Despite tight budgets, Indians spending more on education

Indian households are rewriting their budgets, and the story they tell is one of sacrifice, aspiration, and adaptation. The most striking shift is a four-percentage-point jump in the share of income spent on children’s education.According to The Great Indian Wallet Study 2025, families—especially those in the lower middle class—are reshaping their spending in response to economic pressures and evolving priorities. The surge in spending on education despite tight budgets, is described in the report as “a profound declaration of belief in the future.”The reshuffling of household priorities has come at a cost. While spending on medical needs has edged up by a modest one percentage point, essential categories such as transport and utilities have been squeezed.

Commute-related expenses, although up 17% in absolute terms, now occupy a four-percentage-point smaller share of the household budget—suggesting that rising prices have not prevented consumers from cutting back elsewhere.

Spending on cooking gas and utilities has fallen even more sharply, by nine and five percentage points respectively.This is no accident. The report describes these shifts as a “strategic adaptation”—a conscious effort by families to “spend smarter” rather than simply earn more.

It reflects a larger behavioural pivot: households are not merely reacting to inflation, but recalibrating priorities in pursuit of long-term goals. Among lower-middle-class Indians, nearly half of all income still disappears into just two needs—food and rent—but the rest is now being stretched with increasing precision and intent.Discretionary spending, too, reveals a generational divide and changing preferences.

Local travel (31%) and eating out (30%) now dominate non-essential expenditures, particularly among Gen Z consumers who place a premium on experiences and social connection. In contrast, purchases of fashion and electronics have fallen by 20% and 6% respectively—not necessarily due to frugality, but a “re-prioritisation” toward mindful living and comfort at home."This year's findings reveal something extraordinary: despite economic headwinds, India's lower middle class is more optimistic, more digital, and more determined than ever before,” said .

Ashish Tiwari, Chief Marketing Officer, Home Credit India which has brought out this report.A majority of Indian consumers remain optimistic about their financial future, with 73% confident of meeting their goals within five years and 65% crediting affordable loans for accelerating aspirations. Digital tools are aiding this journey, say 63% of respondents, even as only half reported saving this year—down from 60% in 2024—and 12% are now borrowing to cover basic needs.

Income gains were reported by 57%, while education spending surged 34% in wallet share.

Lifestyle choices are evolving too: 31% now prioritise local travel, and 26% of Gen Z view better job opportunities as key to financial progress All of this, the report argues, highlights the complexity of India’s consumer economy. Far from uniform belt-tightening, the new spending patterns point to “a nuanced, empathetic understanding” of what families truly value. Dreams are being kept alive not through extravagance, but by relentless, everyday recalibration.