70 LPA not enough to live in metro city: LinkedIn post says, ‘Think twice before taking a housing loan’

In a race to achieve more and better every passing minute, people living in metro cities such as Delhi, Gurgaon, Mumbai and Bengaluru are finding it difficult to make ends meet.

A viral LinkedIn post explored how a salary of ₹70 lakh per annum is not enough to live in a metro city today, and by the end of the month, “there's nothing left!!!”

In the post, Sarthak Ahuja, an investment banker and a finfluencer claimed, “70 Lakh p.a. is the New Middle Class”

He explained that ₹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.

Ahuja said, an individual earning ₹70 LPA will only get ₹4.1 lakh in hand per month.

He then explained that monthly fixed costs like the EMIs on a home loan, car loan, school fees, and domestic help drain a substantial amount, leaving them with just ₹1 lakh for all other expenses, which will have to cover savings for a foreign vacation in the year, grocery expenses, utilities like fuel and electricity, shopping, eating out, medical expenses, and contingencies.

“By the end of the month, there's nothing left!!!”

The banker said that while all other EMIs and expenses are inevitable, a housing loan should be avoided.

“The easiest low-hanging effort you can make to solve this is to think twice before you sign up for a housing loan!”

Warning against home loans, the banker explained that a ₹2 crore loan on a ₹3 crore flat with a 20-year tenure on 8.5% interest will result in an EMI of ₹1.7 lakh per month.

No retirement fund for metro city residents

Sarthak Ahuja said there are three factors which are making everyone living in a metro city in India sub-middle class and preventing them from building a retirement fund:

• High Inflation in cities like Mumbai, Gurgaon, Bangalore, where the cost of living has exploded in the past 3 years.
• The cost of real estate, as well as cars, has almost doubled. Where in most cities, an average house costs 10-15 times the annual income of a household (In Mumbai, it is over 30 times!!)
• Lifestyle and aspirations because of heavy exposure to social media.

Here's how netizens reacted:

Netizens were not convinced that a ₹70 LPA salary was not good enough, and said the post was “misleading” to an extent.

“You can always define and redefine what is middle class. But seriously 70l pa is not good enough? Difficult pill to swallow,” a LinkedIn user commented.

“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,” he added.

“This is such a misleading post, trying to fit every middle-class family in this template,” said another user.

One user found the definition of middle class “too pompous” and said Ahuja should've classified ₹70 LPA individuals as at least Higher middle class to look a bit more realistic.

However, the user said, “The only things that stand out from this post, as per my opinion, are that Inflation has gone up drastically, especially in real estate, education, and being ceremonious in nature due to social media influence ( not all but in the majority ).”

“One needs to be very cautious and be watchful to distinguish between needs and wants,” he added.