2025 is finally coming to an end. Financially, this year has marked itself significant in the market, especially for the middle class. It started with hopes for a better future, regular bills, and the regular rhythm. But as the year unfolded, like any other year, its grasp kept tightening. Money no longer felt adequate; people switched to multiple resorts, some saved, some invested, some underwent debts and EMIs in order to maintain their lifestyles while some felt their job security slipping through their fingers. Meanwhile, the nation’s economy faced its own share of setbacks.
Like any other year, December will end and the world will move on. Like any other year, people will gather at midnight and cheer for a fresh start, wishing for a better tomorrow. But that is only certain if, unlike many other years, we learn from 2025 and make reformed financial decisions stepping into 2026.
FY 2025 and the middle class:
Income stagnation and inflation, the good old deadly combo:
Entry level salaries, especially in sectors like IT, remained stagnant around 3 LPA, despite the soaring inflation above 10% in housing, education and healthcare costs. The disposable income was tight, forcing the middle class to delay investments and compromise on consumption. Resulting into a non adequate lifestyle and low efforts in wealth creation, reinforcing a significant gap in their participation in financial markets.
Increased Household debts:
With inflation rising higher than salaries, many started relying on credit cards, personal loans, EMIs, and more to compensate for the lack of income and manage expenses. Although these helped them sustain their lifestyles, the monthly payments still kept growing, forcing the middle class into debt traps.
Hits on the economy:
Corporate earnings in Q2 2025 witnessed the deepest fall in two decades, similar to the 2008 crisis. With the rise in food prices and interest rates, household budgets for the middle class households shrank smaller, consequently slowing down urban consumption. With the pacified demand, sectors like FMCG and real estate took a hit.
Avoidance in participation and wealth erosion:
Up to 70-80% of middle class family’s disposable income was reserved in FDs and saving accounts; yielding only 3-7% returns, unable to surpass inflation. This lead to eroded savings and negative returns.
Chasing equities without a safety net:
Lured by 25% gains in 2024, many rushed into investing in equities without ensuring at least a 6 months of emergency fund. Thus forcing panic sales at 10-13% losses during FPI outflows and rupee depreciation.
Despite struggling in the economy, the middle class plays a significant role in driving it forward. When all sections of an economy learn and progress, the whole economy progresses as a domino effect. That is why no matter the economic status, it is ideal and necessary to obtain financial literacy and understand and monitor personal finances. Our mistakes aren’t threatening us, they show us areas for improvement. Let’s see what 2025 wants to tell us.
5 money lessons 2025 taught the middle class:
- Real returns will hug you when nominal income cannot: Diversifying income streams with freelancing and other side hustles. Keeping a passive income via PPFs and RDs. Did you know an early SIP of Rs.10k since someone’s birth can build up to Rs. 60 lakhs within 15 years despite wage stagnation?
- Keep EMIs below 30% of your monthly income: Avoiding loans for lifestyle and consumption. Focus on your cashflow.
- Recognise your role as the economic drivers: In India, private consumption makes up around 57-60% of the GDP with the middle class being a crucial part of this spending.
- Step into the market, opportunities only come to those who can handle it: Expand you financial literacy and understand the importance of participating in financial markets. It will reward you in the long run!
- Don’t Do It Yourself: Consult a registered Investment advisor for well versed, low risk investment strategies. Avoid riding on impulses and follow a clear path.
The lessons of 2025 can become the financial mantras of 2026. Every year teaches us something important, be it life or finances. Comment below, the lessons you learned in 2025.
DISCLAIMER: Multistrato Capital Advisors Private Limited Type of Registration: Non-Individual. RIA Registration Number: INA000015969 Validity: Perpetual Registered Office Address: #903, EcoStar Building Off Aarey Road, Vishweshwar Road, Goregaon East Mumbai- 400063, India GST number: 27AAHCM9321Q1ZS
SEBI regional/local address SEBI Bhavan BKC, Plot No.C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (East), Mumbai — 400051, Maharashtra Email: sebi@sebi.gov.in
Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
