Financial educator Neha Nagar in a tweet has shared a story about someone who makes Rs 3 lakh a month but is still struggling due to bad money management. This person goes to great length to appear wealthy, owning a BMW car and buying a home ‘way above his budget’ just to ‘fit in society’.
Nagar writes everything looks perfect from outside, but inside, the person is in distress. “Reeling under credit card debts. Taking anxiety pills. No emergency funds, no investments. No health insurance. Nothing,” Nagar writes on X.

Nagar highlights that all the person’s money is going into maintaining a luxury lifestyle. She then highlights the importance of personal finance and recommends seven baby steps to achieve financial independence.

7 steps for financial independence

Step

Action Items

Step 1

Save your first Rs 1 lakh before buying anything.

Step 2

Get out of any small debts you have.

Step 3

Save 6 months of expenses for a fully funded emergency fund.

Step 4

Get health insurance.

Invest 10% of your household income into a retirement plan.

Step 5

Start your investment journey.

Invest 20% of your income into investments – stocks, mutual funds, schemes, etc.

Step 6

Allocate 30% of your income towards car and home loan EMIs.

Step 7

Start upskilling, increase your income, and build long-term wealth.

Case of cash rich, poor in assets is not newThe case Nagar highlights is not new. Many of us would have been in a situation or may know persons who earn well and yet live from paycheque to paycheque. From outside, they may look like rich, but in emergency situations, lack of their financial unpreparedness is exposed badly. That happens because the person is cash rich, but asset poor, and is unable to fall back on financial sources when things fall apart. Let’s see what pushes even high-income earners to the loop of financial distress and how they can stay out of it (As explained by Gurmeet Singh Chawla, director, Master Capital Services Ltd.)Causes for financial distress
Why many high-income earners in India live paycheque to paychequeBeyond essential expenses, incremental earnings frequently get absorbed by lifestyle upgrades and brand-led discretionary spending, with ignorance often leading to large EMIs. There lies a core gap with absence of disciplined cash-flow planning, so even seven-figure earners in India remain exposed to income disruptions.Lifestyle inflation is the biggest obstruction against long-term wealth creation. As income grows, financial commitments tend to expand even faster with lifestyle spends and upgrades like luxury homes, premium cars, club memberships, etc. Further, large sized home loans for 20-25 years, materially limits the ability to invest. Recurring spending on luxury vehicles by high-earning families becomes another significant cash drain. Credit card debt, high EMIs can quietly push salaried people into financial distressRolling over credit card spends with interest rates of 30–40% per annum is arguably the most expensive money available in the retail financial system. This EMI distress builds gradually over time and people recognise it when refinancing options narrow, leading to financial burden at ignorance.Social pressure is a financial threatSocial perception to signal success drives spending patterns in an opposite direction from actual financial standing. This pressure is further amplified by social media where curated lifestyles distort financial reality.How not to fall victim to financial distress

Have emergency fund, insuranceHaving adequate emergency funds and health insurance continue to be grossly neglected even among households earning well above average. Without liquidity buffers, families then resort to loan or distress asset sales during time of emergencies. Often, critical medical problems events without proper financial coverage causes the deepest wealth erosion.

Start investing early The single most damaging financial mistake made by people early in their careers is delaying disciplined investing while front loading consumptions they lack knowledge of investing and wealth creation. The compounding effect of investing even modest sums in one’s mid-20s can lead to stunning investment corpus. Most young professionals spend their first five to seven earning years entirely on lifestyle upgrades, deferring investment to when things settle down.Emphasis on goal-based planning as prudent asset diversification ensures that savings translate into sustainable wealth over time.

What matters equally is intent, beginning to save early along with managing expenses consciously and building consistent financial habits over time.

Seek guidance whenever requiredA common starting point is that people simply do not know how to approach financial planning in a structured manner. In such cases, seeking guidance from qualified wealth planners can make a meaningful difference, as they can help in laying out a disciplined roadmap aligned to one’s income, risk profile, and long-term priorities.