A person with \u20b950 lakh annual salary, a BMW, a Gurgaon flat, and International vacations might sound like a success story; but this image of \u201crich on paper\u201d often means \u201cbroke in reality”, shared Priya Jain, a Sebi-registered research analyst, taking inspiration from her daily encounters.<\/p>\n
In a LinkedIn post, Jain explained how extravagant lifestyles and a lack of financial planning can lead to debt traps that plague high-earning professionals in India.<\/p>\n
Jain shared an analysis in which she detailed the life of a fictional person who earns \u20b950 lakh annually but carries a burden of \u20b960 lakh in loans.<\/p>\n
Instagram life vs bank account reality<\/p>\n
The case highlights the life of a character named Priya who works as a software engineer, drives a BMW, which she bought on EMI and owns an apartment in Gurgaon with a \u20b940 lakh loan.<\/p>\n
This person also maintains an active online presence, complete with Dubai vacation posts and over 10,000 LinkedIn followers.<\/p>\n
LinkedIn post<\/p>\n
Yet, their reality consists of a bunch of liabilities which come with living a \u201crich-on-paper\u201d life. Priya has \u20b960 lakh in total debt, monthly EMIs of \u20b985,000 and zero emergency fund<\/a>. She is living paycheck to paycheck and just one medical emergency away from bankruptcy, Jain said in her post.<\/p>\n “As a SEBI-registered research analyst, I meet these “rich-on-paper, broke-in-reality” people daily,” Jain noted.<\/p>\n Math leading to debt trap<\/p>\n Jain’s analysis reveals the illusion in the numbers. A \u20b950 lakh annual salary translates to roughly \u20b92.8 lakh take-home pay after taxes. The fixed monthly outflow is massive \u2014 \u20b985,000 in EMIs and \u20b950,000 in basic expenses, totalling \u20b91.35 lakh.<\/p>\n Also Read<\/strong> | Man fakes death to dodge \u20b91.40 crore debt \u2014 5 lessons to avoid debt trap<\/a><\/p>\n While this leaves the person with a \u20b91.45 lakh saving, this surplus is quickly consumed by the hidden costs of a luxury life, which include car maintenance, insurance and repairs, along with home maintenance and society fees. Medical expenses<\/a> and family emergencies also add up to the expenses from that surplus money. On top of these expenses, lifestyle inflation pressure also eats up savings.<\/p>\n The actual monthly savings left are often zero, Jain noted.<\/p>\n The middle-class debt trap<\/p>\n Jain said that such a lifestyle can create a \u201cmiddle-class debt trap.\u201d The individual appears successful to others but is deeply stressed inside. Every month becomes a struggle, yet stopping EMIs feels like \u201cfailure\u201d.<\/p>\n Her final lesson is that \u201creal wealth isn’t what you earn. It’s what you keep.\u201d An individual’s financial health is defined as their assets minus liabilities. If this number is negative, then the person by definition is broke, regardless of their salary.<\/p>\n Also Read<\/strong> | Falling into a debt trap? Here’s how to get out of it, step by step<\/a>Also Read<\/strong> | Are fintech apps providing personal loan a boon or a debt trap?<\/a><\/p>\n In another comparison, Jain argues that a delivery professional earning \u20b930,000 monthly but consistently saving \u20b915,000 is financially richer than the fictional character Priya with a monthly salary of \u20b92.8 lakh.<\/p>\n