Are You A H.E.N.R.Y?

According to Investopedia, “High Earners, Not Rich Yet (HENRYs) are individuals who currently have significant discretionary income and a strong chance of being wealthy in the future. The term HENRYs was coined in a 2003 Fortune Magazine article to refer to a segment of families earning between $250,000 and $500,000, but not having much left after taxes, schooling, housing and family costs—not to mention saving for an affluent retirement.”¹

Looks good on paper, but on a deeper level, these people are not truly “wealthy”. They are considered rich enough to afford and enjoy their desired lifestyle but dig deeper and you will find that their long-term financial strategy is not optimised to sustain this spending arc. Simply put, these people are on their way to wealth but the lack of proper planning can easily derail their progress.

Let’s look at the local context and unearth some interesting discoveries from the recent Singapore Census. The survey revealed a higher proportion of Singaporeans moved into higher income brackets in the decade between 2010 and 2020, and also found that the share of households earning at least S$20,000 per month more than doubled – from 6.6% to 13.9%. Wow sounds great right?

Now let’s delve into another headline: 1 in 2 high-income earners in Singapore has money problems². This was part of the findings derived from a poll conducted by a wealth management company, which surveyed 1,000 Singaporeans aged 25 to 54 with monthly salaries starting from S$6,000 a month, and up to S$20,000 or more.

Is this a classic case of “more money, more troubles”? These reasons could be attributing to the financial woes of Singapore HENRYs:

• Sustaining high living costs
• Spending too much and beyond control
• Facing large amounts of debt
• Supporting the financial needs of family members
• Lacking in proper and professional financial planning

If you are a HENRY and you have answered “yes” to at least two of the above, your circumstances could get precarious any moment should unexpected situations happen; such as sudden retrenchment from your high-paying job or supporting the medical expenses of an elderly family member who has no savings to fall back on. These are very real scenarios that can happen to the best of us.

Sources:

¹https://www.investopedia.com/terms/h/high-earners-not-yet-rich-henrys.asp
²https://www.straitstimes.com/business/invest/1-in-2-high-income-earners-has-money-problems-poll