Is a ₹1-cr annual income enough? High earners speak out

That’s how a few people get to lead their lives. In Mumbai, Varun Kakkar is living it up with his annual income of about ₹1 crore. “What this income provides is the ability of not having to think about smaller things. My family and I can live freely without budgeting for day-to-day expenses," said Kakkar, who works at an FMCG company.

Kakkar lives in a 3-bhk apartment in a posh township in Thane that he bought in 2021. “It was an expensive purchase. I pay about 40% of my monthly income towards home loan EMIs," he said. He compensates for this by driving a mid-range Honda sedan that he and his wife bought nine years back. “This kind of income will allow you to fund one big-ticket purchase at a time," Kakkar said.

Akash Sethia, who earns ₹6.5 lakh (post-tax) per month, no longer budgets for certain luxury experiences. On a recent vacation to Europe with his wife and parents, he rented a convertible that cost him ₹60,000 for three days. He also went on a paragliding adventure that cost ₹80,000. “Each month I’m left with substantial surplus. So, I can easily spend on such experiences without giving it much thought," said Sethia, a management consultant.

 

Kakkar and Sethia are just two of the many people who have an envious salary. Income tax data shows that only 131,000 Indians earned above ₹1 crore annually in FY21, roughly 0.01% of the country’s population. A 2020 Bloomberg report said India’s top-paid 1% earn ₹55 lakh and above. To be sure, many businesses and self-employed individuals under-report incomes to avoid higher taxes.

Mint spoke to several ‘crorepatis’ aged between 27 years and 37 years about their lifestyles. Most of them believe that ₹1crore doesn’t make them wealthy enough but unanimously agreed that the income gives them ample financial freedom.

Is ₹1 crore enough?

The number of years it takes to reach this income level, inflation, tax of above 30%, and other financial obligations make a difference.

Sumit Saurabh, 27, a Noida-based techie, doesn’t consider himself particularly wealthy, though he earns over ₹6 lakh a month (post tax). “My cash flows can afford me a luxurious lifestyle, but it falls short if I want to create meaningful assets," he said. Saurabh has so far repaid the ₹22 lakh debt taken by his parents for his education and his sister’s wedding, bought back his mother’s gold jewellery she had pledged and bought his parents, who live in Bihar, a mid-range car.

“If I were to buy an apartment in Noida, I can easily afford the EMIs, but the challenge is to arrange the down payment," Saurabh said. “The value of ₹1 crore earnings for me would be what ₹50 lakh is for a lot of people who have ancestral wealth and are not the sole breadwinners."

Bangalore-based Rohan Chandrashekhar, who runs a content management firm, lives a minimalist lifestyle despite earning a little over ₹1 crore annually. He drives a hatchback worth ₹7 lakh and shops online from mid-segment clothing brands. ₹1 crore is not enough to do everything one may want, he said.

“If you consider the rate of inflation and high taxation coupled with my social impact aspirations as well as willingness to provide unconditional comfort for my family, then the income starts to feel a bit insufficient," said the 37-year-old.

In Ghaziabad, Shubham Garg, 27, says a particular income level is not a milestone for a successful career for him. “Beyond the first ₹2 lakh, the incremental income has become a number for me," said Garg, founder of a software development company, who earns about ₹12 lakh every month. “Yes, we (Shubham and his family) have upgraded to a bigger house, like any middle class family does when income rises, but my personal lifestyle hasn’t changed in a big way."

Tax and inflation bite, said Bangalore-based Devraj, who insisted on using only his first name. “What bothers me more is that even with the high taxes, I still pay separately for private medical care, higher studies and drive everywhere or take cabs because of the lack of good public transportation options," said the 32-year-old.

Where do they invest?

Chandrashekhar’s savings can put many to shame. He invests about 80% of his total income in direct stocks and a mix of active and passive mutual funds. He has made this possible by choosing to live below his means. “I’m a big proponent of FIRE (Financially Independent Retiring Early) ideology and have social impact goals. I want to build a ₹100 crore portfolio of liquid assets by 2030 that can fund both," said Chandrashekhar. It also helps that he lives in his own home and doesn’t have any EMIs to pay.

Meanwhile, Sethia saves about 30% of his income without even trying. “I pay my bills and EMIs, send money to parents, spend through the month and save whatever is left at the end," he said. “I am experimenting with alternative investment products such as P2P lending, invoice discounting, fractional real estate investing, etc., that offer high-yield and have limited risk buffer. Until now I couldn’t do so as these products have minimum investment amount restrictions," he said.

A significant disposable income and regular bonuses can also ensure that you are able to build assets early before other financial responsibilities take over. Garg, for instance, has already invested in two real estate properties and recently started investing in mutual funds.

Fulfilling their dreams

For most, high incomes help fulfil small aspirations that seemed out of reach while growing up.

“The frequent international and domestic vacations I am able to take and the ability to spend on experiences were distant dreams," said Devraj, who works with a multinational company. He is quick to add that his middle-class upbringing prevents him from splurging even though he and his wife together earn about ₹1.3 crore annually.

Kakkar said flying business class evokes a special feeling even now. Another is when he funded a trip for his parents and siblings. “I flew them to Kerala and Kashmir and arranged for their stay in top hotels. It brought them unmatchable joy," he said.

For others, high income enables them to give back to the society. Saurabh is passionate about supporting the underprivileged, but he believes in being a capitalist first and then a philanthropist. “I pursued these causes after my income reached a certain level," he said.

He has founded a non-profit organization that upskills gig workers and sponsors scholarships for students who do not have the means to fund their education. This is over and above the regular monetary support he provides in the form of clothing, food and medicines to those in need.