dweller would assume looks are extremely deceiving in big cities but in fact, Iâve found itâs the exact opposite in cities even where thereâs a wide income disparity.
Itâs REALLY hard to tell who is who, what they do, which borough they live in, and their net worth. Back in the Gilded Age, yes itâs also a Netflix show, the wealth differences were distinctly noticed as fur coats, specialty wagons, and horse-drawn carriages, and townhouses were reserved for the elite. Now, especially in darker, coler, dreary months, everyone is bundled up with their parkas wearing dark colors and masked away. Even in the summer months when people are more outside and reveal themselves, Iâve noticed New Yorkers arenât here to impress and you can distinctly tell who are residents and tourists. The tourists tend to dress to impress. They clearly didnât get the memo.
Ultimately in big cities, you donât want to attract attention. If you are truly rich, people will want to know you for who you are, not your salary. Your self esteem and appreciation are sure to rise as well since you are focused on richer things in life.
You mind your own business and probably own one too to afford living here, and since cities arenât cheap places to live, New Yorkers are always on the move, doing business somewhere working away. Funny enough, the most dressed-up folks I see are dogs. Their owners have more important things to worry about than impressing another New Yorker whoâs in the same boat. They could be neighbors or live in the same building for all we know. Although many aspiring entrepreneurs and fresh grads migrate here for connections and opportunities, top management and first-year salaries have increased due to inflation as well. Companies are scrambling to find workers in big cities since prior to the pandemic HENRYs are taking inventory of their time, money, and sanity, realizing that earned W2 income isnât the most tax-advantageous or effective long term, although it certainly comes with added perks that working for yourself doesnât offer such as PTO, free food, merch, travel, gadgets, subsidized health and disability insurance, (sometimes) free transportation, vacation days, and a tax-advantaged retirement account such as a 401(k), 01(c) or 403(b).
Luckily, earning income on the side while working a 9â5 is doable and is a popular choice amongst New Yorkers where HENRYs are slowly fading. Although our main role/job/career has the largest influence on our financial means and ways of living, for ultimate richness and stability, strive to deviate away from leaning on just one income source. Get creative, think outside of the box, and work for yourself in the meantime without giving more to Uncle Sam. Think about retirement and the life you can live later on to cut back on spending today. It isnât that far away.