India’s Gen Z — those born roughly between 1997 and 2012 — are stepping into adulthood during a time of unprecedented wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW">digital access, easy credit, and rising aspirations. While many young professionals start their careers earning around ₹25,000–₹35,000 per month, an alarming trend is emerging: some are accumulating debts as high as ₹30–₹40 lakh before they turn 30.

How does someone earning ₹30,000 a month end up with a ₹40 lakh loan burden? The answer lies in a mix of lifestyle pressure, easy credit access, financial illiteracy, and social validation culture.

1. The Salary–Lifestyle Mismatch

A monthly income of ₹30,000 translates to ₹3.6 lakh annually. After rent, groceries, EMIs, transport, and utilities, little remains for savings.

However, exposure to luxury lifestyles on social media platforms like instagram and YouTube creates aspirational pressure. Foreign trips, premium gadgets, branded fashion, and fine dining become perceived necessities rather than luxuries.

When aspirations grow faster than income, credit fills the gap.

2. Easy Access to Instant Credit

Unlike previous generations who depended on traditional banks, Gen Z has access to:

• Buy Now Pay Later (BNPL) services
• Instant personal loan apps
• Credit cards with minimal documentation
• Fintech lending platforms

Apps like KreditBee and LazyPay offer quick loans with just a few taps. While convenient, these often come with high interest rates ranging from 18% to 36% annually.

Small, repeated borrowings snowball into massive liabilities.

3. The education Loan Burden

Professional degrees from private universities can cost anywhere between ₹10–₹25 lakh. Many students take education loans early, assuming high future salaries will make repayment easy.

However, starting salaries often fall short of expectations. A ₹15 lakh education loan with interest can easily become ₹20 lakh over time, especially if repayments are delayed.

4. Credit Card Dependency and Minimum Payment Trap

Credit cards are marketed as tools of convenience and rewards. But many young earners:

• Pay only the “minimum due”
• Roll over balances month after month
• Take cash advances

Interest rates on credit cards can exceed 36–42% annually. A ₹2 lakh unpaid balance can quickly double within a few years.

What starts as a manageable ₹50,000 spending spree can spiral into long-term debt.

5. Personal Loans for lifestyle Upgrades

Many young professionals take personal loans for:

• Destination weddings
• International travel
• Latest smartphones and gadgets
• Bike or car upgrades

For instance, purchasing a vehicle from brands like Royal Enfield or upgrading to the latest apple iPhone on EMI may seem affordable monthly — but combined EMIs can exceed 50–60% of income.

When multiple EMIs stack up, financial stress becomes inevitable.

6. Lack of Financial Literacy

Most schools and colleges in india do not teach:

• Budgeting
• Compound interest
• Credit score management
• Investment basics

Without understanding how debt compounds, young earners underestimate long-term repayment burdens. Many only realize the severity when collection calls begin.

7. Social Validation and the Comparison Economy

Gen Z lives in a hyper-connected world. The need to “keep up” with peers — better trips, better gadgets, better lifestyle — fuels impulsive spending.

The psychology is simple:

If everyone else seems to be living well, I should too.

But social media rarely shows EMIs, credit card bills, or loan statements.

8. How ₹30,000 Salary Turns into ₹40 Lakh Debt

Here’s a realistic breakdown:

• ₹15–20 lakh education loan
• ₹5–8 lakh personal loans
• ₹3–5 lakh credit card debt
• ₹5–7 lakh vehicle loan
• Accumulated interest & penalties

Over 5–7 years, compounding interest and refinancing can push total liability close to ₹40 lakh.

9. Mental health Consequences

Debt is not just financial — it’s emotional.

Young borrowers often experience:

• Anxiety
• Sleep disorders
• Family pressure
• Career stagnation (due to credit score damage)

Financial stress is increasingly becoming a silent mental health crisis among urban youth.

10. How Gen Z Can Escape the Debt Trap

1. Follow the 50–30–20 Rule

• 50% needs
• 30% wants
• 20% savings/investments

2. Avoid Multiple EMIs

Total EMIs should not exceed 30–40% of monthly income.

3. Build an Emergency Fund

At least 6 months of expenses before upgrading lifestyle.

4. Use Credit Cards Strategically

Always pay full outstanding balance — never just the minimum due.

5. Start Investing Early

Even ₹2,000–₹5,000 per month in SIPs can build long-term wealth and reduce dependency on loans.

Conclusion: Income Doesn’t Cause Debt — Behavior Does

A ₹30,000 salary is not the real problem. The real issue is borrowing beyond repayment capacity in pursuit of accelerated lifestyle growth.

Gen Z has unprecedented opportunities — but also unprecedented access to debt. Financial awareness, disciplined spending, and long-term thinking are essential to avoid turning early earnings into lifelong liabilities.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.