High-income earners in India and their ongoing financial woes: High-income individuals in India are experiencing being financially strapped despite their high salaries.
In urban India, the dream of a comfortable life on a ₹1 lakh monthly salary is fading. The rising costs of living, inflation, and currency depreciation have combined to erode the purchasing power of this once-aspirational income.
According to the 40-30-30 rule, in metros, 40% of income goes to housing, 30% to basic needs, and 30% to discretionary or savings. However, in today's urban landscape, there is less flexibility due to the increasing costs of essentials like rent, utilities, and groceries.
A recent study revealed that over 90% of urban respondents reported increased commodity prices, while less than 24% saw income growth. This stark contrast has led to many spending more despite no increase in salary.
Inflation and the rise in living costs are not the only culprits. The Indian rupee has steadily weakened against the US dollar, reaching lows near 87.8 per USD in mid-2025. This devaluation reduces the real value of incomes, particularly for goods and services linked to imports or global prices.
Moreover, India's large import surplus prevents large rupee depreciation, as it would worsen import costs, putting pressure on the domestic economy and limiting exchange rate policy options.
As a result, the definition of financial success in urban India is shifting. Financial success increasingly means achieving stable income growth that at least keeps pace with inflation, maintaining or growing disposable income after expenses and taxes. There is a stronger emphasis on diversifying income sources, acquiring assets that hedge inflation (like real estate, gold, or foreign investments), and securing real returns rather than nominal salary increases.
The goalpost has moved from just earning a certain salary to maintaining purchasing power and accumulating real wealth amid economic uncertainties and inflationary pressures. For instance, a ₹1 lakh income in 2013 was sufficient for rent and living expenses in most cities, but today it would require over ₹2 lakh to maintain the same lifestyle, given an average inflation rate of 6% per year.
To become financially un-stuck with a ₹1 lakh a month income, it is crucial to shift from spending to managing money strategically. The first steps are to save and invest at least 20-30% of income, set up an automated SIP, and have 4-6 months of expenses in an emergency fund.
However, financial anxiety is prevalent among middle-income urban millennials due to constant comparison with peers. This comparison-driven spending can lead to increased expenditures and financial lethargy.
In metros like Mumbai and Bengaluru, the cost of living has become extremely high. Rent alone can take up 30-50% of a take-home salary. Even before saving or investing, a person earning ₹1 lakh in Mumbai is left with only ₹27,500.
Lifestyle inflation is another significant factor. With an increase in income, spending patterns also change, leading to increased expenses. Avoiding the pressure of social media is crucial in achieving financial success, as it is not how much money you make that determines your financial status, but how much you keep, grow, and protect.
In today's world, financial success means having a savings and investment program, emergency fund, insurance protection, and manageable debt, with a focus on long-term wealth and peace of mind. A monthly budget for a person earning ₹1 lakh and living in Mumbai includes expenses for rent, utilities, groceries, transportation, subscriptions, clothing, miscellaneous expenses, and EMI or credit card dues.
In contrast, those earning ₹1 lakh in a Tier-2 city like Bhopal or Kochi may save more as rent may be less and there are fewer commuting costs and no lifestyle inflation. The continuous upgrading of lifestyle and increased expectations and expenditures keep people financially lethargic, despite being better off along the way.
It is important to be cognizant of "lifestyle" inflation and avoid unnecessary debt and wasteful spending. The figure of earning ₹1 lakh per month was previously seen as a symbol of success, but today it barely covers rent, groceries, and a few lifestyle comforts in urban India.
- In the realm of personal-finance and lifestyle, the ideal of a comfortable life on a ₹1 lakh monthly salary is diminishing in urban India.
- The escalating costs of living, inflation, and currency depreciation have collectively eroded the purchasing power of this once-aspirational income.
- The market scenario requires a shift in financial mindset, with an increased focus on investment, saving, and acquiring assets that hedge inflation.
- Defi, education-and-self-development, and business ventures are becoming crucial options for diversifying income sources.
- Health-and-wellness and mental-health are also factors to consider in the pursuit of financial success, as financial anxiety can impact one's overall well-being.
- Science and technology have opened doors to financial tools and resources that can help individuals manage their finances more effectively.
- Regardless of where one lives, be it metros like Mumbai or Bengaluru, or Tier-2 cities like Bhopal or Kochi, financial success boils down to smart money management, growth, and protection of wealth.
