₹70 LPA Not Enough to Live in Metro Cities: LinkedIn Post Warns Against Housing Loans

In the relentless pursuit of success and a better life, people in metro cities such as Delhi, Gurgaon, Mumbai, and Bengaluru are finding it increasingly difficult to make ends meet. A viral LinkedIn post by investment banker Sarthak Ahuja delves into the harsh reality of living in these cities, revealing that even a salary of ₹70 lakh per annum is not enough to cover the high cost of living.

Ahuja, an investment banker and a finfluencer, claims that a ₹70 lakh per annum salary is the new middle class. He explains that approximately ₹20 lakh is deducted as taxes from the gross annual pay of ₹70 lakh, leaving the individual with a disposable income of just ₹50 lakh. This translates to a monthly take-home pay of ₹4.1 lakh.

The post highlights that monthly fixed costs, such as EMIs on home loans, car loans, school fees, and domestic help, significantly reduce the disposable income. After accounting for these expenses, individuals are left with just ₹1 lakh for all other expenses, which must cover savings for a foreign vacation, grocery expenses, utilities like fuel and electricity, shopping, eating out, medical expenses, and contingencies.

“By the end of the month, there's nothing left!!!” Ahuja emphasizes. While other EMIs and expenses are unavoidable, he strongly advises against taking a housing loan. “The easiest low-hanging effort you can make to solve this is to think twice before you sign up for a housing loan!” he warns.

A ₹2 crore loan on a ₹3 crore flat with a 20-year tenure at an 8.5% interest rate results in an EMI of ₹1.7 lakh per month. This substantial monthly outflow can severely strain one's finances and leave little room for savings or investments.

Sarthak Ahuja identifies three factors contributing to the financial struggles of metro city residents and preventing them from building a retirement fund:

1. High Inflation : In cities like Mumbai, Gurgaon, and Bangalore, the cost of living has skyrocketed in the past three years. 2. Real Estate Costs : The cost of real estate, as well as cars, has almost doubled. In most cities, an average house costs 10-15 times the annual income of a household, but in Mumbai, it is over 30 times. 3. Lifestyle and Aspirations : The influence of social media has led to higher lifestyle expectations and increased spending on unnecessary items.

Despite the post's warnings, netizens had mixed reactions. Some found the post misleading, arguing that a ₹70 LPA salary is still substantial. “You can always define and redefine what is middle class. But seriously 70l pa is not good enough? Difficult pill to swallow,” one LinkedIn user commented.

Another user pointed out, “When you buy things you don't need, soon you will sell things you need...Warren Buffett....if you understand this simple quote, you won't buy a 20L car and a 3cr flat.” Some netizens found the definition of middle class “too pompous” and suggested that ₹70 LPA individuals should be classified as at least higher middle class.

However, many agreed that the post highlights important issues such as the drastic rise in inflation, especially in real estate and education, and the influence of social media on consumer behavior. “One needs to be very cautious and be watchful to distinguish between needs and wants,” one user added.

In conclusion, while a ₹70 lakh per annum salary may seem substantial, the high cost of living in metro cities can make it challenging to save and invest. Ahuja's advice to think twice before taking a housing loan is a crucial point to consider for anyone looking to secure a financially stable future.