First EMI even before first salary: Is Gen Z entering debt too early?
From smartphones on EMI to Buy Now Pay Later apps and credit card bills, Gen Z is entering financial adulthood with debt instead of savings. Rising living costs, social media pressure, and easy access to credit are creating a silent debt trap for young earners across India.
For many young professionals, the first salary feels like freedom. It marks independence, confidence and the beginning of financial adulthood.
But increasingly, that first salary is quickly followed by something else: 'the First EMI'.
From smartphones bought in monthly instalments to Buy Now Pay Later (BNPL) apps, credit card bills, education loans, and rising rent in metro cities, financial independence for Gen Z often begins with debt.
According to studies, nearly 41 per cent of new borrowers in India belong to Gen Z, showing that young earners are entering formal credit systems much earlier than previous generations.
Financial experts say this reflects a major shift where credit is no longer seen only as a necessity, but increasingly as part of lifestyle and identity.
WHY GEN Z IS BORROWING EARLY
Experts say this is not simply reckless spending.
High rent, expensive city life, stagnant entry-level salaries, family responsibilities and social media-driven lifestyle pressure are forcing many young professionals into financial compromise.
The Reserve Bank of India’s Financial Stability Report shows that non-housing retail loans account for 54.9 per cent of household debt, indicating that borrowing is increasingly being used for personal consumption rather than long-term asset creation.
This includes personal loans, credit cards, and consumer durable loans-such as loans taken for phones, laptops, appliances, and lifestyle purchases.
THE RISE OF SILENT DEBT
Financial advisors warn against what they call silent debt, multiple small EMIs that seem manageable individually but create long-term financial stress collectively.
A phone EMI, a credit card bill, a BNPL payment and a small personal loan may not look alarming separately.
Together, they can quietly drain monthly income and delay financial security.
Financial expert Rahul Malodia, in his LinkedIn article, explains that the real danger lies in how small monthly payments hide the actual financial burden. “The EMI trap is simple. People buy today using future income. Small monthly payments hide the real cost. When many small EMIs stack together, cash flow breaks,” he writes.
He points out that earlier generations mostly borrowed for long-term assets like homes or education, while today, many young professionals use credit for lifestyle spending – phones, travel, food delivery, fashion, and gadgets.
According to him, many Gen Z earners do not even feel like they are borrowing because UPI-based credit and BNPL options make credit feel like a daily utility rather than debt.
Malodia also highlights how social media pressure and FOMO spending make the problem worse. “This is not about greed. It is about belonging,” he notes, explaining how EMIs make belonging affordable today and expensive tomorrow.
The problem becomes more serious when emergency savings are missing.
Many young working professionals still depend on parental support during medical emergencies, sudden relocation or job instability despite being employed.
This hidden dependence often remains invisible behind the appearance of financial independence.
SOCIAL MEDIA AND MONEY PRESSURE
Another major factor is appearance-based financial pressure.
Social media create a constant image of success – frequent travel, expensive gadgets, luxury dining and branded lifestyles.
Young earners often feel pressure to look successful before becoming financially secure.
Financial educator Neha Nagar recently pointed out that Gen Z is increasingly taking debt to “look cool on Instagram,” highlighting how social validation is influencing financial decisions.
Her observations also noted that a significant share of personal loans were being taken for travel, showing that borrowing is no longer limited to emergencies or necessities. This normalisation of lifestyle debt is changing how young people define success.
ALSO READ: 'Sharma Ji Ka Beta' isn't choosing engineering anymore, data shows Gen Z is rewriting career rules
WHAT EXPERTS SUGGEST
Financial planners recommend building at least three months of emergency savings before taking lifestyle-based EMIs.
Understanding credit scores, avoiding unnecessary debt, and learning delayed gratification are becoming essential financial survival skills.
Experts say the issue is not that Gen Z is financially irresponsible – it is that adulthood itself has become more expensive.
In an economy where survival often starts on EMI, borrowing becomes less of a luxury and more of a coping mechanism.
ALSO READ: Gen Z, Gen Alpha won't learn the old way. Can India train teachers fast enough?
THE BIGGER QUESTION
Easy credit can help survival. But when financial independence begins with debt, it also raises a bigger concern: Is Gen Z building freedom – or quietly entering financial stress before stability? Because today, for many young professionals, the first sign of adulthood is not a savings account. It is an EMI.
Written by: Vidhya Das
For many young professionals, the first salary feels like freedom. It marks independence, confidence and the beginning of financial adulthood.
But increasingly, that first salary is quickly followed by something else: 'the First EMI'.
From smartphones bought in monthly instalments to Buy Now Pay Later (BNPL) apps, credit card bills, education loans, and rising rent in metro cities, financial independence for Gen Z often begins with debt.
According to studies, nearly 41 per cent of new borrowers in India belong to Gen Z, showing that young earners are entering formal credit systems much earlier than previous generations.
Financial experts say this reflects a major shift where credit is no longer seen only as a necessity, but increasingly as part of lifestyle and identity.
WHY GEN Z IS BORROWING EARLY
Experts say this is not simply reckless spending.
High rent, expensive city life, stagnant entry-level salaries, family responsibilities and social media-driven lifestyle pressure are forcing many young professionals into financial compromise.
The Reserve Bank of India’s Financial Stability Report shows that non-housing retail loans account for 54.9 per cent of household debt, indicating that borrowing is increasingly being used for personal consumption rather than long-term asset creation.
This includes personal loans, credit cards, and consumer durable loans-such as loans taken for phones, laptops, appliances, and lifestyle purchases.
THE RISE OF SILENT DEBT
Financial advisors warn against what they call silent debt, multiple small EMIs that seem manageable individually but create long-term financial stress collectively.
A phone EMI, a credit card bill, a BNPL payment and a small personal loan may not look alarming separately.
Together, they can quietly drain monthly income and delay financial security.
Financial expert Rahul Malodia, in his LinkedIn article, explains that the real danger lies in how small monthly payments hide the actual financial burden. “The EMI trap is simple. People buy today using future income. Small monthly payments hide the real cost. When many small EMIs stack together, cash flow breaks,” he writes.
He points out that earlier generations mostly borrowed for long-term assets like homes or education, while today, many young professionals use credit for lifestyle spending – phones, travel, food delivery, fashion, and gadgets.
According to him, many Gen Z earners do not even feel like they are borrowing because UPI-based credit and BNPL options make credit feel like a daily utility rather than debt.
Malodia also highlights how social media pressure and FOMO spending make the problem worse. “This is not about greed. It is about belonging,” he notes, explaining how EMIs make belonging affordable today and expensive tomorrow.
The problem becomes more serious when emergency savings are missing.
Many young working professionals still depend on parental support during medical emergencies, sudden relocation or job instability despite being employed.
This hidden dependence often remains invisible behind the appearance of financial independence.
SOCIAL MEDIA AND MONEY PRESSURE
Another major factor is appearance-based financial pressure.
Social media create a constant image of success – frequent travel, expensive gadgets, luxury dining and branded lifestyles.
Young earners often feel pressure to look successful before becoming financially secure.
Financial educator Neha Nagar recently pointed out that Gen Z is increasingly taking debt to “look cool on Instagram,” highlighting how social validation is influencing financial decisions.
Her observations also noted that a significant share of personal loans were being taken for travel, showing that borrowing is no longer limited to emergencies or necessities. This normalisation of lifestyle debt is changing how young people define success.
ALSO READ: 'Sharma Ji Ka Beta' isn't choosing engineering anymore, data shows Gen Z is rewriting career rules
WHAT EXPERTS SUGGEST
Financial planners recommend building at least three months of emergency savings before taking lifestyle-based EMIs.
Understanding credit scores, avoiding unnecessary debt, and learning delayed gratification are becoming essential financial survival skills.
Experts say the issue is not that Gen Z is financially irresponsible – it is that adulthood itself has become more expensive.
In an economy where survival often starts on EMI, borrowing becomes less of a luxury and more of a coping mechanism.
ALSO READ: Gen Z, Gen Alpha won't learn the old way. Can India train teachers fast enough?
THE BIGGER QUESTION
Easy credit can help survival. But when financial independence begins with debt, it also raises a bigger concern: Is Gen Z building freedom – or quietly entering financial stress before stability? Because today, for many young professionals, the first sign of adulthood is not a savings account. It is an EMI.
Written by: Vidhya Das
