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Opinion: Advice for high earners applies to all

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Let’s talk about HENRY.

Also known as a High-Earning-Not-Rich-Yet person, HENRYs tend to earn at least six-figure salaries. And while most discussions of economic uncertainty tend to focus on the low- to middle-income households, what happens on this socioeconomic rung of the ladder can have trickle-down effects that cool local economies.

In Springfield, HENRYs tend to be medical professionals, and with health care entities holding four spots on the Springfield top 20 employers list, their success and ability to contribute to our community is critical. However, while these professionals are great in their fields, due to time constraints, some tend to place less focus on their finances.

Discretionary spending
Sharing the benefits of savings is a component in most financial planners’ playbooks for those who are interested. In the case of HENRYs, they generally focus more on discretionary spending than wealth building. Their household expenses can be three times or more the typical household’s, depending on their lifestyle. The more we earn, the more we spend. These habits often can result in HENRYs living beyond their means at the detriment of creating a savings plan that could be accessible during a financial emergency or shifts in the economy.

The lack of a savings safety net makes these high earners more vulnerable to unexpected expenses. This, in turn, can lead to more reliance on credit card debt that further strains financial stability. And that’s where the trickle-down effect is felt. When their discretionary spending power dries up, so does the downstream revenue of the businesses they once supported.

Savings vehicles
Certificates of deposit and money market accounts are savings solutions anyone can benefit from with each currently paying returns that haven’t been seen in years. Both traditional and high-yield money markets are great first steps into savings, especially in today’s rate environment where it’s been easy to find one with an annual percentage yield in the 4-5% range – much higher than traditional savings accounts, which have averaged less than 1%. Another great thing about money markets is they offer the ability to keep assets liquid.

While high-yield money market accounts can have a higher APY than traditional money market accounts, the difference can typically come down to minimum balances, fees and other considerations attached to the account. It’s important to find the right account that best fits your financial needs. For HENRYs, the high-yield money market may make more sense if they have the minimum balance to take advantage of a higher APY.

CDs pay a fixed interest rate over a period of time, and this differs from the variable rates of money markets that fluctuate in accordance with the Fed rate. Locking in a CD in the 4-5% range can be a great option if you are not concerned about having access to the money before the maturity date without early withdrawal fees.

When working with clients, especially those transitioning to a higher level of income, such as newly graduated professionals, it is often a recommendation to establish savings habits prior to the inclusion of their added income into their overall spending picture. Good savings habits early help to prevent the likelihood of financial stress in the future.

New habits
HENRY or not, wage earners should consider working with a banking adviser to focus on the following:

  • Creating better spending habits.
  • Reviewing and taking advantage of investment opportunities.
  • Building retirement savings and long-term financial security.
  • Reducing debt.

It’s never too late to develop new habits to secure your financial future. If you want to leave the HENRY lifestyle behind, now is a great time to take advantage of available opportunities. Successfully managing your personal finances can help you make the most out of your financial situation and help you weather turbulent economic conditions ahead.

Rhonda Sorensen is a senior private banking adviser and senior vice president for Arvest Bank in Springfield. She can be reached at


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