A high annual pay may mean you are financially secure. But it doesn't mean you are financially sensible.

In Australia, an emerging group of high-income earners are finding themselves in a precarious financial situation. These individuals, known as HIFIs (high-income, financially insecure), earn well above average but are experiencing significant financial stress and insecurity.

Recent research by Finder reveals that a third (33 per cent) of Australians earning more than $100,000 annually are living pay day to pay day, with less than a month's salary saved.

This is a lower percentage than those earning $50,000-$100,000, 57 per cent of whom are in this category.

The fact that one third of high income earners are in this position, however, is a surprise. Worryingly, 8 per cent of these high-earners have no savings at all, leaving them vulnerable in case of emergencies.

Are you earning six-figures and still not coping? Contact yahoo.finance.au@yahooinc.com

Lavish lifestyle or cost of living? Why $100k+ wage doesn't cut it

This financial strain among high-income earners can be attributed to several potential factors, including a lavish lifestyle and the rising cost of living.

Lifestyle creep, where discretionary spending increases as income rises, may be particularly prevalent among younger Australians.

The pressure to maintain a certain lifestyle, driven by either TikTok and Instagram influencers or a high experience threshold, leads to higher spending on luxury items and experiences.

This research indicates that many Australians define wealth not just by their bank balance but by their ability to keep up with their peers.

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This mindset, combined with significant debts such as student loans and surging credit card balances, has left many high earners between a financial rock and a hard place.

Despite these financial challenges, spending among high-income Australians remains robust.

A report by Pymnts found that a similar proportion - 36 per cent - of urban American millennials earning over $200,000 per year live pay day to pay day, yet still allocate 28 per cent of their budget to recreation, personal care, and everyday expenses.

This suggests that while financial pressure is mounting, the desire for luxury and high-quality goods remains strong.

Retailers are adapting to this trend by offering more affordable luxury options.