Are you a high earner with no money to spare? Follow these 5 tips to help you stop living hand to mouth and grow your long-term wealth

As a personal finance consultant, I work with HENRYs — a lot of HENRYs.

And I can relate to them because I used to be one: High Earner Not Rich Yet.

Your typical HENRY makes a slightly better-than-average income, but lives pay cheque to pay cheque, and that’s the problem — they get stuck in a scenario where their expenses are high and they don’t have a strategy to make their money grow on the same trajectory as their income.

Often, they get sucked into the ‘lifestyle inflation’ vortex — the more you earn, the more you spend.

I was certainly not immune. 

As a young 20-something fresh out of university and working in finance, I was earning way more than most of my friends having just published my first best selling book, “Rich by Thirty.” 

I’d bought an inexpensive townhouse and still had plenty of excess cash flow.

So, I spent. And spent. And spent some more. Business clothes (first impressions were important to me); networking lunches (an expensive way to meet industry people); and travel to NYC, Napa, Italy, Crotia — name the place and I was there. 

All the while, I was making next to no progress on my money.

What turned it around for me was a lesson from my aunt, a self-made millionaire and entrepreneur who sat me down and said, “If it’s on your ass, it’s not an asset!”

She reminded me that I’d been a great saver before, but had lost my way — and to get my behind into high-savings mode.

This one piece of advice — build wealth for the long term — saved me from a lifetime of HENRY.

Now, before you flame me on socials about how unrelatable this is, here’s a little secret: the most financially successful people I have worked with over the past 15 years are average income earners, not HENRYs.

These folks figured out early on that to get ahead, they’d need to pay themselves first and live off 80 to 85 per cent of their income, rather than spending 100 per cent of it.

If you’re looking for a great read on this mindset, pick up a copy of Morgan Housel’s “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness.”

Chances are, you’ve got a lot on your plate — loans, kids, mortgages, car payments — the list is endless.

You probably also want what so many HENRYs — and average earners — want; career and income growth and to not have to worry about your financial future.

Here are five tips to get you there.

The sooner you implement them, the more financially secure you’ll become.

Dream big and make a plan

Even a high income won’t direct itself.

Dream how you want the next five years to go. Envision your days, the travel you want to do, the people you want to be with and your work.

Now, work with your financial planner or money coach to incorporate these dreams into a financial plan.

That plan should include: an income projection for retirement; a framework for your investment performance; how much you need to save every week; and how to deal with any debt spirals you may find yourself in.

Financial planning services costs money, so it’s important to reframe this expense in your mind as an investment for your future.

You can turn to an AI platform like ChatGPT for a free financial plan, but beware that it might not take into account things like your habits, tendencies and what’s going to motivate you to execute on the plan.

Understand and track your net worth monthly

Your net worth, not your income, is the real measure of financial success.

Create a spreadsheet (or use an app) that lists your assets (what you own) and liabilities (what you owe).

Assets minus liabilities is your net worth. Each month, your goal is to see your net worth grow, and there are only two ways that can happen: saving money and paying down debt.

Review your numbers monthly over a glass of wine or coffee.

Watching that bottom line will keep you motivated, and if it dips (and it will from time to time), it’s a sign to adjust spending or saving habits before things slide further.

Saving and investing consistently is the foundation of wealth

If you’re financially stuck, you’re probably not investing much.

The trick is to start investing something and increase your contributions every year.

It’s going to take time to go from investing nothing to 15 per cent of your gross income.

But, if you increase the amount every three to six months, you’ll get there sooner than you think.

This disciplined approach to investing not only sets you up to retire comfortably but also ensures you’re prepared for a longer life expectancy.

Maximize your tax advantages by contributing to RRSPs, TFSAs, and other registered accounts through work, and focus on high-quality, diversified investments rather than chasing trends.

You need to create a budget — now!

Being a HENRY doesn’t eliminate the need for a budget, it just raises the stakes.

Without one, it’s hard to build any net worth because the money you earn is going to get spent.

Mindful budgeting ensures your spending aligns with your priorities — including retirement.

Plan where your money will go each month and make room for what brings you joy. Then, trim the unnecessary.

The happiest (and wealthiest) budgeters see budgeting as empowerment, not punishment. They see it as a tool to stay on track, and still have fun.

To get started, track your spending for at least 30 days

By doing this, you’ll learn something about your habits and have data to nudge you toward making better choices with spending.

Use a spreadsheet to find the culprits that prevent you from growing wealth — dining out, too many memberships, crazy high car payments.

Then stop spending on stuff that doesn’t matter, and redirect that cash toward priorities — like retirement.

If you want to stop being a HENRY and start being a wealth builder, changing your mindset is crucial.

True long-term wealth is built through day-to-day habits, not big one-time moves, bonuses or salary increases.

Practice gratitude for what you already have, and do your best to stop comparing yourself to others.

I get that social comparisons are hard to avoid, because when you’re a HENRY, you’re usually surrounded by other HENRYs.

But, this combination of practical net worth building action, and being more content with what you have builds a healthier relationship with money, helping you stay consistent and positive on your financial journey.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.