High-earning individuals in India Find Themselves Struggling Financially Despite Six-Figure Incomes: A Look at the Mystery behind their Fiscal Woes
In the bustling metropolises of Mumbai and Bengaluru, a monthly salary of ₹1 lakh may seem like a significant achievement. However, the reality is far from rosy. The continuous upgrading of one's lifestyle with increased income, coupled with the comparison of one's lifestyle to others who earn more or portray more, keeps many financially lethargic despite being better off.
The decrease in the perceived value of a ₹1 lakh monthly salary in urban India is primarily due to lifestyle inflation and rising living costs in metropolitan areas. As income increases, people tend to upgrade their lifestyle—choosing better housing, premium services, frequent eating out, and more discretionary spending—which quickly absorbs the salary gains without creating a comfortable financial buffer. Additionally, inflation has eroded the purchasing power of ₹1 lakh compared to a decade ago, making basic expenses like rent, groceries, transportation, and bills take up a significant portion of income.
For instance, rent alone can consume ₹25,000, groceries ₹12,000, transportation ₹7,000, and bills around ₹3,500, leaving little room for savings or emergencies. This situation results in many feeling financially stretched despite a seemingly good salary.
Urban metro cities have high living costs that act as "financial pit holes," and constant comparison with peers or aspirational lifestyles only pressures individuals into increased spending, perpetuating a cycle without real wealth accumulation.
In this context, financial success today is defined not by nominal income but by disciplined financial habits, savings, and investments. Experts like Chartered Accountant Nitin Kaushik suggest that avoiding lifestyle inflation, tracking expenses, prioritizing investments like SIPs (Systematic Investment Plans), PPF (Public Provident Fund), and carefully planning for emergencies and retirement are key. Financial success means building a strong net worth over time through consistent saving and investing rather than spending increases in tandem with income.
A typical disciplined middle-class family in India could build wealth exceeding ₹1 crore in 10 years by following prudent financial strategies. The benefits like job security, health cover, and work-life balance (especially in Indian tech jobs) also contribute importantly to overall financial well-being beyond salary alone.
This shift reflects changing economic realities and priorities in urban India’s middle class as compared to previous decades. Salaries may increase annually by 6-8%, but purchasing power remains static or equivalent to a decrease. Essential living costs, such as food, fuel, healthcare, and education, have significantly increased in price.
It is important to avoid the pressure of social media and its portrayal of success as being solely about income, and instead focus on keeping, growing, and protecting one's wealth. The key to becoming financially un-stuck with a salary of ₹1 lakh a month is to shift from spending to managing money strategically, including saving and investing a significant portion of income, cutting down on wasteful expenditure, avoiding unnecessary debt, and consulting a financial advisor if needed.
A couple in Bangalore earning ₹2.4 lakh a month were only saving ₹15,000, illustrating the financial challenges in metros. Financial success today requires proper management of money for a comfortable lifestyle and financial security, including a savings and investment program, emergency fund, insurance protection, and manageable debt.
The salary of ₹1 lakh per month was once considered a symbol of success, but today it barely covers rent, groceries, and a few lifestyle comforts in urban India. Lifestyle inflation is a significant factor in why ₹1 lakh no longer feels like much money. Increased income often leads to increased spending. In Tier-2 cities like Bhopal or Kochi, a salary of ₹50,000 may result in more savings due to lower living costs and less lifestyle inflation.
Financial anxiety is prevalent among middle-income urban millennials due to constant comparison with peers. At ₹1 lakh/month, one falls into a financial situation where one is not enough to create wealth without discipline, but also not eligible for government support or assistance schemes. A monthly budget for a person earning ₹1 lakh in Mumbai includes expenses such as rent, utilities, groceries, daily use items, subscriptions, clothing, miscellaneous expenses, and EMI or credit card dues.
Inflation has eroded the purchasing power of ₹1 lakh. For example, ₹1 lakh in 2013 had the purchasing power of over ₹2 lakh today to maintain the same lifestyle. Even after accounting for these expenses, a person earning ₹1 lakh in Mumbai is left with only ₹27,500. The struggle to make ends meet in urban India's metros is a stark reminder of the importance of financial discipline and strategic money management.
- Urban metro cities, with high living costs, act as "financial pit holes," as people tend to upgrade their lifestyles, leaving little room for savings or emergencies.
- Experts suggest that financial success today is defined by disciplined financial habits, savings, and investments, like SIPs, PPF, and careful planning for emergencies and retirement.
- A typical disciplined middle-class family could build wealth exceeding ₹1 crore in 10 years by following prudent financial strategies in India.
- The salary of ₹1 lakh per month, once considered a symbol of success, barely covers rent, groceries, and a few lifestyle comforts in urban India due to lifestyle inflation.
- Financial anxiety is prevalent among middle-income urban millennials due to constant comparison with peers, and proper management of money for a comfortable lifestyle and financial security is crucial, including a savings and investment program, emergency fund, insurance protection, and manageable debt.
