Are You a High Earner But Still Broke? Five Fixes for That

HENRYs, or high earners, not rich yet, are professionals who earn significant income but struggle to build lasting wealth. It's easy to see how this happens — demanding schedules mean high earners may not have time to address their financial well-being.

Lifestyle creep, missed investment opportunities and a lack of clear financial objectives are obstacles to achieving financial freedom. But there are steps you can take to get back on track. Here are five ways to start taking control of your financial future:

1. Identify your objectives

The first step is to define your objectives clearly. For many high earners, the primary goal is to stop working for their boss and gain financial freedom. But that requires a clear understanding of the lifestyle you want to live — both now and in the future. Start by asking yourself:

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• What does financial independence look like to me?
• How much do I need to spend to live the life I want?
• Do I want to retire early or achieve the freedom to choose how I spend my time? Optionality is a valid goal.

We kick off our wealth planning process by asking these types of questions. Once you’ve defined your goals, break them down into manageable, measurable steps — whether you work on them with a wealth planner or not; this will give you a road map for making smarter financial decisions moving forward.

2. Take control of your spending

Getting caught up in spending is easy when your salary is high. However, many HENRYs are unknowingly spending beyond their means. Take, for example, one of our clients, a 43-year-old executive in California making $2.5 million annually.

Despite a substantial income, he found himself burning through $2 million yearly due to discretionary spending. For instance, he spent $300,000 on landscaping for a new home despite being in an arid climate where lush grass isn’t practical.

To avoid similar pitfalls, start by tracking your expenses and identifying areas where you can reduce non-essential spending.

Use an Excel spreadsheet or a budgeting app like Simplifi from Quicken to help categorize and visualize your spending. You can make conscious decisions about where to cut back by identifying where your money is going.

3. Automate saving and investing

Automating your savings is one of the easiest ways to ensure you’re saving enough. For our California executive, we helped set up a monthly transfer of $73,000 into one of his investment accounts. This automated transfer ensures that he saves 35% of his paycheck without even thinking about it.

Additionally, for those with access to retirement plans, ensure you're contributing the maximum allowed. In 2025, the maximum elective deferral to a 401(k) plan is $23,500 — plus a $7,500 catch-up contribution for those 50 and older, plus a $11,250 extra catch-up for those ages 60 to 63.

Automating retirement savings also helps minimize your income tax bill over time.

4. Proactively mitigate income taxes

Income taxes are usually one of the most significant drains on a high earner’s paycheck, especially if you live in a high-tax state like New York or California. With a high income, a substantial portion of your earnings can go toward taxes, leaving less room for savings and investments.

Proactive income tax planning is crucial to mitigate tax liability. A good CFP® or CPA who helps you forecast the next couple of years of income taxes is often worth the investment, especially if you own real estate or receive equity compensation such as stock options.

Understand that tax-advantaged accounts — such as retirement plans — can also work to your benefit here. For our California executive client, we helped set him up with a defined benefit plan to reduce his taxable income significantly.

The maximum contribution for 2025 is $280,000, resulting in an income tax savings of about $103,600, based on a 37% tax rate.

Sometimes, contributing to a Roth account makes more sense than to a pre-tax account; it depends on factors like your age, state of residence and how you believe income tax rates will change in the future.

Consulting with a wealth planner or tax professional can help you use all available strategies to minimize taxes.

5. Decide what matters to you

Ultimately, achieving financial independence requires balancing your short-term desires with long-term goals. For our California client, this meant evaluating what was most important for him and his family.

While he wanted to retire at 55, his spending habits weren’t aligned with that trajectory. A large home for the family and expensive activities for the children added significant costs to the family’s lifestyle.

Through our planning process, we helped our client and his wife prioritize what mattered to them. This involved discussions about setting realistic expectations and aligning their financial objectives.

For instance, if they wanted to maintain a large home and take costly vacations, they would need to plan for a longer working life, as their spending would make early retirement difficult.

Evaluate what brings you happiness and fulfillment — and then make sure your financial decisions align with those values.

You may find that you are willing to delay gratification on specific wants for the future but not others.

Your path to financial independence

Building wealth as a HENRY requires balancing savings and costs. Mastering lifestyle creep and saving more consistently is the key to achieving financial independence.

By identifying your objectives, taking control of your spending, automating savings, prioritizing and making thoughtful choices, you can achieve the freedom you’ve always wanted without sacrificing the things that matter most to you.

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