From a sheer numbers standpoint, our family would qualify as high-earners. My husband earns a healthy salary and bonuses from his corporate job, while I bring in extra cash from my freelance business.
We’re considered HENRYs — high earners, not rich yet. We’re also millennials, with student loans, high interest rates, kids, and the rising cost of living to contend with. Here’s how we make our money work for us.
We live on a budget
One of the earliest pieces of financial advice I ever received was to live on a budget, regardless of your income. Initially, I scoffed at the idea. Isn’t one of the best parts of earning a lot to not worry about money?
Then we started earning more money, my husband at his corporate job, and me with my freelance business. And I realized that the advice was spot-on. The more money you earn, the more you spend, and the easier it is to lose track of things.
Today, even though we’re earning the most we’ve ever earned, we live on a budget — for everything from investing for retirement to saving for our boys’ college to paying bills, and even for our biweekly spending allowance.
We automate everything
I automate everything related to my finances. Every payday, our bills are automatically debited, our retirement and college savings contributions are deducted, and our spending money is sent to a separate account.
It’s an easy way to stay on budget for someone who doesn’t necessarily love checking a bank account every day; plus, it helps us stay on track with our medium and long-term financial goals even when life gets busy. And with two kids, it often is.
We invest regularly
We are still paying off the last of our student loans, but we make investing a priority each month. We contribute the full employer match to my husband’s 401(k) and try to max out my SEP IRA each year, as well as both our kids’ 529 college savings accounts.
Investing regularly and early is the key to building real wealth, since your money has more time to compound and grow. And while I wish I had started investing in earnest in my 20s, I’m doing what I can in my 30s to make up for lost time.
We don’t upgrade if we don’t need to
It’s so easy to want to upgrade your life, especially when you start earning more. But we try to avoid that common pitfall. For example, we’ve lived in the same house for seven years, mostly because we have a great interest rate (3.5%). However, we’ve also realized that at 2,400 square feet, it’s the perfect size for our family of four. Would I like a mud room? A bigger living room? Sure, but it’s not worth blowing all our equity and savings.
We also have a family rule of sorts — if it works, we don’t replace it with a newer, better model. Our phones are older models, and our dishwasher isn’t the best, but they both work. So we make it work.
We are looking for a secondary income stream
The next step in our financial journey is building a passive income stream that we can also enjoy. For a year or so, we’ve been looking to purchase land in rural areas to build a vacation home for our family and eventually set it up as a rental property when we’re not using it.
We aren’t sure whether we will finance a new property or try to pay cash for land and build slowly; a lot depends on the interest rates at the time. But it’s definitely on our radar.
Being a HENRY has its perks. I know that in today’s economy, we’re lucky to be growing our earnings and building wealth. And while it can be frustrating to still worry about money and live on a budget, even as our income grows, I know one day it will pay off. (Literally.)
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