Rs 30 LPA earner can be poorer than Rs 10 LPA one: CA explains the math of 'high income trap' that eats up your wealth

A higher salary is usually seen as success. But chartered accountant Nitin Kaushik on X has recently stated that earning more does not always mean building wealth. In fact, he explains how someone earning ₹30 lakh a year can end up in a weaker position than a person making ₹10 lakh, if spending habits don’t change.

In his post, CA Nitin Kaushik writes that “High income is a TRAP for people who value status over freedom.” He explains that moving from ₹5 lakh to ₹15 lakh salary may look like growth, but for many people, it becomes “just a larger cage.”

The reason, he says, is simple but often ignored. When income rises, spending rises faster. If someone’s earnings triple but their savings rate drops from 40% to 20%, they are “technically poorer in terms of time.” There may be more money coming in, but less control over life.

The reality of lifestyle creep

One of the biggest factors behind this problem is lifestyle creep. As income increases, people upgrade everything around them. Kaushik points out how “A ₹20,000 rent becomes a ₹50,000 EMI,” and a basic car turns into “a luxury sedan with a ₹35,000 monthly commitment.”

These are not one-time expenses. They become fixed monthly obligations. Over time, they increase what he calls the “survival floor,” meaning the minimum amount needed every month just to maintain the same lifestyle.

Another point he raises is the role of social media. People often compare their lives with those who earn and spend far more. This creates what he describes as a gap between reality and perception.

“When you earn ₹1.5L a month but consume content from people spending ₹5L, you feel a phantom poverty,” he explains. To match that image, many end up spending an extra ₹20,000 or more every month, even when they cannot really afford it.

Fixed costs and financial risk

The CA also highlights how fixed obligations increase financial risk. He writes, “If you earn ₹1.2L and ₹70,000 is precommitted to EMIs and subscriptions, your financial flexibility is gone.” In such a situation, even a small disruption like a job loss or health emergency can create serious trouble.

On top of that, taxes reduce take-home income. On a ₹15 lakh salary, around ₹2.5–3 lakh goes in taxes. After this, and after high monthly expenses, the actual surplus left for savings or investment often doesn’t improve much.

Income vs wealth: what really matters

Kaushik makes a clear distinction between earning and building wealth. “Income is just water flowing through a pipe; wealth is the water that stays in the tank,” he says. He adds that a person earning ₹10 lakh but having ₹1 crore net worth is “objectively wealthier and safer” than someone earning ₹30 lakh with no assets.

He also notes, “Cash flow buys things, but capital buys time,” underlining that long-term security comes from assets, not just income.

To avoid falling into this cycle, Kaushik suggests controlling lifestyle inflation. “If your salary increases by 20%, limiting your lifestyle increase to 5% creates a compounding surplus,” he writes.

He sums it up by saying, “Wealth isn’t about what you earn, but the widening gap between your income and your ego.” In the end, real financial success is simply about assets minus liabilities and consistent growth in net worth.

Indivduals in the comments stated that one of the simplest ways to judge financial health is not by salary, but by how long a person can maintain their lifestyle without a paycheck. This is sometimes called the “runway period.” Someone with low debt, strong savings, and investments may survive months or even years without income, while a high earner with large EMIs and little savings can face pressure within weeks of losing a job. This is why many wealth planners focus more on emergency funds, asset building, and low fixed expenses rather than only chasing salary growth.