Why 90% of Indians Struggle With Money (Even High Earners)

DISCLAIMER

This blog post is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or professional consultation. The author and publisher are not registered financial advisors, and readers should consult qualified professionals for personalized financial guidance. All examples and statistics mentioned are for illustrative purposes. Individual financial situations vary, and past performance or general trends do not guarantee future results. Readers are solely responsible for their financial decisions.

Introduction: The Uncomfortable Truth

You probably know someone earning ₹15 lakh per year who’s always broke by month-end. In fact, you might even be that person.

Meanwhile, your neighbor earning ₹8 lakh somehow owns a house, has investments, and sleeps peacefully at night.

What’s happening here?

The answer isn’t about how much you earn. Instead, it’s about something far more fundamental that nobody talks about—and it’s keeping 90% of Indians trapped in a cycle of financial stress, regardless of their income.

Let me show you exactly why this happens and what you can do about it.

The Shocking Reality: High Income Does Not Equal Financial Security

Let’s start with hard facts:

According to various financial literacy surveys conducted in India, 76% of salaried Indians live paycheck to paycheck. Moreover, only 27% have an emergency fund covering 3 months of expenses. Additionally, over 60% of households earning ₹10 lakh or more annually carry high-interest debt. Finally, less than 10% of Indians have any form of retirement planning beyond EPF.

Translation? Even doctors, engineers, chartered accountants, and IT professionals making ₹20-30 lakh per year are one medical emergency away from financial crisis.

Why This Matters to You

If you’re reading this, chances are you fall into one of these categories:

You earn well but have nothing to show for it. Alternatively, your salary increases, but so do your expenses. Perhaps you feel stuck in the “earn-spend-repeat” loop. Or maybe you know you should save and invest but never get around to it.

You’re not alone. Furthermore, you’re not broken.

The system was never designed to teach you how money actually works.

Reason #1: We’re Never Taught How Money Actually Works

The Education Gap

Think about your entire education journey. During 12 years of school, you learned algebra, history, and literature. Then, over 3-4 years of college, you specialized in engineering, medicine, or commerce. Throughout this time, you spent countless hours on derivatives, organic chemistry, and Shakespearean sonnets.

However, the hours spent learning about money, budgeting, investing, and taxes? Zero.

The Real-World Shock

Then suddenly at 22-23, you get your first salary and you’re expected to know how much to save, where to invest, how loans work, tax planning strategies, insurance needs, and retirement planning requirements.

Nobody taught us these essential skills. Consequently, we learn from our parents who learned in a completely different economic era, friends who are equally clueless, bank relationship managers who have sales targets, or social media “experts” who profit from our clicks.

The Consequence

Without proper financial education, we make decisions based on emotions, trends, and peer pressure instead of logic and planning.

For example, consider Raj who earns ₹12 lakh per year. His colleague buys a car. Therefore, Raj thinks, “If he can afford it, so can I” and takes a ₹8 lakh loan. Unfortunately, nobody told him this ₹15,000 EMI would consume 15% of his take-home salary for 5 years.

Reason #2: Lifestyle Inflation is Killing Us Silently

What is Lifestyle Inflation?

Simply put, lifestyle inflation means that as your income increases, your expenses increase proportionally or even faster.

The Trap in Action

At ₹5 lakh per year, you rented a 1BHK in the suburbs, used public transport, ate homemade lunch, took annual budget vacations, and saved ₹8,000 per month.

However, at ₹12 lakh per year after 4 years, you rented a 2BHK in a better area, started paying bike EMI, ordered regularly from Swiggy or Zomato, dined out on weekends, subscribed to 5 or more OTT platforms, upgraded your phone and gadgets, aspired for international vacations, yet saved only ₹10,000 per month.

In other words, your income doubled, but your savings increased only 25%.

Why This Happens

Our brains are wired to seek status and comfort. As a result, each salary hike triggers thoughts like “I deserve this after working so hard,” “Everyone at my level has this,” or “I’ll start saving seriously from next hike.”

The Mathematics of Lifestyle Inflation

Let’s compare two people over 10 years.

Person A increases expenses with every raise, saves 10-15% throughout their career, and after 10 years has decent savings with moderate investments.

In contrast, Person B keeps expenses relatively stable, saves 30-40% throughout their career, and after 10 years is significantly wealthier and on the path to financial freedom.

Same income. Completely different financial future.

Reason #3: EMI Culture Has Normalized Debt

The New Normal

Walk into any Indian household earning ₹8 lakh or more, and you’ll likely find home loan EMI, car loan EMI, personal loan EMI, credit card outstanding, and “zero cost” EMI purchases.

Often, the total EMI burden reaches 40-60% of take-home salary.

How We Got Here

Banks and NBFCs are brilliant at marketing. They advertise “Own your dream home for just ₹20,000 per month,” though they don’t mention the ₹50 lakh total interest over 20 years. Similarly, they promote “Drive home your dream car today, pay later,” despite it being a depreciating asset funded at 9-12% interest. Furthermore, they offer “Zero cost EMI on iPhone,” even though the price is inflated to cover interest.

The Psychological Trick

EMIs make large purchases feel affordable by breaking them into “small monthly payments.”

A ₹10 lakh car sounds expensive. However, ₹15,000 per month for 7 years sounds manageable.

Nevertheless, you end up paying ₹12.6 lakh total. Additionally, your cash flow is locked for 7 years.

The Real Cost: A Case Study

Consider Amit, age 28, with a salary of ₹10 lakh per year resulting in ₹58,000 take-home per month. He pays ₹22,000 for home loan EMI, ₹12,000 for car loan EMI, ₹8,000 for personal loan EMI, and ₹5,000 for credit card minimum due.

His total EMI is ₹47,000, which represents 81% of his salary. Consequently, he has only ₹11,000 left for everything else.

Amit earns well. However, he’s trapped. One job loss and his entire financial life collapses.

Reason #4: We Confuse Income With Wealth

The Critical Difference

Income equals money coming in, whereas wealth equals money you keep and grow.

You can have high income and zero wealth. Conversely, you can have moderate income and build significant wealth.

The Salary Trap

Most Indians measure success by salary. They say “He earns ₹20 lakh per year, he’s doing great!” or “I got a 15% hike, I’m successful!”

But nobody asks how much he saves, what’s his net worth, or whether he owns assets or liabilities.

Real Wealth Indicators

Poor indicators of wealth include salary package, the car you drive, the area you live in, and branded clothes.

In contrast, actual indicators of wealth include net worth (assets minus liabilities), passive income sources, emergency fund size, debt-to-income ratio, and investment portfolio value.

Eye-Opening Example

Priya earns ₹18 lakh per year, drives an Audi, and lives in a posh apartment. Yet her net worth is negative ₹15 lakh due to heavy loans.

Meanwhile, Suresh earns ₹12 lakh per year, rides a bike, and lives modestly. His net worth is ₹35 lakh from investments and property.

Who’s wealthier? Suresh, by ₹50 lakh.

Reason #5: Instant Gratification Over Delayed Satisfaction

The Marshmallow Test Applied to Money

A famous psychology experiment showed that kids who could delay eating a marshmallow for a bigger reward later had better life outcomes.

Similarly, adults face the same test daily.

Option A is instant: Buy a new iPhone on EMI today. Option B requires delay: Save ₹10,000 per month for 8 months, then buy with cash.

Most choose option A because the psychological satisfaction of immediate ownership overpowers logical thinking.

Why This Matters

Compound interest, the most powerful wealth-building force, requires time and patience.

For instance, ₹10,000 per month invested at 12% annual returns grows to ₹8.17 lakh after 5 years, ₹23.23 lakh after 10 years, ₹99.91 lakh after 20 years, and ₹3.52 crore after 30 years.

However, you must start and stay consistent.

The Social Media Effect

Instagram and Facebook feeds are filled with friends’ vacation photos, new car posts, restaurant check-ins, and shopping hauls.

This creates constant FOMO (Fear of Missing Out), pushing us toward instant spending decisions.

Reality check: Most of those people are either in debt or their parents funded it.

Reason #6: No Clear Financial Goals

The Directionless Money Flow

Ask yourself honestly: What’s my financial goal for the next 5 years? How much do I need for retirement? When do I want to be debt-free? What’s my wealth target?

Most people respond: “Umm, save more? Invest somewhere?”

Without specific goals, money just flows randomly.

The Power of Specific Goals

Vague goals sound like “I want to save money.” In contrast, specific goals state “I will save ₹15 lakh for house down payment in 3 years by investing ₹40,000 per month in equity mutual funds.”

Similarly, vague goals say “I should invest,” whereas specific goals declare “I will build ₹5 crore retirement corpus by age 55 through monthly SIPs.”

Why Goals Matter

With goals, you know exactly how much to save. Furthermore, you can choose right investment instruments, have motivation to resist temptations, and can track progress.

Without goals, money gets spent on random things. Additionally, there’s no urgency to save or invest, retirement planning never happens, and financial stress continues.

Reason #7: Following the Herd Without Questioning

The Social Pressure Spiral

Indian society has unspoken financial “milestones”: Get married at age 25-28, buy a house at age 28-30, buy a car and have a kid at age 30-32, then upgrade house and car at age 35.

Nobody asks: Can you actually afford these? Do you even want them?

Real Conversations I’ve Heard

“Everyone’s buying property, so I took a home loan” without checking if it makes financial sense for their situation.

“My friends are investing in crypto, I should too” without understanding the risk.

“If I don’t buy a car now, what will people think?” leading to an ego-driven ₹8 lakh loan.

The Cost of Following

When you make financial decisions based on what others are doing rather than your own situation, you take unnecessary loans. Moreover, you invest in things you don’t understand and sacrifice your goals for social validation.

Reason #8: The Tax-Saving Panic

The March Madness

Every January through March, employees panic about tax saving. Consequently, insurance agents make most of their sales, and bad investment products get sold.

Why? Because we treat tax saving as a last-minute emergency instead of year-round planning.

The Wrong Products Sold

In the rush to save tax, people buy traditional insurance plans that mix insurance and investment badly, ULIP schemes with high charges and poor returns, fixed deposits with lowest returns, or whatever the chartered accountant or agent pushes.

A better approach involves strategic tax planning across the year with instruments that actually build wealth.

Reason #9: No Emergency Fund

The One Crisis Away Problem

Statistics show that over 70% of Indian households have no emergency fund.

What this means: Medical emergencies lead to credit card debt, job loss results in loan default, and vehicle breakdown forces personal loans.

The Domino Effect

Without an emergency fund, unexpected expenses force you to borrow at high interest. Then, added EMIs leave less money for savings. Subsequently, another emergency leads to more borrowing, creating a debt spiral.

In contrast, with an emergency fund, you use it for unexpected expenses, handle situations stress-free, rebuild the fund gradually, and maintain financial stability.

How Much Do You Need?

The bare minimum is 3 months of expenses. A comfortable amount covers 6 months of expenses. Ideally, you should have 12 months of expenses saved.

For ₹40,000 monthly expenses, the minimum is ₹1.2 lakh, comfortable is ₹2.4 lakh, and ideal is ₹4.8 lakh.

Keep this money in high-liquidity instruments like savings accounts, liquid funds, or short-term fixed deposits.

Reason #10: Believing Money Will “Automatically Work Out”

The Magical Thinking

Common thoughts include “I’ll start saving seriously from next year,” “Once I get my next hike, I’ll invest properly,” “I’m young, I have time,” and “Things will work out somehow.”

Reality: They won’t. Not without intentional action.

The Time Cost

Starting a SIP at age 25 versus 35 makes a massive difference. With ₹10,000 per month at 12% returns, starting at 25 and retiring at 60 means 35 years of investing ₹42 lakh total, resulting in a corpus of ₹6.45 crore.

However, starting at 35 and retiring at 60 means only 25 years of investing ₹30 lakh total, resulting in just ₹1.89 crore.

Therefore, a 10-year delay costs ₹4.56 crore.

How to Break Free: The Action Plan

Step 1: Get Financially Educated Starting Today

Read books like “Rich Dad Poor Dad” and “The Psychology of Money.” Additionally, explore official government resources such as RBI Financial Education and SEBI Investor Education. Furthermore, use credible financial literacy platforms.

Commit 30 minutes daily for 3 months to build a financial literacy foundation.

Step 2: Calculate Your Current Financial Position

Do this exercise right now. First, list all income sources including salary, freelancing, and rental income. Next, list all monthly expenses using bank statements. Then, list all assets such as savings, investments, and property. After that, list all liabilities including loans and credit card dues. Finally, calculate net worth by subtracting liabilities from assets.

This is your starting point. Remember, you can’t improve what you don’t measure.

Step 3: Create Your Budget

Use the simple 50-30-20 rule that works effectively. Allocate 50% to needs like rent, groceries, utilities, EMIs, and insurance. Then, assign 30% to wants such as dining, entertainment, shopping, and hobbies. Finally, dedicate 20% to savings and investments as non-negotiable.

Adjust based on your situation, but always save first, then spend later.

Step 4: Build Emergency Fund as Priority Number One

Follow this action plan: First, open a separate savings account. Next, calculate 6 months of expenses. Then, automate transfer on salary day. Most importantly, don’t touch it unless there’s a real emergency.

Timeline: 6-12 months to fully fund.

Step 5: Eliminate High-Interest Debt

Follow this priority order: First, attack credit card debt with 18-42% interest. Next, tackle personal loans at 10-18% interest. Then, address car loans at 8-12% interest. Finally, handle home loans at 8-9% interest as the lowest priority.

Use either the debt avalanche method targeting highest interest first or the snowball method starting with smallest amount first.

Step 6: Set SMART Financial Goals

Use this example format for your goal. Specify “House down payment” as the goal, ₹15 lakh as amount needed, 3 years as timeline, ₹40,000 per month as required saving, and equity mutual funds SIP as investment vehicle.

Write down your 5-year goals, 10-year goals, and retirement goals.

Step 7: Start Investing Even With Small Amounts

The best time to start was 10 years ago. However, the second best time is today.

For beginners, start with ₹500-1000 per month SIP in index funds. Subsequently, increase with every salary hike. Most importantly, stay consistent and don’t stop during market downturns.

Remember: Learn before investing. Don’t follow tips blindly.

Step 8: Automate Your Finances

Set up auto-debits on salary day for emergency fund transfer, SIP investments, insurance premiums, and loan prepayments.

Benefit: “Pay yourself first” becomes automatic, requiring no willpower.

Step 9: Review Quarterly

Every 3 months, check expenses versus budget. Additionally, review investment performance, adjust goals if needed, and celebrate small wins.

Step 10: Get Professional Help When Needed

Consider fee-only financial planners for tax planning, retirement planning, complex investment decisions, and estate planning.

Avoid commission-based advisors who push specific products.

The Mindset Shift Required

From Old Thinking to New Thinking

Change from “I earn well, I’m doing fine” to “My net worth determines my financial health.”

Shift from “I’ll save what’s left after expenses” to “I’ll spend what’s left after saving.”

Transform from “EMI makes it affordable” to “If I need EMI, I can’t afford it.”

Move from “I deserve this purchase” to “Does this align with my financial goals?”

Progress from “I’m too young to think about retirement” to “Starting early is my biggest advantage.”

Evolve from “Investing is risky” to “Not investing is the biggest risk.”

Common Excuses And Why They’re Wrong

“My salary is too low to save”

Truth: It’s not about amount, it’s about percentage. Someone saving 20% of ₹30,000 is doing better than someone saving 5% of ₹1 lakh.

“I have family responsibilities”

Truth: That’s exactly why you need to be financially secure. Your family depends on you.

“I’ll start after buying house, car, or getting married”

Truth: There will always be another goal. Start now, adjust later.

“Market is too high or too low right now”

Truth: Time in the market beats timing the market. Start SIP and maintain consistency.

“I don’t understand investing”

Truth: You don’t need to be an expert. Basic financial literacy is enough to start.

Real Success Stories: Changed Mindset Equals Changed Life

Case 1: Reshma, 32, Software Engineer

Before making changes, she earned ₹15 lakh per year but saved only ₹5,000 per month. Additionally, she carried ₹8 lakh in car and personal loan debt, resulting in negative net worth.

After 3 years of financial discipline, her salary grew to ₹20 lakh per year through normal progression. Moreover, she now saves ₹50,000 per month, eliminated all debt, built a net worth of ₹22 lakh, and maintains a ₹3 lakh emergency fund.

What changed? Her mindset, budgeting approach, and consistent execution.

Case 2: Vikram, 28, Marketing Professional

Before transformation, he earned ₹8 lakh per year while living paycheck to paycheck. Furthermore, he had no investments and carried ₹1.2 lakh in credit card debt.

After 2 years, his salary increased to ₹10 lakh per year. Meanwhile, he eliminated all credit card debt, started a ₹15,000 per month SIP, built a portfolio worth ₹4.2 lakh, and established a ₹1.5 lakh emergency fund.

What changed? He stopped lifestyle inflation and automated his savings.

Final Thoughts: Your Money, Your Rules

The reason 90% of Indians struggle with money isn’t because they’re bad with numbers or lack intelligence.

Rather, it’s because nobody taught us, society pressures us, marketing manipulates us, and we never questioned the system.

However, here’s the empowering truth: You can change this starting today. Moreover, you don’t need to earn more to start winning with money. Furthermore, small, consistent actions compound into massive results. Finally, financial freedom is achievable for anyone willing to learn and act.

The question isn’t whether you can do it. Instead, the question is: Will you do it?

Take Action Today

Don’t let this be another article you read and forget.

Pick one action from this list and do it in the next 24 hours:

Calculate your current net worth. Open a separate savings account for emergency fund. Start a ₹500 per month SIP in any index fund. List all your debts and interest rates. Create a simple budget for this month. Read the first chapter of “The Psychology of Money.” Unsubscribe from shopping app notifications. Calculate how much you need for retirement.

Financial transformation doesn’t happen overnight. However, it does happen when you take the first step.

That first step is today.

Frequently Asked Questions

Question: I’m already in debt. Is it too late?

Answer: Absolutely not. Many people have turned around worse situations. Focus on these steps: First, stop taking new debt. Second, build a small emergency fund of ₹25,000-50,000. Third, attack highest-interest debt aggressively. Finally, once debt-free, redirect that money to investments.

Question: How much should I save every month?

Answer: Minimum 20% of income. Ideally 30-40% if you want to achieve financial independence early. Nevertheless, even 10% consistently is better than nothing.

Question: Should I invest in stocks or mutual funds?

Answer: For beginners, choose mutual funds, specifically low-cost index funds via SIP. They provide diversification and professional management. Meanwhile, learn about stocks while your mutual fund SIPs run.

Question: Can I prepay my home loan or invest that money?

Answer: If your home loan interest is 8-9% and you can earn 12% or more from equity investments over the long term, mathematically investing wins. However, if debt stresses you, prepaying gives psychological peace. Both are valid choices.

Question: How do I stay motivated?

Answer: Follow these strategies: Set specific goals with deadlines, track progress monthly, join financial communities, celebrate milestones, and remember your “why” such as freedom, security, and your family’s future.

Additional Resources

Recommended Learning Sources

Books

“Rich Dad Poor Dad” by Robert Kiyosaki, “The Psychology of Money” by Morgan Housel, and “Let’s Talk Money” by Monika Halan provide Indian context.

Official Government and Regulatory Resources

RBI Financial Education serves as Reserve Bank of India’s official financial literacy portal. Similarly, SEBI Investor Education offers Securities and Exchange Board of India’s investor awareness initiatives. Additionally, NCFE India represents the National Centre for Financial Education as a government initiative. Furthermore, MyMoney Portal operates as Ministry of Finance’s financial education platform.

Credible Educational Platforms

NSE Academy provides National Stock Exchange educational resources. Likewise, BSE Institute offers Bombay Stock Exchange learning center materials. Moreover, NISM (National Institute of Securities Markets) functions as SEBI’s education arm.

Important Note: This blog does not endorse or promote any individual influencers, social media personalities, or unregistered financial advisors. For personalized financial advice, always consult SEBI-registered investment advisors or certified financial planners. Be cautious of “get rich quick” schemes, guaranteed return promises, and tips from unverified sources on social media.

About This Blog

This blog is dedicated to spreading financial awareness and literacy among Indians. Our mission is to provide accurate, actionable, and accessible information to help you make informed financial decisions.

We believe financial freedom is a right, not a privilege, and it starts with education.

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