From a UK financial planning perspective, a “Henry” is an acronym describing someone who is a “high earner, not rich yet”.
It will often relate to an individual who has a very well-paid job in secure employment but has not yet found the time and, perhaps more importantly, doesn’t feel they have the means to put any long-term plans in place for their future financial security.
If you think you may be a “Henry”, or are starting to get concerned that your salary is not really reflective of your financial wealth, then read on to discover some steps you should be taking to get on track.
You could be a Henry if you struggle to save money regularly
A typical Henry is likely to be earning a six-figure salary but does not think that they have accrued the assets and, importantly, the financial security, that you would normally associate with that level of earnings.
There is no one major reason for this apparent paradox, but some of the factors that could have combined to leave you in this uncertain position include:
- Because you perceive yourself to be wealthy, you’ve become susceptible to “lifestyle creep”, meaning your spending increases as your earnings do.
- An increase in interest rates since you took out your mortgage has resulted in much higher monthly repayments than you first budgeted for.
- You pay a lot of Income Tax to HMRC each month and are caught in a “tax trap” which can result in you incurring an effective 60% tax rate on some of your earnings.
Furthermore, since you started earning a high wage, you have been affected by the increased cost of living that was driven, in part, by the big increase in inflation in 2021/22.
As a result of these factors, and perhaps other circumstances unique to you, you may well have found yourself in the position typical of most Henry’s in that:
- You have little or no savings
- You often have to use credit cards to bridge the gap between paydays
- You haven’t got an emergency fund set up
- You’re only putting the minimum required into your pension each month, or nothing at all.
If you are in the position of facing some, or even all, of these issues, you may want to start putting a plan together to get yourself on the right financial track. This will enable you to make the most of your earnings now, while also helping you build the financial resilience needed to secure your long-term future.
A personal budget can help you get control of your finances
If you are a Henry, the key contributory underlying factor is likely to be not having proper control of your finances.
It’s understandable, then, that the starting point to getting on track is ensuring you have a clear idea of your monthly expenditure, as well as your other financial commitments.
While there are plenty of online budgeting apps available, it’s easy enough to get started with a simple spreadsheet you create yourself in Excel.
By listing your regular outgoings, and then reviewing your discretionary spending over the past few months, you’ll get a simple overview of where your money is going.
This will help you to:
- Identify pressure points and areas where you have excessive outgoings
- See where you can make savings, such as by reducing spending in certain areas and identifying mandates that can be cancelled
- Clearly assess your financial priorities.
You will also get a good idea of how much you are spending to service your unsecured debt each month. While there is no easy short-cut to long-term financial security, there’s no doubt that having minimal balances on credit cards can make it far easier for you to plan ahead, and to allocate money towards accumulating wealth.
Put a long-term financial plan in place, and review it regularly
Once you have established a clear idea of your monthly expenditure and are following a budget, it will become far easier to cut down on unnecessary spending and put a financial plan together to secure your future.
Clearly, how much you are able to save, and the other granular details of your plan will be dependent on your financial circumstances.
However, there are some key priorities that you should be looking to address. These will include:
- Creating an emergency fund that you can access in the event of unexpected financial events
- Making regular contributions to a pension plan to ensure you will be able to live comfortably in retirement
- Other savings and investments to help grow your wealth.
Given that one of the contributing factors towards feeling like a Henry might be your high levels of taxation, it makes sense to utilise tax-efficient savings options as far as possible.
For example, in the UK you will get tax relief at your marginal rate on your pension contributions up to your Annual Allowance. This is the total amount you can contribute tax-efficiently to your pension during a single tax year; it includes personal and employer contributions, as well as tax relief.
It stands at £60,000 or 100% of your earnings, whichever is lower, though you should be aware that it may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.
If your salary is between £100,000 and £125,000, pension contributions will also help you mitigate the effect of the “tax trap” you read about earlier, as well as helping you build a fund for your retirement.
Alongside pension contributions, ISAs are also an effective and tax-efficient option when it comes to saving and investing in the UK.
You can save up to £20,000 into ISAs in 2025/26, and the money you accrue in your ISA fund will not be subject to Income Tax or Capital Gains Tax.
Get in touch
If you believe you may be a Henry and would like to talk about the best way to get your finances in order, please get in touch with us.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC, which is subject to change.