Are you an optometric HENRY?

June 28, 2020
I have to confess, I’m a bit baffled by the use of a given name as a descriptor these days (particularly unfortunate if your name is Karen), but one has been popping up lately that has actually been around for over 20 years, and it’s particularly relevant to optometrists and optometric practice owners: a HENRY.

HENRY, which stands for High Earners Not Rich Yet has become popular recently as it applies to younger adults who make over $100,000 but still feel broke. These days, it’s applied mostly to millennials, and has cropped up on the internet lately because this group has had their bank accounts grow considerably since the pandemic, unable to spend money on experiences and things.

Millennials aside, this is an interesting acronym for ODs and optometric practice owners because it applies to them for a much longer period than many professions: student loans upon graduation, then practice loans upon purchase… although ODs are high earners, this path is one that takes planning and time to reach high net worth income and savings status.

What I want to focus on today is the “NYR” (not yet rich) portion of HENRY because it’s very easy to remain in HENRY status by increasing lifestyle as cash flow loosens up. There are 3 things practice owners (and really anyone) can do to break out of HENRY status and into financial freedom:

The 50/30/20 Rule
Remember the 50/30/20 rule (50% needs/30% wants/20% savings) and TRACK IT at least once a year. Want to buy a new home? Make sure it keeps your “needs” bucket under 50%. Thinking about joining an expensive gym or country club? You may have to amend your vacation budget to stay in the 30% range (remember vacations?). 20% savings? Non-negotiable.

There are some good spending trackers out there to help with this process:, good budget, and I like Simplify by Quicken although it does cost $40/year or $4 per month.

Just as a side note, if your needs are just 50% of your net income, think of how much easier crises like Covid-19 are to handle. And if you’re saving 20%, yes, it’s ok to temporarily back down during bad times.

Have a payoff plan
Paying off student loans and practice purchase debt is a big deal. It’s time to celebrate! Yes, but… have a plan in place BEFORE you pay off. It’s too easy to mentally allocation those funds to a home renovation, new car or travel. Then you blink and every year that cash has been spoken for.

If early retirement or financial flexibility appeals to you, I suggest rewarding yourself with 50% of the benefit to spend today and rewarding your future with the other 50%. At the very least, allocate the 50/30/20 20% to savings.

Hide your savings from yourself
Speaking of savings, there’s one ridiculously simple trick that is oftentimes the difference between savings success and failure: payroll routing. Automatically sending net pay to your savings or investment account is very different manually removing it from your bank account into savings. If you don’t see it, you don't miss it! Almost every payroll provider has this option—use it for your regular pay, and don’t forget to do the same with practice distributions.

We’re at an interesting point in time where work is getting back to normal, but for most of us spending patterns (shopping, dining out, travel) are not. It’s a perfect time to re-evaluate your 50/30/20 budgeting and savings rate so that when this pandemic has passed, your financial house is in order.

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