In India, even middle class households can afford a maid. An upper middle class household can afford a driver as well as a cook. Whereas only a millionaire can afford such a lifestyle in America. Also,India now has all big brands and many malls. Healthcare, schooling, transportation and food are much cheaper in India.
I’m taking the typical case of a software engineer who goes to the US for his masters, and continues living largely the same quality of life.
An average software engineer, working in Bangalore, earning Rs. 6 lakh per annum in a software firm.
Net income (after taxes) = Rs. 4.5 lpa
Rs. 8k/month = Rs. 96,000
Assuming occasionally eating out
Rs. 150/day = Rs. 54,750/ year
Assume you buy a bike. Since I’m calculating cost/year, it makes sense to calculate depreciation value of the bike rather than the cost price. Let’s say it lasts for 10 years, and cost Rs. 70,000.
Depreciation cost: 7,000/year
Petrol cost: Rs. 450/month = Rs. 5,400/year
Bike of mileage 50 kmpl covering average distance of 10 km daily -> 6L petrol/month
Assume 1 Laptop
Assume 5 branded tees and 2 pairs of jeans
5 tees = 500*5= Rs. 2500
2 jeans = 1500*2 = Rs. 3000
Assume 1 movie/month.
Rs. 300/month = Rs. 3,600/year
Rs. 500/weekend = Rs. 27,000/year
Misc. expenditure (medical, home decor):
Rs. 1000/month = Rs. 12,000/year
Total expenditure ~= Rs. 2,50,000 / annum
4,50,000 – 2,50,000 ~= Rs. 2.0 Lpa
An average software engineer, working in San Jose, would earn $90,000 per annum.
Net income (after taxes) ~= $60,000
With the same assumptions,
$900/month = $10,800/year
$10/day = $3,650/year
Public Transport = Free (most companies give pass)
Bikes are uncommon.
Assuming buying a used car for $5000 and run for 2 years before it’s junk.
Depreciation cost = $2500/year
Gas: $5/day = $1825/year
(Assuming average traveling distance of 25 miles per day, and mileage of 25 miles/gallon)
I’ve left out insurance for simplicity.
5 tees = $15*5 = $75
2 jeans = $40*2 = $80
$10/month = $120/year
Nightclub cover charge + Bar drinks/food
$10 + $30 = $40/week = $2160/year
$400/month = $4800/year
60,000 – 27,000 = $33,000
Savings in INR, ~= Rs. 20 lpa
You may change some quantities I calculated, but bottom line won’t change.
Typically, people go the US for their Masters and then start working. Though it varies widely, on an average, they will probably spend about Rs. 30 lakh on the education. In 2 years, you can repay the loan. In 3 years, your ROI will be greater than continuing to work in India. In 10 years, you’ll be much richer.
That’s not all. There’s a huge jump in the quality of life in general. No potholed roads, no dirt and pollution, well-established legal system, better job opportunities and so on.
The average middle class cannot afford drivers and cooks easily anyway. You’ll notice I didn’t factor those costs here. No freshly graduated software engineer will ever hire cooks and drivers. Period.
I’ve found people who’re above a certain income threshold to prefer living in India. In fact, it may be a good idea, financially speaking, to work from, or in India after a few years of working in the US.
It’s true that India’s cheaper, but the income levels of most people are way lower to make sense to stay in India. (Once again, only financially speaking)