Meet the HIFIs: High-income earners who feel financially insecure but can’t quit their luxury spending

Although people under 40 are accumulating more wealth earlier in life than previous generations, 48% of Gen Zers and 59% of millennials say they feel behind financially, according to a Credit Karma survey of 1,006 US adults published in December.

That could be due to inflation keeping prices high, the cost of living skyrocketing in US cities, and the end of pandemic-era government cash infusions combined with student loan and credit card debt.

HIFIs are redefining spending norms at their own expense

Sherwood News reported that many HIFI consumers’ steep spending began during the pandemic. Stimulus checks provided young people with additional income, and, because people were staying home, they spent more money on online shopping instead of restaurants, recreation, or vacations.

The “buy now, pay later” feature on credit cards, Amazon, and other online platforms is fueling these shopping sprees, per a 2024 Adobe report. Shoppers feel like items are more affordable when they can pay in installments, according to the report.

Many Americans also haven’t cut back on their pandemic-era shopping habits — even as they renewed their social spending with the reopening of restaurants and vacation destinations.

Additionally, there are social reasons for HIFIs behavior: people want to feel rich.

Per a Schwab survey of 1,000 Americans in 2023, younger generations tend to measure their wealth in comparison to their peers. If a friend or social media personality owns something, Gen Zers and millennials don’t want to miss out.

Some will buy the same piece of expensive clothing item or accessory they see on celebrities or social media, while others will search for dupes.

In fact, millennials and Gen Zers were responsible for a 22% gain in luxury spending in 2022, according to a Bain & Co. report published in January 2023.

But for many, this spending culture isn’t sustainable.

HIFIs are increasingly facing an economic disconnect. Although they’re affluent, their income often isn’t enough to overcome luxury spending and the high costs of daily life.

Many HIFIs struggle to afford rising housing and food costs but still spend a sizable amount of their income on recreation and personal care. And, financial and fintech news firm Pymnts found in its February/March report that 36% of millennials in US cities making $200,000 or more a year are currently living paycheck to paycheck.

Are you a HIFI? Are you open to sharing how you fit recreation and luxury spending into your budget? If so, reach out to this reporter at allisonkelly@insider.com.