July 19, 2021 by Dymphna 1 Comment

T-Bomb: Why rich millennials can’t make ends meet

Truth Bomb Tuesday: Anyone can be broke. Ask me how.

Henry is broke. Poor Henry.

But Henry shouldn’t be broke. He’s earning six-figures. But that’s the thing. Anyone can be broke.

It’s surprisingly easy.

I’m not talking about one person here – I’m talking about high income millennials. The so-called Henrys – High Earners, Not Rich Yet’s.

A recent survey in the US found that 60% of them were living pay-cheque to pay-cheque.

From the AFR:

High-earning Millennials are feeling broke.

Sixty per cent of Millennials raking in more than $US100,000 (AUD$134,300) a year say they’re living pay cheque to pay cheque, according to a new survey by PYMNTS and lending company LendingClub which analysed economic data and census-balanced surveys of over 28,000 Americans.

That is partly due to lifestyle choices. Many of these Millennials are likely HENRYs – short for high earner, not rich yet. The acronym was invented back in 2003, but has come to characterise a certain group of 30-something six-figure earners who struggle to balance their spending and savings habits.

HENRYs typically fall victim to lifestyle creep, when they increase their standard of living to match a rise in discretionary income. They prefer a comfortable and often expensive lifestyle that leaves them living pay cheque to pay cheque.

Ok, let’s not gloat too much or roll out that ‘entitled millennial’ troupe.

Yes, it’s about lifestyle and expenses. But life is also much more expensive than it used to be. The average Henry leaves university with a debt of US$80,000! That’s a heckuva hole to be starting in.

And then houses are more expensive than they used to be, etc. etc.

But there’s a really important point here – and that’s about lifestyle drift.

When you’re earning good money, you’re probably working hard for it. And that means you want to feel rewarded for the work you do.

And you’re probably moving in circles that spend freely. Expensive dinners out, that sort of thing. And they probably live in in expensive suburbs.

You either open up the wallet and fork it out, or you feel like you’re being left behind.

I mean, I once had a student who as a high-end engineer on the mines. He was earning like $300K a year.

But when he came to me he was still renting. When I asked him why he said that he hadn’t been able to save enough to build a deposit!

There are two sides to the wealth equation. There is your earn and your burn. If you’re not earning more than your burning, then you’re just not saving money and you’re just not moving forward.

But this requires sacrifice – and it doesn’t matter what level of income you’re starting from – it requires sacrifice.

It requires a disciplined commitment to keep your burn on a leash.

If you don’t watch it, it will quickly drift out of control.

This is something we all have to watch.

Even multi-millionaires like me.

Humans are just funny like that.