Before this becomes a name popularity contest, let us clarify that HENRY and MIRIAM are both acronyms.
HENRY stands for “High Earner Not Rich Yet” and is used to describe millennials making $100k+ per year, but still living paycheck to paycheck. MIRIAM on the other hand is a Raiz created acronym (patent pending 😆) and stands for “Modest Income Regularly Invests And Motivated.” So are you a Henry or a Miriam?
Henry has large spending habits and does not plan ahead.
It comes down to money in and money out. Sure, Henry has a great income, but is young and has disproportionately high spending habits, meaning the best part of 100% of income coming in is going out as monthly expenditure. This goes against the grain of paying yourself first and spending later.
A good rule of thumb is to put aside 20% of your pay when you receive it to save and invest regularly, then pay for fixed costs like rent, utilities and staples, and spend what you have left over after that.
Many of us like to shop, have fun, eat out, but it is not financially wise to burn through any sized paycheck without having a plan for what you want in the future, versus what you want right now.
Miriam does not earn as much as Henry, but has a plan and is motivated.
It doesn’t matter if Miriam is on minimum wage or a modest income, Miriam understands the benefit of allocating a regular portion of her pay to investing for her future, whether it’s by rounding up the spare change from her coffee or setting aside $5 a week to start building her investments. And because Miriam invests often, if the markets move up or down, Miriam is achieving a Dollar Cost Average approach to investing.
Henry wants it all, but also doesn’t know what he wants.
Henry is living in the moment but is not reflecting on what will be important in 10, 20 or 30-years time. Henry’s lifestyle may change over time. Perhaps there will be a pet, a family, a house. There may unfortunately even be an unforeseen event that requires a rainy-day fund sitting by and at the ready. This again could be solved if Henry decided to plan, work out how to get to that plan, and invest regularly, little by little, to make that plan happen.
Miriam understands the need to set goals and stay focused.
Miriam knows that life can change either by choice or by chance, and that investing regularly can both set Miriam up for the future, as well as help to create a rainy-day fund should it ever be needed.
Miriam takes advantage of programs that help her invest when making everyday purchases (Raiz Rewards is one of these types of programs 😉) and makes one off deposits when her monthly budget leaves her with more left over than normal.
Miriam still treats herself as well, and is able to withdraw when it suits her, and deposits to invest when it suits her as well, all the while having her long-term plan front of mind.
What’s the moral of this acronym story?
Henry relies on a high income to fund his lavish lifestyle. Given the way things are in the global economy, there is no guarantee that the high income will be there forever. Henry should look to spend with his means, have a goal looking forward, and invest regularly to enable Henry to reach this goal.
Miriam is taking the slow and steady approach, still enjoying life and spending where appropriate, but also saving and investing where possible. Miriam is showing the responsible approach when it comes to not investing everything at once, but investing often and over time, with a purpose in mind to help stay motivated.
To some, Miriam may sound a bit dull, but to others, Miriam has the right balance of fun now and investing for later. Which one are you, and which would you like to be?
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