How is it that some millennials making six figures still feel broke?

This cohort, known as "Henrys," typically earn over $100,000, are largely millennials, and struggle to balance their saving and spending habits.

Henrys fall victim to lifestyle creep, preferring a comfortable and often expensive lifestyle that leaves them behind when it comes to building wealth.

But their situation is also indicative of an economy that seems bright on the outside but dull on the inside — they are part of a generation facing an affordability crisis, and $100,000 is no longer what it used to be.

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Some millennials feel that their six-figure paychecks are stretching thin.

As Melkorka Licea reported for the New York Post in October, they are known as "Henrys." The acronym — short for "high earner, not rich yet" — was invented by Shawn Tully in a 2003 Fortune magazine article and has come to characterize a certain group of six-figure earners who are mostly millennials, Licea wrote.

According to the experts, the typical Henry earns over $100,000, is in their early 30s, and struggles to balance their spending and savings habits. As a result, they're behind in wealth-building and are not inching closer to their financial goals.

Their comfortable, if not lavish, lifestyle is partially to blame for feeling broke — but so too is an economy that seems good but has a lot of tensions bubbling under its surface.

High-earning millennials fall victim to lifestyle creep

One of a Henry millennial's biggest financial issues is that they typically live above their means and fall victim to lifestyle creep, Gideon Drucker, a certified financial planner at Drucker Wealth and the author of the upcoming book "How to Avoid H.E.N.R.Y. Syndrome," previously told Business Insider.

Lifestyle creep occurs when one increases their standard of living to match a rise in their discretionary income. But just because a Henry's income keeps going up doesn't mean they have to spend more money, Drucker said. In fact, they shouldn't spend more. If they get used to living off $3,000 or $4,000 a month, they might wake up a decade later and find they're spending $10,000 a month, he added.

"Henrys" like a comfortable lifestyle. Edward Berthelot/Getty Images

Licea spoke to several Henrys with expensive habits, like staying at luxury hotels, taking international vacations, owning and/or renting two homes, and signing up for ClassPass, a gym pass that can cost as much as $180 a month.

Henrys won't sacrifice this lifestyle, according to Licea, even if it requires budgeting in other areas: They'll shop at budget stores like Forever 21 or TJ Maxx and vacation using credit-card points if it means more money for travel.

These lifestyle choices contradict one of the golden rules of experts; avoiding lifestyle creep is a key way to build wealth. But there are forces beyond a Henry's control that are also holding them back financially.

Millennials are facing an affordability crisis

The economy may seem like it's riding a high right now — the stock market has rallied since fears of an impending recession abounded last year, and the US unemployment rate has maintained its half-century low of 3.5%.

But that doesn't paint the whole picture. It ignores that income increases simply have not kept up with an exponential increase in living costs.

Consider this: A SuperMoney analysis last year found that income for young adults grew by just $29, adjusted for inflation, from 1974 to 2017. Meanwhile, the median price of a home has increased by 39%, and national healthcare costs per person have increased by $9,000 since 1970.

The cost of education has also more than doubled since then, leading students to borrow more than ever. The national total student-loan debt is now a record $1.5 trillion, and the average student debt per 2018 graduate who took out student loans was $29,800.

Henrys are also dealing with student-loan debt. 10'000 Hours/Getty Images

Even though Henrys typically have high-paying jobs, those who took on student loans to get them owe about $50,000 more than the national average. Priya Malani, the founder of Stash Wealth, a financial firm that bills itself as "Home of the Henrys," previously told Business Insider that 40% of her clients had student loans — they owe $80,000 on average.

It's all a bad formula for a generation that's already financially behind from the Great Recession. Older millennials got a rough start in the job market and were left playing financial catch-up. Younger millennials watched the financial crisis unfold and became more cautious and risk-averse with their money.

Studies have found that millennials are the most financially conservative generation since the Great Depression and that most are wary of investing. So even if the stock market is good, it's likely that millennials are still scared to put their money in it and are thereby missing an opportunity to build wealth.

$100,000 isn't 'rich'

As living costs surpass income increases, a six-figure salary is no longer what it used to be. In today's economy, $100,000 is considered middle class in the US.

The Pew Research Center defines the US middle class as people earning two-thirds to twice the median household income, which was $60,336 in 2016. That means middle-class American households were earning about $40,425 to $120,672 that year.

It helps explain why a 2019 Insider and Morning Consult survey found that 38% of millennials earning $100,000 or more a year thought they were middle class. About 23% thought they were in the upper middle class, and only 6% thought they were affluent.

Henrys tend to live in areas with a high cost of living. Edward Berthelot/Getty Images

A family in the US needs an annual income of $421,926 to be in the top 1% of earners. But the minimum income needed to be in the top 1% varies by state, ranging from $255,000 in Arkansas to more than $700,000 in Connecticut.

It all comes down to location — where a person lives affects how far their dollar stretches, how much they're taxed, and how they're influenced by their peers. And while Henrys can live anywhere, Malani, who has worked with clients across 32 states, said they're predominantly in states home to cities with a notoriously high cost of living, like New York, California, and Washington, DC.

For millennials who feel broke despite making six-figure salaries, the situation is affected by internal and external factors. Since $100,000 doesn't go as far as it once did, they need to be picky when allocating their money. Learning how to balance living for the now and setting money aside for the future will indeed mean they have less cash to burn, which can contribute to feeling broke.

But these same millennials are also dealing with economic circumstances beyond their control, highlighting the consequences that have largely affected their generation as a whole. Even with careful personal spending habits, that $100,000 salary does seem a lot smaller in the scheme of today's higher cost of living, an astronomical student-debt load, and the ongoing fallout from the recession.