How High EMIs Quietly Kill Your Ability to Take Risk?

Let’s start with a simple question:

What happens when more than 50% of your monthly salary goes into EMIs?

For many Indians, the answer is: not much on the surface.

The EMI gets paid. Life goes on. The car is parked in the driveway, the apartment EMI ticks like clockwork, and Insta still gets those weekend coffee shots.

But below the surface? Something important dies.

Your ability to take risks.

The Indian Dream Has Changed (But The Cost Hasn't)

India is booming. Salaries have gone up. Career options have exploded. Credit scores are tracked like personal health stats. And for the ambitious, every life milestone now has an EMIs-for-everything version:

• House? Home loan

• Car? Car loan

• Destination wedding? Personal loan

• Travel? Credit card EMI

• iPhone? No-cost EMI

Don’t get us wrong—leverage can be powerful. Used wisely, it can help you build assets and experiences. But the line between strategic debt and suffocating debt is thinner than most people think.

And that line gets crossed the moment over 50% of your monthly salary goes into EMIs.

What Does This Do to Your Finances?

1. Zero Slack = Zero Confidence
   When your fixed obligations eat up a large chunk of your income, there's no breathing space. Even small unexpected expenses (a medical bill, a car repair, a job switch delay) can trigger panic.

2. No Risk Appetite = No Wealth Creation
   If you’re just servicing EMIs, you hesitate to invest. You avoid equity markets, skip top-up SIPs, and kill any entrepreneurial itch you might have had. You’re too leveraged to explore upside.

3. Short-Term Thinking Becomes the Default
   Instead of asking, "Where do I want to be in 10 years?" you're stuck at, "How do I survive next month?"

4. Lifestyle Inflation in Disguise
   You think you're upgrading life. But in reality, you’re committing future income to pay for today’s wants. That’s the opposite of financial freedom.

The Urban India EMI Epidemic

Let’s look around.

In metros like Mumbai, Delhi, and Bangalore:

• A decent 2 BHK costs ₹2–2.5 crore

• EMIs on a 25-year loan = ₹1.2 lakh/month to ₹300,000/month

• Salaries? Median for mid-level professionals: ₹2 to ₹3.5 lakh/year (~₹100,000/month after tax and generally both husband and wife both are working)

That’s 65-80% of net salary going just to the house EMI!

Add a car loan? Credit card dues?

There goes the rest.

And we haven’t even added school fees, family care, or basic savings.

But Everyone’s Doing It, Right?

Yes, and that’s the problem.

We’re in a world of social comparison, where:

• Weddings are judged by drone shots

• Phones are replaced every year

• Vacations must be Instagrammable

• Renting is seen as a failure

We’ve normalised over-leveraging as a lifestyle badge.

But here’s what doesn’t get posted online:

• The anxiety of being one job loss away from default

• The guilt of skipping SIPs

• The resentment of not being able to switch careers or take a break

And slowly, risk-taking becomes a luxury only the unburdened can afford.

What You Miss When You're Over-Leveraged

• That equity mutual fund you avoided? It grew 14-18% last two years.

• That business idea you parked? Someone else launched it.

• That sabbatical to study or explore? Gone.

When your cash flow is tight, your imagination shrinks.

And risk appetite isn’t just for investors. It’s for dreamers, career switchers, creators, parents, and everyone who wants more from life than a paycheck.

How to Regain Your Risk Muscle

1. Aim for <35% EMI-to-Income Ratio
   That’s the healthy zone. It gives you space to save, invest, dream.

2. Prioritise Liquidity
   Build 6-9 months of expenses as an emergency fund. This alone boosts your risk capacity.

3. Delay Gratification
   Rent the house. Buy the phone next year. Choose the used car. Future You will thank you.

4. Track Fixed Commitments Monthly
   List your EMIs, rent, bills. If it's >60% of income, pause before taking on more.

5. Automate Wealth Creation
   Treat SIPs like non-negotiable EMIs. Because they fund your future.

Final Thought: You Deserve Freedom, Not Just Assets

Owning a home is great. Driving your dream car is awesome.

But not if it comes at the cost of saying no to growth, opportunity, or peace of mind.

Remember: Money should empower you to take risks. If your current commitments are doing the opposite, it's time for a reset.

Want help evaluating how financially flexible you are?

- Tejas Lakhani and Team Fincare