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Meet the 'hand-to-mouth' wealthy

Do you live a life of luxury without saving a dime? You may be a High-Beta Rich HENRY.

By Money Staff Mar 25, 2014 1:28PM

This post comes from Robert Frank at partner cite CNBC.

Some call them HENRYs -- High Earners Not Yet Rich. Others call them the Faux Riche -- people who look rich but aren't.

Wealthy couple celebrating in a car © Image Source/Getty ImagesIn my last book, I called them the High-Beta Rich, a new class of wealthy whose spending and wealth fluctuate wildly with markets.

A new paper (.pdf file) calls them the "hand-to-mouth" wealthy. And it says there are 70 million such households in the U.S., suggesting that wealth today is far more precarious than many people think.

The paper -- by economists Greg Kaplan, Giovanni L. Violante and Justin Weidner -- says these families often own homes, cars and boats, spending virtually all of their paychecks.

The high costs of college and other bills have made many wealthy families feel more vulnerable to economic shocks, especially when their wealth is tied up in illiquid assets.

"The wealthy 'hand-to-mouth' are households who hold little or no liquid wealth (cash, checking and savings accounts), despite owning sizable amounts of illiquid assets," the study says.

The paper says that when governments create stimulus programs, they target the poor. But they might do well to target the hand-to-mouth wealthy as well, since they too are likely to spend the extra money and help the economy.

More from CNBC

Mar 25, 2014 1:56PM
These are the idiots that we are going to be forced to take care of when they get old. Instead of saving anything they spend it all. When they can't work anymore they will come crying to us to support them in their old age. 
Well I haven't done without my entire life, so that I could put away a stash of cash, just so these jerks could come along and get the government to take my money away to support them. Screw them. I hope they end up in their car like I was. No one came along and saved me. Difference was that I did this in my youth while I still had plenty of time to recover.
Go ahead and piss all your money away. Just don't come begging me for something when you run out.
Mar 25, 2014 4:59PM
This isn't anything new.  Many of the folks that are perceived to be wealthy really aren't, and it's been that way for centuries.   An asset really isn't an asset unless you own actually own it.  And even then, its value fluctuates quite a bit.  So you own an $80k boat - great, how much could you sell it for tomorrow if you had to?   

People who are truly wealthy don't live beyond their means and they aren't one or two missed paychecks away from financial disaster.
Mar 25, 2014 3:53PM
Most people live at 108% of income. That's not surprising because that's what our government does? Leadership by example!
Mar 25, 2014 2:10PM
I suppose many newly rich families will find this article helpful for solving their dire financial problems. Otherwise there is no discernible reason for its publication.
Mar 25, 2014 1:49PM
My net assets are nearly 2 million, but my income from investments and municipals is 40000.  And that is barely enough.  If the GOP did infrastructure investing, our economy could boom and stocks would go up, I could sell and have more liquid income.  I am fortunate, I have been poor, no place to live for several years during my college years, sleeping on sofas, showering at the gym.  But I don't compare myself to the gutter, I compare myself to what would allow me to live comfortably, not extravagantly, but comfortably.  And low interest rates are good, but not for fixed income people.  There has to be a balance.
Mar 25, 2014 5:03PM
I don't care how they live and what they do with their money. If you want to blame somebody, blame the Fed. They've lowered the lending rates to nearly zero to punish those who save and encourage others to spend lavishly and speculate in the stock market. Similar they punish the hardworking taxpayers and reward the lazy uneducated bums. Now the rich has gotten richer and the liberals open their mouths and complain how income inequality has gotten wider. Even my home value has gone up 30% over the last few years. This income inequality is going to get wider as our technology improves because menial jobs like stocking shelves and punching cash registers and waiting tables will soon disappear. Remember the gas station attendants who used to fill up your gas tank about 15 years ago? Alright let the thumbs down begin! Take it easy on me. I'm just a messenger who speaks the truth.
Mar 25, 2014 4:15PM
Now wait just a minute!  The other day I saw a post that said the "rich" had more money than they could ever spend and that the "rich" weren't paying their fair share of taxes.  Now this article claims there are 70 million "rich" that can be said to be living a "hand-to-mouth" existence.

Hmmmmmm . . . I guess the world is not as black and white as many would believe.
Mar 25, 2014 7:15PM
This is so ludicrous, I'm sure this was written purely to incite a lot of impassioned negative comments. So don't give it to them. I don't think there's anything here that needs refuting because it's all so stupid.
Mar 26, 2014 12:56PM
what ???
gee give me a break this is just totally stupid article

Better article would be starving children across America need more money so they will not starve do not give very well paid people money as they obviously can not handle the money they do get.
Another elitist idea

Mar 26, 2014 1:13PM
i don't want to be rich-------i only want to live like i am   lol !
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