Easy access to digital credit is making borrowing feel routine for young Indians, raising concerns that everyday lifestyle spending could erode long-term investment discipline.
At a Business Standard Smart Investor Arena discussion, Chartered Accountant and content creator Sakchi Jain argued that for many young Indians, credit is now the first financial product they encounter, often before a savings account or a systematic investment plan. She said the spread of buy now, pay later services and credit cards is reshaping how Generation Z spends, borrowing and thinks about money.
Jain’s central concern was not simply that young consumers are spending more, but that digital credit has made borrowing feel routine. Where loans once required paperwork, branch visits and a clear sense of obligation, she suggested that modern lending tools can make purchases feel almost frictionless. That ease, she said, can encourage people to finance lifestyle upgrades they may not be able to sustain. She pointed to the “lipstick effect”, a term used to describe smaller indulgences people buy when larger ambitions feel out of reach.
Her warning was that this behaviour can quietly undermine long-term investing. Jain said lifestyle costs may pose a bigger threat to systematic investment plans than market swings, because spending decisions are made every day while investing discipline is often tested monthly. In her view, the real competition for a SIP is not volatility in equities but the pull of immediate consumption. She also cautioned that borrowing for discretionary purchases can become more dangerous when repayment commitments begin to stack up, particularly if a young worker loses a job or faces a medical emergency.
That concern fits with broader signs of a more credit-literate but not necessarily more cautious generation. A report cited by Mint found that Gen Z consumers tend to favour convenience, quick commerce and longer repayment periods when they borrow for larger purchases. Another Mint analysis of millions of UPI transactions showed that digital payments are deeply embedded in the daily financial lives of salaried Gen Z users, covering essentials, subscriptions, travel and entertainment. Together, those trends suggest that young consumers are comfortable moving between spending, borrowing and investing inside the same digital ecosystem.
Jain also said the way financial products are packaged can shape behaviour as much as the products themselves. She noted that daily SIPs may feel less daunting than a larger monthly commitment, even if the end result is similar. That observation echoes research on BNPL platforms, which argues that the design of such services can normalise repeated borrowing and hide the cumulative burden of debt. Her broader point was that long-term wealth creation depends less on starting early in isolation and more on balancing aspiration with restraint, borrowing carefully and investing consistently.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
