The Middle-Class Trap: Why Indian Families Earning Lakhs Still Feel Poor

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Middle-Class Indians Are Not Broke – They Are Trapped

“Rajesh earns ₹1.2 lakhs per month. His wife brings in another ₹80,000. By all accounts, they’re doing well. Yet, at the end of each month, he lies awake at night, calculating and recalculating, wondering where all the money went. He’s not broke. He has a job, a home, a car. But he feels poorer than he did five years ago when he earned half as much.”

This is the paradox of the Indian middle class in 2024. We’re not struggling to put food on the table. We’re not jobless. We have degrees, careers, and aspirations. But somewhere between earning and living, we’ve become trapped in an invisible cage of obligations, expectations, and engineered desires that consume our income faster than we can earn it.

The Trap Has Many Doors

The middle-class trap isn’t about poverty. It’s about the illusion of prosperity coupled with the reality of zero financial freedom. It’s about being one medical emergency, one job loss, or one bad investment away from financial ruin, despite having a “good income.”

Consider Priya, a software engineer in Bangalore. She earns ₹18 lakhs per annum, a salary that would have been considered exceptional a decade ago. Yet, after rent (₹35,000 for a 2BHK), EMIs for her car (₹28,000), education loan repayment (₹15,000), groceries, utilities, and the endless subscription services we’ve all signed up for, she saves barely ₹20,000 a month. One unplanned expense and that savings evaporates.

40%

Income to Housing

30%

To EMIs & Loans

5-10%

Actual Savings

The EMI Economy

We’ve normalized debt in ways previous generations never did. Everything is available on EMI now – phones, laptops, furniture, even groceries. The financial industry has convinced us that “affordable monthly payments” are the same as affordability. They’re not.

My neighbor, a 32-year-old marketing professional, once told me he had seven different EMIs running simultaneously. “It’s manageable,” he said, “only ₹45,000 total per month.” Only. That word does a lot of heavy lifting. What he didn’t mention was that these EMIs consumed 60% of his take-home salary, leaving him with barely enough for daily expenses and zero for emergencies or genuine savings.

Anecdote: I remember my parents buying our first color television in 1998. My father saved for eight months, and we went to the store with cash. Today, I recently watched a friend buy a ₹1.5 lakh TV on a no-cost EMI without blinking. “I’ll pay ₹12,500 for twelve months,” he said cheerfully. When I asked if he had ₹1.5 lakhs in savings, he laughed. “Why would I need that? That’s what EMI is for.” That conversation haunted me for days.

The Education-Healthcare Trap

Two sectors hold the Indian middle class hostage: education and healthcare. Both are essential, both are increasingly privatized, and both are wildly expensive.

Parents are spending ₹5-10 lakhs per year on school fees, tutoring, and extracurricular activities, terrified that anything less will doom their child’s future. A single hospital admission can wipe out years of savings. I’ve seen colleagues take personal loans to pay for their parents’ surgeries, adding another EMI to their already strained finances.

The middle class is caught in a cruel bind: they earn too much to qualify for government schemes but too little to afford quality private services without financial stress. We’re the buffer class, absorbing the shocks of a system that serves either the very poor or the very rich, but not us.

The Aspiration Tax

Social media has amplified what I call the “aspiration tax” – the cost of keeping up with the life we see others living online. Foreign vacations, trendy cafes, the latest gadgets, weekend getaways, festival sales, gym memberships we never use, streaming services we barely watch.

We’re not buying things because we need them. We’re buying them because we’ve been algorithmically convinced that we deserve them, that we’ve earned them, that life is short and we should “treat ourselves.” Every month. Every week. Every day.

Anecdote: A colleague once confessed to me during lunch that she spent ₹45,000 on a handbag she saw an influencer carrying. “I worked hard, I deserved it,” she said. Two weeks later, she was stressed about covering her credit card bill. The handbag sat unused in her closet, but the debt lingered for months. The math of deserving rarely adds up.

The Real Estate Mirage

Owning a home is still considered the ultimate middle-class achievement, the mark of having “made it.” So we take 20-year home loans, paying double the property’s actual cost by the time the interest is factored in. We sacrifice our 30s and 40s – our most productive, creative years – to service a liability disguised as an asset.

The tragedy is that many middle-class Indians own homes worth crores on paper but have no liquidity for emergencies. They’re asset-rich and cash-poor, which is a fancy way of saying trapped.

The Missing Safety Net

Unlike the wealthy who have diversified investments and multiple income streams, or the poor who have government welfare systems, the middle class has neither. We have one source of income – our jobs – and if that disappears, everything collapses.

The pandemic exposed this vulnerability brutally. Thousands of middle-class families discovered that three months without a salary meant losing everything they’d built over decades. The emergency fund was supposed to be there, but it had been spent on last year’s vacation or this year’s wedding or that unexpected car repair.

Breaking Free

The solution isn’t to earn more, though that helps. The solution is to recognize the trap for what it is – a system designed to keep us consuming, borrowing, and working until we retire with just enough to survive, but not enough to thrive.

Breaking free means questioning every purchase, rejecting the EMI culture, building genuine emergency funds, investing in assets that appreciate rather than liabilities that depreciate, and most importantly, defining success by financial freedom rather than material accumulation.

It means being willing to look “less successful” than our peers while actually being more secure. It means driving a modest car while investing the difference, living in a smaller apartment while building a portfolio, saying no to expensive weddings and vacations until we can truly afford them without debt.

The middle-class trap is real, but it’s not inevitable.

We are one generation away from financial freedom if we choose consciousness over consumption, saving over status, and security over show. The lock on our cage isn’t secured by poverty – it’s secured by our own choices, our own fears of missing out, our own need to prove we’ve made it.

The key has always been in our hands. We just need the courage to use it.

We’re not broke. We’re trapped. But traps can be escaped, one mindful decision at a time.