₹40,000/month myth: Financial advisor's reality check for NRIs underestimating India’s living costs

For many Indians working abroad, the idea of returning home often comes with a comforting assumption: that living costs in India remain far lower than in the West. But financial advisors say that assumption can lead to serious miscalculations — especially for families planning early retirement or relocation. 

A recent case shared by SEBI-registered investment advisor Vivek S G highlights the growing gap between perception and reality when it comes to the cost of living in India’s major cities. 

The ₹40,000 assumption 

According to Vivek, a 44-year-old senior professional based in Europe approached him recently to plan an early return to India within six months. The individual hoped to transition into consulting work after relocating with his wife and two children. 

However, during their initial discussion, the professional estimated that ₹40,000 per month would be sufficient to sustain his family in India. 

The advisor quickly challenged that assumption. 

“When I asked him about school fees in cities like Bengaluru or Mumbai, he guessed around ₹5,000–₹10,000 a month,” Vivek wrote in a post describing the conversation. 

The actual numbers were far higher. 

Education alone can exceed expectations 

Private schooling in major Indian cities has seen steep increases over the past decade. Vivek explained that a decent private school can cost ₹15,000-₹30,000 per month, while institutions following international boards can charge ₹50,000 per month or more. 

For families with two children, education expenses alone could therefore surpass the professional’s entire estimated monthly budget. 

Inflation is reshaping household budgets 

Beyond schooling, rising inflation in key sectors is reshaping everyday costs. 

According to Vivek, medical inflation in India is running at roughly 14%, while food inflation averages around 10%, both of which significantly impact household budgets over time. 

Even discretionary spending has shifted. A weekend dinner for two in a Tier-1 city can easily cost ₹2,000–₹4,000, highlighting the broader rise in urban lifestyle expenses. 

The real monthly cost 

Once the advisor and the returning professional recalculated expenses — factoring in schooling, healthcare, food, and other essentials — the estimated minimum monthly requirement came to about ₹1.5 lakh, nearly four times the original assumption. 

That single miscalculation, Vivek noted, meant the individual’s retirement corpus would need to be significantly revised. 

“He had lost touch with ground reality,” Vivek wrote, adding that many NRIs continue to plan for India “as it was, not as it is.” 

A common planning mistake 

Financial planners say such misjudgments are common among overseas Indians who have been away for many years and rely on outdated cost estimates shared by relatives or old experiences. 

With urban India experiencing rapid growth in education, healthcare, housing and lifestyle expenses, returning families often face a shock when translating global savings into Indian spending power. 

Three steps for NRIs planning a return 

Vivek advises expatriates planning their homecoming to reassess their financial assumptions before making the move. 

1. 1. Conduct a “lifestyle audit”: Evaluate current living standards — including schooling, healthcare, domestic help, food and entertainment — and research what maintaining a similar lifestyle costs in India today. 
2. 2. Recalculate retirement needs: Adjust financial plans assuming 8-10% long-term inflation and confirm whether projected income can sustain expected expenses. 
3. 3. Consult a fiduciary advisor: Professional guidance can help avoid unrealistic projections and ensure financial plans reflect current market conditions rather than outdated estimates. 

Planning for today’s India 

For many returning NRIs, India still offers a relatively lower cost of living compared to Western countries. However, the gap has narrowed significantly in major urban centres. 

Financial planners say the key takeaway is simple: homecoming plans must be built on present-day numbers, not past perceptions. As Vivek cautioned, the reality check should begin before booking the return ticket — not after arriving home.