Indian middle class going 'broke' due to common spending trap: CA warns about financial habit that drains even future wealth

The Indian middle class may be earning more than before, but easy access to credit and monthly EMIs can quietly push young earners into a cycle where a large part of their future income is already committed. Chartered Accountant Nitin Kaushik has warned about this growing habit, saying that no-cost EMIs and consumer loans can make people feel they can afford a lifestyle that may actually be beyond their means.

The warning comes at a time when buying expensive phones, cars, holidays and other lifestyle products on monthly instalments has become common. The monthly payment can look manageable, but several such payments together can leave very little money available for savings or investments.

No-cost EMI may not feel like debt

Kaushik pointed out that the problem is not always the interest rate. Even when an EMI is advertised as “no cost”, the borrower is still committing a portion of future income to something that has already been consumed or is losing value.


In a post on X, CA Nitin Kaushik wrote, “No cost EMIs are keeping the Indian middle class permanently BROKE.”

He also highlighted how longer loans can turn normal lifestyle spending into a financial burden. According to Kaushik, “Financing a 5 year car loan or taking credit card EMIs for expensive phones and vacations hooks people into pledging their future salaries for immediate lifestyle upgrades.”

That means the issue can go beyond one purchase. Once a person already has several EMIs running, the next purchase can also end up being financed because there is little cash left at the end of the month.

Young earners can lose financial flexibility

Kaushik also raised concerns about how normalised retail borrowing has become among young professionals. People who have only recently started earning may quickly move towards premium phones, cars, holidays and other purchases without first building a basic financial cushion.

He wrote, “Retail debt has become so normalized that young professionals trade away their financial flexibility for depreciating assets before they even build a baseline net worth.”


The point is not that every EMI is automatically bad. A loan can be useful for a major purchase when the repayment is comfortably affordable and the borrower has enough savings to deal with unexpected expenses. The problem starts when borrowing becomes the default way to maintain a particular lifestyle.

The real cost is money that cannot be saved

A person paying several EMIs may still appear financially comfortable because the payments are spread across months. But the same monthly amount could otherwise have gone towards an emergency fund, mutual funds, retirement savings or other long-term investments.

Kaushik's warning is particularly direct for consumer purchases. He wrote, “If you have to borrow money over 36 months just to afford a consumer gadget today, you cannot actually afford it.”

For young earners, the bigger concern is therefore not just whether the EMI can be paid every month. It is whether the purchase leaves enough income to build savings and wealth at the same time.