New Delhi: Financial experts say that a handful of common money habits, rather than income levels alone, are often what keep middle-class families from building lasting wealth, with excessive dependence on EMIs, reluctance to invest, and poor savings discipline topping the list of financial pitfalls to avoid.
According to personal finance analysts, middle-class households in India typically operate on limited monthly incomes, often ranging between Rs 40,000 and Rs 50,000, and are forced to manage both essential expenses and aspirational purchases within this budget. This financial pressure frequently pushes families towards buying on EMIs (equated monthly instalments), a habit experts caution against. “EMI is like a burden. It works like a trap that people get stuck in,” according to the analysis, noting that reliance on instalment-based purchases can quietly erode a family’s ability to save or invest over time.
A second major habit identified is the reluctance to invest. Many middle-class families avoid investing altogether, fearing that setting money aside will compromise their ability to meet immediate needs. However, experts stress that investment is fundamentally a future-oriented exercise, and timely investment can prove beneficial for both the individual and their family in the long run.
Even when middle-class families do invest, they tend to lean heavily on fixed deposits (FDs), locking in a sum at a fixed annual interest rate. While this is often perceived as a safe option, experts point out that FDs are not particularly effective wealth-building tools, since inflation steadily erodes the real value of money parked in low-yield instruments. Diversifying into other asset classes is generally recommended instead.
A fourth pitfall is the tendency to inflate lifestyle expenses as soon as income rises, described as “the biggest red flag” in wealth building. When rising earnings are matched by rising spending, there is little scope for meaningful savings, since expenditure grows in tandem with income, according to the analysis.
Finally, many middle-class households lack a structured approach to saving, often setting aside money only at the end of the month, by which point most of the income has already been spent. Experts recommend reversing this approach by setting aside a fixed amount for savings and investment at the very beginning of the month, before other expenses are made, to ensure savings goals are consistently met.