Middle-class dilemma: Is your lifestyle eating up your Rs 20 lakh salary? Expert unpacks urban woes
Earning Rs 20 lakh per annum may sound impressive, but India’s urban middle class is battling high living costs that leave little room for savings. Experts warn that rising expenses and lifestyle inflation are turning once-coveted salaries into a struggle for financial security.
- Jul 10, 2025,
- Updated Jul 10, 2025 5:20 PM IST
The allure of a Rs 20 lakh per annum salary in India has long been seen as a symbol of success and financial security. But for many urban professionals, the harsh reality is sinking in: such a package barely qualifies as middle class, let alone “rich.”
“The perception that Rs 20 lakh CTC makes you wealthy is largely an illusion,” said CA Nitin Kaushik, a chartered accountant and financial advisor. “Once you factor in taxes, PF contributions, and other deductions, the in-hand salary shrinks to about Rs 1.25 lakh per month. In metro cities, that money evaporates fast.”
Kaushik broke down the typical expenses facing an urban professional earning Rs 20 lakh a year. “A decent one- or two-bedroom apartment in a metro easily costs Rs 40,000 a month in rent. A car EMI can set you back another Rs 25,000. Monthly household expenses, including groceries, utilities, fuel, and dining out, often hover around Rs 30,000,” he explained.
Beyond these basics, there’s the unavoidable digital life cost — phone bills, OTT subscriptions, and EMIs for gadgets — adding another ₹5,000 monthly. Unplanned expenses like gifts, social outings, or sudden bills consume an extra Rs 5,000.
“That’s already Rs 1.05 lakh to Rs 1.10 lakh gone every month,” Kaushik noted. “At best, you’re left with Rs 15,000 to Rs 20,000 to save or invest — and that’s if you resist lifestyle creep.”
He emphasised that Rs 20 lakh per annum is neither poverty nor financial freedom. “It’s enough for a reasonable lifestyle, but you’re far from being wealthy or financially free. The real challenge is maintaining savings while coping with rising living costs,” Kaushik said.
| Rent | 40,000 | Decent 1-2 BHK in a metro city |
| Car EMI | 25,000 | Basic sedan or compact SUV |
| Monthly Expenses (groceries, etc.) | 30,000 | Groceries, utilities, fuel, dining, basic needs |
| Phone/OTT/Subscriptions/EMIs | 5,000 | Minimal digital life cost |
| Untracked Spending | 5,000 | Gifts, outings, sudden bills |
| Total Fixed Monthly Outflow | 1,05,000 - 1,10,000 | |
|---|---|---|
| Remaining for Savings/Investment | 15,000 - 20,000 | If lifestyle inflation is controlled |
Kaushik advised young professionals to avoid the trap of equating high income with financial stability. “Your income means nothing if your lifestyle eats it all. It’s not about how much you earn; it’s about how much you keep and grow,” he stressed.
He recommended starting investments early, avoiding unnecessary EMIs, and focusing on skills that can propel professionals beyond this income ceiling. “Fancy CTC letters look great on paper, but they’re not a measure of financial success,” he said.
Kaushik warned that unless individuals manage their spending habits, even seemingly high salaries won’t secure long-term financial well-being. “In today’s India, being middle class doesn’t mean financial comfort—it means constant vigilance over your expenses,” he added.
As living costs in urban India continue to climb, the middle-class dream increasingly hinges on prudent financial choices rather than headline salaries alone.
The allure of a Rs 20 lakh per annum salary in India has long been seen as a symbol of success and financial security. But for many urban professionals, the harsh reality is sinking in: such a package barely qualifies as middle class, let alone “rich.”
“The perception that Rs 20 lakh CTC makes you wealthy is largely an illusion,” said CA Nitin Kaushik, a chartered accountant and financial advisor. “Once you factor in taxes, PF contributions, and other deductions, the in-hand salary shrinks to about Rs 1.25 lakh per month. In metro cities, that money evaporates fast.”
Kaushik broke down the typical expenses facing an urban professional earning Rs 20 lakh a year. “A decent one- or two-bedroom apartment in a metro easily costs Rs 40,000 a month in rent. A car EMI can set you back another Rs 25,000. Monthly household expenses, including groceries, utilities, fuel, and dining out, often hover around Rs 30,000,” he explained.
Beyond these basics, there’s the unavoidable digital life cost — phone bills, OTT subscriptions, and EMIs for gadgets — adding another ₹5,000 monthly. Unplanned expenses like gifts, social outings, or sudden bills consume an extra Rs 5,000.
“That’s already Rs 1.05 lakh to Rs 1.10 lakh gone every month,” Kaushik noted. “At best, you’re left with Rs 15,000 to Rs 20,000 to save or invest — and that’s if you resist lifestyle creep.”
He emphasised that Rs 20 lakh per annum is neither poverty nor financial freedom. “It’s enough for a reasonable lifestyle, but you’re far from being wealthy or financially free. The real challenge is maintaining savings while coping with rising living costs,” Kaushik said.
| Rent | 40,000 | Decent 1-2 BHK in a metro city |
| Car EMI | 25,000 | Basic sedan or compact SUV |
| Monthly Expenses (groceries, etc.) | 30,000 | Groceries, utilities, fuel, dining, basic needs |
| Phone/OTT/Subscriptions/EMIs | 5,000 | Minimal digital life cost |
| Untracked Spending | 5,000 | Gifts, outings, sudden bills |
| Total Fixed Monthly Outflow | 1,05,000 - 1,10,000 | |
|---|---|---|
| Remaining for Savings/Investment | 15,000 - 20,000 | If lifestyle inflation is controlled |
Kaushik advised young professionals to avoid the trap of equating high income with financial stability. “Your income means nothing if your lifestyle eats it all. It’s not about how much you earn; it’s about how much you keep and grow,” he stressed.
He recommended starting investments early, avoiding unnecessary EMIs, and focusing on skills that can propel professionals beyond this income ceiling. “Fancy CTC letters look great on paper, but they’re not a measure of financial success,” he said.
Kaushik warned that unless individuals manage their spending habits, even seemingly high salaries won’t secure long-term financial well-being. “In today’s India, being middle class doesn’t mean financial comfort—it means constant vigilance over your expenses,” he added.
As living costs in urban India continue to climb, the middle-class dream increasingly hinges on prudent financial choices rather than headline salaries alone.