In medicine, there is an issue that plagues our community of doctors. It’s common and almost expected to see a newly minted attending reward themselves with a brand new luxury vehicle or large house. These individuals show all the signs of having attained wealth, but are they truly rich? Here are some facts that you need to know to prevent yourself from becoming Dr. HENRY (High Earner Not Rich Yet).
What is HENRY?
HENRY is a term that was coined by Fortune Magazine back in 2003. HENRY stands for High Earner Not Rich Yet.
The concept of HENRY refers to young individuals in their 20s and 30s making a healthy six-figure income, yet they feel poor and live paycheck to paycheck.
This description of HENRY can almost exactly describe the average graduate from any medical specialty.
As a doctor, most of us will go on to graduate from residency and fellowship in our 30s. At this time we then obtain a relatively high salary, but most will also start to tackle the mountain of debt we have accumulated for the last decade or more. We quickly find ourselves as a Dr. HENRY.
Why Are We So Prone?
Doctors are one of the most HENRY prone individuals out there. This is due to a multitude of reasons.
Reason 1: Doctors are almost always high-income earners.
This is no surprise. Medicine continues to top the list of highest-paying jobs in the United States. This should be no surprise to any medical student or resident.
Most graduating residents and fellows will go on to jobs that pay a salary ranging from the low six-figures all the way up to high six-figures depending on their chosen specialty.
Being compensated for your amazing work is great, but how you choose to spend it is more important when it comes to building wealth.
Reason 2: Doctors almost always have mountains of debt.
There are exceptions to this. Some people are fortunate enough to have the support of family or have earned well-deserved scholarships that allow them to graduate with minimal or no debt.
That said, the majority of doctors will graduate with significant debt that will take years to wipe out.
This puts most new attendings in a very financially weak position. Most brand new attendings have negative net worths.
Reason 3: We tend to want to make up for the lost time.
As doctors, we spend most if not all of our precious 20s in a library or hospital. During this time we either make no money or very little.
While we have our heads buried in our books, our non-medicine counterparts are off building their careers, purchasing new homes, and starting families.
It’s very easy to feel a sense of FOMO (fear of missing out) when we see or talk to these friends.
This often leads to trying to make up for the lost time. We tend to do so by purchasing that new home, dream car, or taking those expensive vacations you have lusted over for years.
These 3 reasons combined often lead may doctors to become a High Earner Not Rich Yet individual.
You Are Being Targeted
Social media is great to stay connected to our friends and family. That said, advertising has become a really scary thing.
New doctors meet the criteria of the ideal consumer of luxury goods.
We tend to be young individuals making healthy sums of money that may have a strong demand to consume expensive things.
From my own experience, Since becoming an attending I have definitely seen in an increase in ads for luxury cars in my social media feeds.
This may be a coincidence, but it doesn’t change the fact that these companies do see me as a possible buyer. They believe this enough to pay money to put their advertisement in front of my eyes.
Never forget that there is always someone out there looking to sell you something.
The Working Rich
Now I don’t mean to be judgemental. Being a High Earner Not Rich Yet individual isn’t the end of the world. Everyone is entitled to live their lives how they see fit.
That said, I would just warn a HENRY about the possibility of becoming the Working Rich.
The Working Rich are individuals that can absolutely afford to buy that large house and fancy car. Their expenses are only a small fraction of their paychecks.
This leads to individuals that display all the signs of being rich, but when you look a little closer, they are actually less comfortable than they appear to be.
The danger lies in their income sources. For the Working Rich, they often depend on one source of income for the majority of their money. If that source goes away, they may find themselves in a situation where they can no longer afford to pay their expenses.
The Working Rich are trapped and MUST keep working to maintain their current lifestyle.
How To Avoid Becoming Dr. HENRY
If you want to avoid becoming a HENRY, you need to equip yourself with the appropriate mindset.
It’s important to realize that upon finishing our training that this is only the beginning of our financial journey.
We need to be sure not to confuse our high salaries with real meaningful wealth. Although we might have a substantial salary, we are also plagued by a mountain of debt.
By coming to terms with our actual financial position, only then can we make appropriate financial decisions that will put us in a better place in the long run.
A great way to track your current financial position is to use tools like the Mint app or the Personal Capital app.
If you want to get started transforming your mindset and begin making good financial decisions during medical school and residency, be sure to check out the free Investing Resident E-book.
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