Written by:
Joel Simmonds
Head of Advice
There’s a particular irony about being a high-income earner that doesn’t get talked about often. You’ve worked hard to secure a six-figure salary, and from the outside, life looks great. You’ve got the home, the car, the holidays. But when you check your bank balance or think about the future, there’s an unsettling realisation: Where’s all the money gone?
If this sounds familiar, you’re not alone. This scenario is so common that it has a name—HENRY, or “High Earner, Not Rich Yet.” HENRYs are living proof that income and wealth aren’t the same thing. While they might be in the top tax brackets, many HENRYs feel stuck on a financial treadmill, earning plenty but not building any real safety net.
So, what’s keeping high-income earners from turning their salaries into lifelong wealth? And more importantly, how can you break free? Let’s start by understanding the challenges and then dive into practical steps to transform your financial reality.
The term “HENRY” was first coined by Fortune Magazine, and it captures a phenomenon that’s more widespread than you might think.
HENRYs are the quintessential high-income earners who seem to have it all — except actual wealth. They earn enough to enjoy the finer things in life but often have little to show for it in terms of financial security.
Alex earns a six-figure salary and has the lifestyle to match: a beautiful home, a luxury car, and regular holidays to idyllic destinations. But beneath the surface, Alex feels financially vulnerable.
Despite the income, there’s no real wealth to fall back on, and the thought of unexpected expenses or retirement brings a pang of anxiety. While it might seem like Alex’s situation is rare, it’s actually exceedingly common. Many high-income earners face similar struggles, especially those who started with no financial assistance — no inheritance, no safety net, and no early guidance on how to manage or grow wealth.
Alex’s story reflects a broader trend among people who’ve worked hard to achieve their current income but feel stuck in a financial cycle of maintaining appearances rather than building long-term security. This cycle often stems from the pressures of lifestyle inflation, rising expenses, and the challenge of balancing current comforts with future goals. It’s a stark reminder that earning a high salary is just the starting point — it’s how you manage and grow that income that truly counts.
Sarah is another high-income earner, but one who’s taken a very different approach. Inspired by the FIRE (Financial Independence, Retire Early) movement, Sarah resisted the pull of lifestyle inflation. Instead of upgrading her lifestyle with every raise, she saved aggressively and invested her surplus income. Her goal wasn’t just to enjoy life now but to create a foundation for financial independence.
Alex and Sarah highlight the two paths HENRYs can take: one leads to financial vulnerability, and the other to long-term security. The difference lies in how they manage their money—and their mindset about wealth.
For many HENRYs, the greatest barrier to building wealth is lifestyle inflation.
It starts subtly—a nicer car, an upgraded home, better holidays. After all, you’ve worked hard, so why not enjoy the rewards? But over time, spending creeps up to match income, leaving little room for savings or investments.
Alex fell into this trap. As his income grew, so did his expenses. The issue wasn’t a lack of discipline but the cumulative effect of small indulgences: dining out regularly, impulse purchases, and subscriptions that went unused. It wasn’t until Alex began tracking his spending that he saw how much was slipping away.
Sarah, on the other hand, took a different approach. By keeping her expenses consistent despite earning more, she created a substantial surplus to invest. Her discipline and long-term vision allowed her to grow her wealth steadily without sacrificing the things she valued most.
For many HENRYs, the financial challenges go beyond numbers — they’re deeply emotional. High-income earners often feel the weight of expectation: if you’re earning six figures, you should be financially secure. But when the reality doesn’t match, it can lead to stress, frustration, and even shame.
For someone like Alex, they may describe the exhaustion of living on a financial roller coaster. Big paydays feel exhilarating, but months of tight budgets can be equally draining. The lack of a clear financial plan can add to the anxiety, leaving Alex feeling stuck in a cycle of highs and lows.
This is where many HENRYs find themselves — not broke, but not truly secure either. Breaking free from this cycle starts with a shift in mindset: wealth isn’t just about how much you earn; it’s about what you do with it.
Turning a six-figure salary into lasting wealth isn’t all about radical sacrifices — it’s about building a strategy that works for you. Here’s a step-by-step guide to get started.
The first step to building wealth is understanding where your money is going. For Alex, this meant sitting down and tracking every dollar — needs, wants, and unnecessary extras. It wasn’t about guilt or blame but about becoming more intentional.
Here’s how to take control of your spending:
By cutting back on non-essentials, you can free up hundreds of dollars a month to redirect into savings and investments.
Debt, especially high-interest credit card debt, is a silent wealth killer. If you’re paying 15-20% interest on credit card balances, it’s virtually impossible to get ahead financially.
How to tackle debt effectively:
Using the Avalanche method, for example, can save thousands in future interest payments and free up money to build wealth.
Without clear goals, it’s easy to drift financially, even with a high income. Sarah’s disciplined approach started with defining what she wanted her money to achieve.
Here’s how to set effective goals:
Setting realistic, specific goals makes wealth-building much more achievable.
Investing is one of the most powerful ways to grow wealth, thanks to the magic of compound interest. Even small amounts invested early can grow significantly over time.
How to get started:
Starting small and diversifying your investments provides both security and growth opportunities.
Superannuation is a powerful wealth-building tool, but high-income earners often hit contribution caps. It’s essential to explore other tax-efficient strategies as well.
Key strategies include:
Combining tax-efficient strategies with regular investments can supercharge your wealth-building efforts.
Many people assume they should pay off their mortgage completely before investing, but this isn’t always the best strategy. Striking a balance can lead to better outcomes.
How to balance these priorities:
Balancing debt repayment with strategic investing allows you to grow wealth without feeling over-leveraged.
The most important factor in wealth-building is consistency over time. Wealth isn’t built overnight; it’s the result of disciplined choices made year after year.
Here’s how to stay on track:
Shifting to a long-term mindset will keep you committed to wealth-building, even during financial ups and downs.
For high-income earners who feel stuck in the HENRY cycle, the concept of FIRE—Financial Independence, Retire Early—offers a powerful way to reframe your financial goals. While not everyone wants to retire early, adopting the principles of FIRE can provide clarity and purpose for building lifelong wealth.
The challenges of lifestyle inflation and inconsistent wealth-building often leave HENRYs feeling like they’re working hard but not getting ahead. The FIRE mindset provides an antidote: by focusing on intentional saving, investing, and financial discipline, you can create the freedom to live life on your terms — even if early retirement isn’t your ultimate goal.
At its core, the financial independence retire early mindset is about building enough wealth to cover your living expenses indefinitely. This frees you from the need to work, giving you the choice to spend your time how you want — whether that’s pursuing passion projects, travelling, or simply enjoying a slower pace of life.
For high-income earners, the appeal of FIRE often lies in achieving financial security faster and gaining flexibility, even if they don’t stop working entirely.
The principles of FIRE — saving aggressively, avoiding lifestyle inflation, and investing wisely — address the very issues that keep many HENRYs financially vulnerable:
The FIRE movement isn’t a one-size-fits-all approach, which makes it adaptable to different financial goals and lifestyles. For high-income earners, there are several ways to tailor the FIRE mindset:
For those in the HENRY category, Fat FIRE can serve as a realistic and motivating goal, combining financial security with a fulfilling lifestyle.
The FIRE mindset complements the practical steps outlined earlier in this article. By integrating FIRE principles — like intentional saving, avoiding lifestyle inflation, and diversifying investments — into your financial plan, you can accelerate your journey from HENRY to financially secure.
Even if you don’t aspire to retire early, adopting aspects of FIRE can help you:
Being a HENRY can feel like a constant financial balancing act, but with the right strategies, you can turn your income into lasting wealth. By addressing lifestyle inflation, setting clear goals, and adopting principles like intentional saving and investing, you can move toward financial independence and security.
If some of these steps feel complex, we’re here to help. We offer a no-cost consultation to guide you through the process and create a plan tailored to your goals. Take the first step today — your financial future is waiting.
In this video, Financial Adviser Erin Truscott shares how we help you create a personalised investment strategy designed to align with your financial goals.
Discover how our approach balances growth and risk management, providing you with confidence and clarity as you build wealth for the future.
We know that navigating finances as a high-income earner can be complex, especially when it feels like you should be building wealth but aren’t seeing the progress you’d expect. Over the years, we’ve worked with many HENRYs (High Earners, Not Rich Yet) who face similar challenges.
Below, we’ve answered some of the most common questions we hear from clients like you to help clarify the path to financial security and lifelong wealth.
If you’re earning a six-figure salary but feel like you’re living pay cheque to pay cheque, struggling to save, or finding it difficult to build wealth despite your income, you may be stuck in the HENRY cycle. Tracking your spending, reviewing your savings habits, and assessing your net worth can help identify areas for improvement.
Yes! The FIRE movement isn’t just about retiring early — it’s about achieving financial independence, so you have the freedom to make choices about your life. Even if retiring early isn’t your goal, adopting FIRE principles can help you build a solid financial foundation and reduce stress.
It depends on your financial goals and circumstances. While paying off high-interest debt is usually a priority, balancing mortgage repayment with investing can help you take advantage of compounding returns. We can work with you to create a plan that strikes the right balance for your situation.
Automating your savings and investments is one of the best strategies. By “paying yourself first,” you ensure that a portion of your income is working toward your financial goals before you spend on discretionary items. We can help you structure your finances to make this process easy and effective.
The first step is gaining control of your spending. Start by categorising your expenses into needs, wants, and savings. Identify areas where you can cut back and redirect that money into investments or other wealth-building strategies. Getting a clear understanding of your cash flow sets the foundation for long-term financial success.
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What’s keeping high-income earners from turning their salaries into lifelong wealth? And more importantly, how can you break free? Let’s start by understanding the challenges and then dive into practical steps to transform your financial reality.
What’s keeping high-income earners from turning their salaries into lifelong wealth? And more importantly, how can you break free? Let’s start by understanding the challenges and then dive into practical steps to transform your financial reality.
Thinking about using your superannuation to invest in property? With an SMSF (Self-Managed Super Fund), it’s possible to purchase investment properties directly. However, there are specific rules and considerations, as well as unique benefits, that come with this approach.
This is a publication of Direct Wealth Pty Ltd, a wholly owned subsidiary of Direct Wealth Group Pty Ltd.
General Advice Warning – The information contained in this article is of a general nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decisions regarding any products or strategies mentioned in this publication.
Disclaimer – While all care has been taken in the preparation of this blog, to the maximum extent permitted by law, no warranty is given in respect of the information provided and accordingly, neither Direct Wealth nor its related bodies corporate, employees or agents shall be liable for any loss suffered arising from reliance on this information.
