For those hoping to become wealthy, a job with a high salary would seem to be a big step in the right direction. However, high income alone doesn’t guarantee a high net worth, and a growing number of high earners say they don’t see themselves as wealthy. Advisors call this group HENRYs: “High Earners, Not Rich Yet.”

Despite their large discretionary income, those in this cohort live a lifestyle in which saving and investing are not a priority. The money comes in and goes out, leaving their total net worth unaffected.

Stats from the Center for Retirement Research at Boston College reveal the problem: High earners, those making $150,000, to $283,000, are the least likely of all the income brackets to prioritize retirement planning—though retirement investing is a key component of building net worth. The center’s statistics reveal that 32% of high earners are not engaged with retirement planning in a significant way.

A high income without a comparable high net worth creates an illusion of affluence in young earners, so that the financial stability they should be feeling remains out of reach. Those who don’t understand and address the disconnect relinquish their potential to build their net worth and secure a financially secure future.

What Fuels The Affluence Illusion?
One of the problems is a high-consumption lifestyle. Consider the 50/30/20 rule—when 50% of income is set aside for living expenses, 30% for discretionary income and 20% for savings. This rule empowers anyone to build net worth by limiting consumption and contributing to savings. But when living expenses push past 50%, something has to give. Usually, that something is savings, and thus a more expensive lifestyle derails the process of building net worth.

A report by PYMNTS.com shows high earners struggle with the 50/30/20 rule, and that more than one-third of people earning more than $200,000 a year live paycheck to paycheck. Among those making $100,000 or more per year, the figure rises to 40%.

The site Financial Samurai, using data from a study on U.S. wealth distribution by economists Emmanuel Saez and Gabriel Zucman, suggests that the savings among today’s high earners are closer to 10% than 20%. Whereas the top 1% of earners save 38%, the remainder of the top 10% report saving only 12%. With the bottom 90%, the average percentage of income saved is only 4%.

Net Worth Suffers When Priorities Are Misplaced
Increasing your net worth requires setting priorities to value tomorrow’s needs over today’s wants, meaning savings and investing need to be as important (preferably far more important) as a newer car or another vacation.

You can tell by the way a client handles a pay increase how they maintain the illusion of affluence. If they use unexpected bonuses to fund spontaneous vacations or put pay increases toward higher lease payments on a newer car, a higher net worth will remain out of reach for them. Their net worth always suffers when depreciating assets are prioritized over tangible wealth.

An extra $600 spent on a car payment might not seem like much to someone bringing home $16,000 a month or more. But $600 per month deposited in an investment account earning a 7% return translates into more than $700,000 over 30 years. If 20% of a $16,000 monthly income is put into the same account, the end balance after 30 years is $3.7 million.

Some observers think social media has contributed to misplaced financial priorities. Your clients might like sharing their latest purchases on Instagram. It’s the modern equivalent of “keeping up with the Joneses.” Allianz Life reported in 2018 that 57% of respondents to a firm survey said they’d made a purchase they hadn’t planned to because of a report on social media. A Stackla survey found that 59% of consumers say that user-generated content is more authentic. The takeaway is that social media scrolling might allow your clients to increase their savings.

Having Difficult Conversations About Affluence
The most difficult conversation you can have with your clients as a financial advisor is the one about the affluence illusion and how they overcome it. Since retirement and savings are subjects that concern the future, something your clients aren’t thinking about, they’re easy subjects to blow off. “We’ll worry about that later,” is a common response from those who have made retirement planning a low priority and perhaps see a new car as a more immediate issue.

But advisors can make retirement planning more immediate to clients by showing them what happens if they continue to downplay savings and by making them wrestle with the outcomes. Your clients need someone who will challenge their ways of thinking about finances, especially when their priorities are blocking their potential for building net worth.

Aaron Cirksena is the founder and CEO of MDRN Capital, which offers a comprehensive range of services, including income planning, investment management, tax planning, healthcare planning and estate planning.