Middle class faces a harsh reality: Savings alone won’t secure your future, says CA; know why

India’s middle class is confronting an uncomfortable truth — salary growth has virtually stalled. Over the past decade, wages have grown at a compound annual rate of just 0.4%, according to economists and financial commentators tracking income trends. For a population that has long equated steady jobs with upward mobility, this number underscores a deeper economic challenge.

Rising inflation, job automation, and shrinking global opportunities are quietly eroding real income. While aspirations have multiplied, purchasing power hasn’t kept pace. Essentials like housing, healthcare, and education have become costlier, while salary increments have failed to cover inflation. The result is a widening gap between what Indians earn and what they need to sustain the “middle-class lifestyle” once taken for granted.

Chartered Accountant Abhishek Walia explains the issue with a simple yet powerful insight: most Indians don’t realise they’re losing money even when they’re saving.

“A lot of people proudly say, ‘I save ₹10,000 every month.’ But what they don’t realise is that the value of that ₹10,000 drops every single year because of inflation,” says Walia.

India’s average inflation rate over the past few years has hovered around 5–6%, while most savings accounts earn just 2.5–3.5% interest. That means the real return on traditional savings is negative — money parked in the bank is effectively shrinking in value over time.

The illusion of safety in cash savings, Walia warns, has left many households financially stagnant. “You’re saving, yes, but technically your wealth is eroding every single year,” he says.

So what can India’s middle class do differently?

Experts recommend a shift from mere saving to strategic investing. The first step is maintaining an emergency fund — ideally three to six months of expenses — in a liquid fund or high-interest savings account for immediate needs. Beyond that, surplus income should be directed toward investments that beat inflation, such as equity mutual funds through Systematic Investment Plans (SIPs).

Even small SIPs can compound over time and help preserve real purchasing power. Automating these investments — much like fixed EMIs — ensures financial discipline and consistency.

“Saving is step one,” Walia concludes. “But it’s investing smartly that truly protects and grows your wealth.”

For India’s middle class, the message is clear: in an era of low salary growth and high inflation, the path to financial security lies not in how much you save, but in how wisely you invest.

The growing middle class

India’s middle class has become central to the country’s growth narrative as policymakers recognise the limits of trickle-down economics. Rising inequality, with the richest 1% capturing over one-fifth of national income, has highlighted the need for a stronger middle-out model in which broad consumer demand drives prosperity. The middle class fuels domestic consumption, supports tax revenues, and anchors economic stability through entrepreneurship and skilled employment. Although this segment is expanding and is projected to dominate the population by 2047, income growth remains uneven and household leverage is rising. Strengthening middle-class resilience is essential to secure sustainable, inclusive development in the decades ahead.