Rs 40 lakh CTC illusion vs reality exposed by CA: How 4 simple rules can lead to real 'financial freedom'

In today's hyper-competitive job market, salary packages are often used as markers of success. A Rs 40 lakh CTC sounds like a dream to many, especially to young professionals entering the workforce. But CA Nitin Kaushik, a chartered accountant, has exposed how such high packages can create a false sense of financial well-being.

Harsh Truth Behind High CTCs

According to the CA, a Rs 40 lakh cost-to-company salary often creates the illusion of financial success, while in reality, many in this income bracket still struggle with basic financial independence. He points out that several people earning this much can’t even afford to take a six-month break without feeling financially unstable—proof that high income doesn't always translate into real wealth.

Through the case of a 32-year-old IT professional, Kaushik highlights how high income doesn't necessarily translate to financial freedom—especially when spending habits and financial planning don’t align with long-term goals.

At first glance, the individual appears to be doing well. With an annual CTC of Rs 40 lakh and a monthly in-hand income of Rs 2.2 lakh, the financial situation looks promising. However, much of this income is tied up in fixed liabilities. The professional purchased a Rs 1.5 crore apartment in Mumbai’s Mulund, making a down payment of Rs 25 lakh. The rest—Rs 1.25 crore—was financed through a home loan, leading to an EMI of Rs 1.12 lakh per month. This single expense consumes over 50% of the monthly take-home pay.

Add to this a car EMI of Rs 15,000 and living expenses of Rs 50,000, and there is little left for savings. At best, the person manages to set aside Rs 30,000 to Rs 40,000 a month, assuming no unexpected expenses or disruptions.

4 Rules for True Financial Freedom

To break free from the illusion of wealth and achieve genuine financial stability, the CA lays down four practical rules:

Spend Mindfully: Avoid upgrading your lifestyle just because your income has increased.

Build Real Investments: Invest consistently in mutual funds, stocks, and other productive assets.

Maintain an Emergency Fund: Keep a financial cushion for unforeseen circumstances.

Stay Out of Debt Traps: Don’t let aspirational purchases create long-term financial pressure.

The broader message in his post is a wake-up call: high income is not the same as financial security. The illusion of a big CTC may keep one trapped in a cycle of overwork, debt, and anxiety, unless balanced with sound financial habits. Real wealth, according to him, comes from conscious spending, sustainable saving, and long-term planning—not just a big paycheque.