How India’s youth in tier 2 and 3 cities spend their first salary

New Delhi: A new study by The Bharat Lab, a research initiative formed by Rediffusion and Lucknow University, examines the financial and emotional significance of the first salary among young earners in India’s Tier 2 and Tier 3 cities.

Titled “My First Salary”, the report is based on a survey of 2,125 individuals and highlights how initial earnings are influenced by cultural expectations, familial ties and changing personal values. According to the study, a first salary is not only a financial milestone but also a symbolic rite of passage.

“A first salary is more than a transaction. It’s a declaration of independence, a family ritual, and often, a quiet revolution, especially for women,” said Dr. Sandeep Goyal, Co-Chairman of The Bharat Lab and Chairman of Rediffusion. “This report captures the sociology of a bank SMS.”

Dr. Alok Kumar Rai, Chairman of The Bharat Lab and Vice Chancellor of Lucknow University, added, “At Lucknow University, we believe research must reflect the heartbeats of the nation. The Bharat Lab is a living testament to that belief. This report doesn’t just speak to economists—it speaks to parents, policymakers, and every young adult standing at the threshold of financial independence.”

Key findings

• Spending on family: 38.8% of participants reported spending their first salary on gifts, mainly for family members.
  
  

• Savings: 24.5% chose to save, reflecting an increased awareness of financial planning.
  
  

• Charitable giving: 20.4% donated to religious or social causes.
  
  

• Women and autonomy: 88.5% of women surveyed saw their salary as a marker of personal freedom.
  
  

• Family communication: 44.6% informed their mothers first, indicating strong emotional ties in decision-making.
  
  

The report also notes continued interest in traditional practices, with one in three women choosing to buy gold with their first salary. It further explores a generational shift from collectivism to individualism, and the emergence of gendered patterns in spending and saving.

New Financial habits among Gen Z

Among the emerging trends, 76% of respondents expressed a preference for flexible investment options over fixed monthly plans. Rather than committing to regular systematic investment plans (SIPs), many young earners invest when they receive freelance payments or bonuses, often labelling goals such as “Goa 2026” or “Dream Bike.”

“They want to save, but without being shackled,” said Dr. Goyal. “This is personal finance made personal—not passive.”

Suggestions for stakeholders

Based on its findings, the report outlines several recommendations:

• For fintech platforms: Offer flexible and event-based investment options.
  
  

• For policymakers: Reassess starting salary structures in non-metropolitan areas.
  
  

• For marketers: Recognise emotional drivers such as gifting, family spending and gold purchases.
  
  

• For educational institutions: Integrate financial literacy, particularly for women, into higher education curricula.
  
  

The study aims to contribute to a broader understanding of financial behaviour in India’s semi-urban regions, capturing how cultural identity continues to influence economic choices in contemporary youth.