The Economic Times

A salary hike can make you poorer: CA explains the lifestyle inflation trap that you must avoid

CA Nitin Kaushik warned on X that a salary hike can make you poorer if lifestyle inflation outpaces income growth. He illustrated how a 50% salary increase from Rs 1 lakh to Rs 1.5 lakh could reduce the savings rate from 30% to 23.3% when expenses rise sharply. Instead, he suggested investing half of a Rs 50,000 raise and using the rest for lifestyle upgrades, raising the savings rate to 36.7%.