Rs 30,000 Salary, Rs 40 Lakh Debt: Why Gen Z Is Slipping Into A Borrowing Trap

India’s youngest workforce is increasingly vulnerable to debt traps. Reports reveal alarming cases where individuals earning around Rs 30,000 a month are burdened with debts exceeding Rs 40 lakh. The rise of digital lending apps, buy-now-pay-later (BNPL) schemes, and instant credit cards has made borrowing effortless but risky.  

Financial analysts point out that Gen Z’s preference for aspirational lifestyles, coupled with limited financial literacy, is driving reckless borrowing. Many are using loans to fund travel, gadgets, and luxury consumption rather than investments or essentials. This mismatch between income and liabilities is creating long-term risks of defaults, poor credit scores, and mental stress.  

Experts advise young earners to recognize early warning signs of debt dependency, such as frequent refinancing, reliance on multiple credit cards, and ignoring repayment schedules. Building financial discipline, budgeting, and prioritizing savings are critical to avoiding the debt spiral.  

Key Highlights  

• Gen Z professionals facing debt up to Rs 40 lakh on modest salaries  
• BNPL schemes and digital lending apps fueling borrowing  
• Lifestyle-driven consumption outweighing income levels  
• Risk of defaults, poor credit scores, and stress rising  
• Seven red flags include refinancing, multiple loans, and missed repayments  

Sources: Economic Times, Mint, Business Standard