On paper, India's upper crust is thriving, with paychecks crossing ₹1 crore a year. Yet, behind the premium gated communities and the gleam of luxury cars lies a financial irony: many high-income individuals only save a sliver of their income and fail to create real, lasting wealth.
The ‘India Wealth Survey 2025’ by Marcellus and Dun & Bradstreet, covering high-net-worth individuals across India, revealed 43% save less than 20% of their income, while 14% don’t have an emergency fund.
Their wealth is eroded by escalating lifestyle expenses and peer pressure. Also, wealth managers often pitch complex, illiquid investments to people in this income bracket. These, coupled with behavioural biases and hidden fees, ultimately create dangerous portfolio traps that turn high incomes into financial quicksand.
Visible spending, invisible savings
For the average middle-class household, saving money offers an immediate sense of security and existential comfort. It’s not the same for high earners.
“It's a perception that the more you earn, the more you save, but I often tell people: ‘no, it's a behaviour’,” said Biju Dominic, chief evangelist at Fractal Analytics, a global artificial intelligence and advanced analytics company. “Many high earners' brains work on rewards, and luxury goods give them a much better reward than putting it in a bank account.”
Choice paralysis
Affluent individuals are constantly bombarded with premium, experimental financial products, which can easily cloud their rational judgement. “When you're rich, you have a huge number of choices for financial products,” said Dominic. “What it does is that it actually confuses the brain. When the brain is confused, it procrastinates and fails to make a decision. Uncertainty creeps in when they can't accurately calculate the underlying risks involved. To get people to make the right financial decisions, you need to reduce the options available, ideally to a maximum of three.”
The cost of looking rich
While social proof—the psychological tendency to copy the behaviour of others to fit in—affects everyone, high earners are especially susceptible to it because of status signalling. Because affluent individuals work and live in closed social circles, social proof drives them to mirror their peers' material choices and use luxury goods to actively broadcast their own wealth and success.
Suresh Sadagopan, founder and managing director at Ladder7 Wealth Planners, said, “An individual earning ₹5 lakh a month may end up saving only ₹1 lakh. On its own, saving ₹1 lakh looks great, but that is only one-fifth of their income. Luxury cars or premium houses come with massive EMIs. International vacations and foreign education stack up fixed liabilities. Despite what you earn, these fixed EMIs eventually cause deep financial heartburn.”
According to Dominic, when such an individual sees peers upgrading their lifestyles, this psychological impulse spikes. Social benchmark shifts their money away from compounding investments and into rapidly depreciating luxury goods. Rather than putting extra cash to work in the markets, high-earners often splurge on an ₹80 lakh luxury vehicle when a premium car at a third of the price would work just fine.
“Higher income often creates a false sense of financial comfort,” warned Feroze Azeez, joint CEO at Anand Rathi Wealth Limited. “If someone earning ₹1 lakh a month saves ₹30,000, a 10% increase in income should ideally increase savings to ₹33,000. Instead, many people keep their investments flat at ₹30,000 and let the additional ₹10,000 get absorbed into luxury expenses. The ability to convert incremental income growth into long-term assets is far more critical than the size of the paycheck itself.”
Sadagopan highlighted that lifestyle spending among the affluent lacks a ceiling. He cited a client who was spending over ₹1 lakh a month only on secondary domestic services, including specialized house help, private drivers, and dog walkers. In an era where mass layoffs are common, carrying such massive fixed expenses is hazardous.
Tax squeeze
For high earners, direct taxes are a major structural barrier to accumulating wealth. As individuals climb to higher income brackets, a significant portion of their gross earnings flows into direct taxes and high surcharges, leaving substantially less for savings.
Under the new tax regime, if a person's income crosses ₹24 lakh a year, the tax rate is 30%. In addition, a 15% surcharge is levied on the computed income tax for income between ₹1 crore and ₹2 crore.
According to Jinal Mehta, a certified financial planner in Mumbai, the true crisis for affluent professionals is the simultaneous explosion of both tax liabilities and lifestyle overheads. When your tax bracket and your day-to-day spending rise at the same time, the actual amount left for real wealth creation becomes surprisingly small.
Product trap: high cost, low liquidity
Wealth managers, private banks, and distributors frequently target affluent clients with fancy brochures, sophisticated-sounding jargon, and bespoke offerings. The goal is to convince high earners that standard investment products such as mutual funds are beneath them.
But what they omit from their pitches are the compounding costs, steep risks, and severe lack of liquidity in these alternative products. The total cost to the client can run between 2% and 5% a year in management fees and distributor commissions, severely eating into the net yield, Sadagopan said.
Mehta added that many high earners put too much of their capital into real estate in Dubai and India, which locks up their wealth in assets with steep transaction costs, regulatory risks, and myriad other issues. She recalled the case of a high-earning builder in Gujarat whose entire portfolio was tied up in real estate that yielded no rent, and opaque alternative investment funds with strict lock-in periods. When a cash crunch hit, he had no way to access his capital or even assess the actual value of his holdings.
How can high earners save more?
Prableen Bajpai, founder and CEO of FinFix Research and Analytics, said building wealth requires a clear order: "Planning comes first; the products come second."
To counter the 30% income tax and surcharges, Prableen suggested building a short-term buffer using tax-efficient arbitrage funds to ensure liquidity for upcoming goals.
She said that instead of chasing volatile, high-risk bets, high earners must prioritize keeping their portfolio flexible and cost-efficient. Practically, this means automating a significant portion of cash flow. “For someone earning ₹7-8 lakh a month, ₹2-3 lakh should flow straight into transparent, low-cost mutual funds through SIPs, before lifestyle creep absorbs it,” she added.