Why don’t high earners accumulate wealth?

Dear Z, E, and T,

Do you know what a Henry is? No, not that funny kid you met at the park. HENRY: High Earner, Not Rich Yet. I just learned this term myself. It’s an interesting term and a more interesting reality. I would guess there are lots of people who would/could identify themselves as High Earners, but not rich yet.

Yet. That word 1) implies they will be rich, someday. And 2) it reveals that no one thinks of themselves as rich bc there’s always someone with more. And “rich” is relative. So not only would someone probably think b/c they earn high wages they will eventually end up rich, but they also wouldn’t say they are rich now b/c their eyes are focused on those who have more than them.

I don’t want your goal in life to ever be “to be rich”. However, money is necessary and it needs to be stewarded well and used (and “not used” i.e. saved) wisely.

Do you want to know the secret (it feels ridiculous calling it that b/c it’s so obvious)? Why are high earners not rich and don’t feel rich? (let’s say high earner in 2019 is $115,000+ in most locations, which puts you in the top 8% of Americans… NYC residents, don’t blast me, I get it, you’re broke if you make $500,000 but you chose to live there).

It’s because they earn to spend. A lot of money comes in and a lot of money goes out. Many times, more money goes out than in. That’s why Americans are in significant amounts of debt. They earn to live the life they think will bring them joy. They earn to spend b/c they think having fun always costs money. They earn to live the life that will impress others. They earn more and more and spend more and more because they believe everyone needs/should have/deserves fill in the blank with any American luxury you think of.

Do you want to know one more secret? (again, secret is a ridiculous word to use here) How can you grow wealth and not feel like you’re barely getting by (even if you are NOT a high earner)? Contentment. It’s that simple. NOT easy, but simple. Be content.

Most people pick the house they want, the car they want, the toys they want… and then feel like they’re barely getting by and “don’t make enough to save”. “If I made another $10,000, then I’d be able to save and grow wealth”. But guess what, the raise comes and the money flows out again for something else you realized you “needed”.

You cannot pick the lifestyle you want and then force your income to support it. Your income will determine the lifestyle you can have and you get to choose to be content or live in denial and self-inflicted poverty of wealth.

Save FIRST. Save in a tax favored retirement account (401(k), 403(b), IRA, whatever). But then, from your cash on hand, also save money that isn’t “trapped” in a retirement account. I’d say make it 10% of what you make. THEN with what’s left over after that, figure out what you can afford and be content with whatever house, car, vacation, clothing brand, etc. that you can afford with what you have.

**Above I said to save first, but by this point you already know that everything I recommended here comes after giving. I highly encourage you to give 10% of what is provided to you back to the Lord with a thankful heart as a way of acknowledging that everything you have (including breath in your lungs) is because of Him and provided by Him.

I’d go one step further and say give, save, and then, if you make enough that it’s possible, live on even less than what’s left so you can generously give to others.

Love,
Dad