My take on Mumbai expenses and living in India in general

boredinmumbai

A couple of clarifications for those who aren't familiar with the numbering conventions in India:
Rs. 1 lac = 1 lakh = 100,000 = 1,00,000 = 2400 USD = 1200 British pounds
Rs. 1 crore = 100 lacs = 100 lakhs = 10 million = 10,000,000 = 100,00,000 = 240,000 USD = 120,000 British pounds
The range of 60 - 80 lakhs derived at the very end is then 144,000 USD - 192,000 USD

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Inspired by a long thread on the Bangalore forms, I thought I'd share my observations and contribute to this incredible board. As an NRI, who left India at an early age, doing a 6 month stint in Mumbai, I have several observations to share (in no real order):

- In 2 words, if I can describe India, it is the land of the "definite maybe". Say what? It's the essence of the sidways headshake, it's behind every "it will be done in 5 minutes only", and it is behind all the arbitrary rules and even more arbitrary enforcement of said rules. Cryptic enough? Ask an expat who has a lived a few months in India and they will know what I'm talking about

- More so than in the West, there is a wide dichotomy between the haves and have-nots in Mumbai. There literally are 2 Mumbais available if you are in the upper middle class bracket. One need not look any further than food prices. At my place of servitude, lunch is in the company cafeteria where a full meal, and I mean a LOT of food, is available at Rs. 40-60. You eat Rs. 60 worth of food, you will have had 3 (yes three) big masala dosas, for example or a very rich paneer dish with 2 tandoori rotis or, well you get the message. PLUS add a fresh glass of fruit juice in that total as well. But when I go out, I like to goto the nice places. For example, dinner yesterday night was at Olive in Bandra West. Total tab was Rs. 3500 per person That's more than I would spend on all my lunches for 2 months...lol.

- It is very tough to meet new people and you do get quite lonely. I'm a young 30-something male but the only people I have ever gone out with is my colleagues, all of whom are also expats. It's hard to even socialize with the local Indian colleagues because for them going out for a night and spending 5000 a night on food, drinks, clubbing is completely unfathomable. It's hard to meet any new people because of the way you dress, you carry yourself, and you present yourself will be different. Please do not interpret that to mean anything negative but just different. It's hard to bridge the gap to put the local person at ease, try as you might and I have the advantage of speaking perfect Hindi (in fact as good or better than any of the local colleagues).

- Little gestures go a long way. Whenever I ask my driver to take me out shopping on a weekend or to help run some errands, I make it a point of pick up something for them to eat. Costs nothing to me and it really means a lot to them. Doesn't have to be ready to eat food either. Today I picked up the biggest thing of butter I could find and gave that to the driver on the pretext that I "forgot that I don't have any utensils to cook with"...lol.

- Work starts at 9:30 to 10 am and ends around 5:30 - 6 pm for the local population. For the expats, it usually starts around 9:30 but doesn't usually end till 8-9 pm and then another 2-3 hours after dinner. Companies aren't stupid. They know you are making more and the expectations are sky high.

- Indian movie theaters rock! They have such nice seats that recline like luxury airplane seats. Yesterday I saw the Dark Knight (new Batman movie which incidentally was shot next to my place of servitude in US and I saw several scenes that I saw being shot in the movie) and it was a great experience. Cheap as hell too...$4 for a ticket.

- Property is ridiculously expensive in decent locations. A crappy apartment with 2 bedrooms in a decent location like Bandra West is roughly 2.5 crores. Or I can rent it for about 1 lac a month. Get out of Bandra West, Juhu, Breach Candy, Colaba (read all desirable locations) to something lesser and the cost goes down significantly but I have not been able to check them out yet.

- Driver are ridiculously cheap. Well, in my case, the driver/car is part of my package so I don't pay anything but if I wanted to get a f/t driver, it would be roughly Rs. 10k per month.

- Good schools are ridiculoulsy expensive. Anecdotally, a good international level school will set you back Rs. 3-4 lakhs per year per child. Maybe someone with actual figures can back this up?

- Traffic is ridiculous. I asked my driver to switch with me today so I actually drove a little today but it is nerve-racking to be sure. Oh, and it takes forever to go small distances most times of the day. Rule of thumb is that on average, you will only manage 20-25 km per hour, so budget time accordingly

- Monsoons are awesome. Love when it rains non-stop for a while. Everything gets so green and it is so peaceful, even in Mumbai. If I had my wish, I wish it would rain every day for 6-8 hours while I'm here. There is a difference in the rain in India vs. West. Someone more poetic than I can take a stab at describing the difference but, at its most basic, rain in India feels warm, like taking a lukewarm shower vs cold water in the West. I love the feeling of rain in India.

- So, let me now take a stab at the final tally of monthly expenses for a family of 3 (mom, dad, and 1 small child) to live an expat life in Mumbai:

Renting a 2 BHK in a decent location (read above for examples of decent locales in Mumbai): Rs. 1 lakh

Good meals eaten out, assuming eating out in a nice restaurant twice every week for a total of 8 nice meals per month: (Rs. 1500/pp * 2 people + Rs. 500/pp * 1 (for the child) ) * 8 = Rs. 28,000

Other meals: Assume 3 meals a day for 30 days for 3 people = 270 meals. 24 meals (8 meals for 3 people) were accounted for above. The remaining meals cost Rs. 55 pp. So (270 - 24) * 55 = Rs. 13,500

Car: Assume 1 car. Driver is Rs. 10,000. Not including the cost of the car as I am assuming its cheap enough to be a one-time cost. Assume monthly cost of fuel + insurance + maintenance to be Rs. 5,000. Total cost = Rs. 15,000

Schooling: Assume international quality school @ 4 lacs or about Rs. 35,000 per month per child. Total cost = Rs. 35,000

Clothing/entertainment (other than meals): Assume 3% of gross salary annually, so will have to append it at the end when I have a final tally of everything else. Total cost = ?

Cell phones: Plans are dirt cheap. Assume Rs. 500 a month * 2 phones = Rs. 1000

Internet: Rs. 1000

Laundry, dry cleaning, pressing: Rs. 1000

Newspapers, books, etc: Rs. 1000

Twice yearly vacations to not too distant places: Rs. 50,000 * 2 = Rs. 1 lac yearly or Rs. 8000 per month

Other misc. expenses: Assume 5% of gross annual salary. Total cost = ?

Savings: 15% of gross salary. Total = ?

Taxes: 25% of gross salary. Total = ?

Medical/dental: 5% of gross salary. Total = ?

If I put all of the above into Excel and let it figure a salary that will be the exact match for all of the above expenses, then a salary of Rs. 51.9 lakhs will be exactly what is needed to satisfy everything listed above. Let us be more conservative to account for life's little curve balls and and round it up to Rs. 60 lakhs gross. Keep in mind that this salary level will not allow you to buy property in decent locales, so if possible both spouses should work to bring home Rs. 70 - 80 lakhs per year, which I think should be enough.

So, net-net, a range of 60 - 80 lakhs per year (5 to 7 lakhs per month) in Mumbai is what a family of 3 wanting to live an upper middle class life will need. Any lower, then adjust your lifestyle accordingly. I welcome any feedback to my assumptions.

Cheers






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Nick-H

Wow! What a post! Great stuff

It would take much more than one reading to take it all in, and I do not know Mumbai anyway --- but I have to comment that Londoners (UK) would dream of achieving 20-25kph, so it's not all bad!

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GoanCanuck

The food served in company cafeterias is subsidized by the employer. You can not under any circumstance compare that to the prices charged by restaurants anywhere else.

skk

Excellent first post - This could be the beginning of something pretty comprehensive if we get quality and on topic contributions ( yeah right, ). We'll need to develop per capita concepts and use indexes of locale specific variations so we can level the data for locale and for individual variations so that something that can be simply applied in future can developed. Nice idea, no

My personal plan involves 3 months a year in India, but not Mumbai but Pune, Sangli or somewhere even more quiet and less polluted ( and less expensive), every year for the rest of our lives - its in the same vein that I prefer to live in Boulder and not NY and probably Rye Sussex and not London for my 3 months in the UK.

I'll stick to the expenses side of things - In constant 2008 US$, and Indian Rs I plan to stay under US$2000/month which works out at Rs80,000/month just for me just for hotel( and one day 3 month leased accomodation), food, local travel( not big ticket travel). I'll keep a record and report back. - I'll keep a record anyway since this is data that will feed into long term plans.

-K

Nick-H

Right.

That's round about my budget (excluding house which we own, and other stuff accountants would and should include like depreciation on the car) for two of us for a monthThat's about 1.5 times my salary in London the last time I worked and earned (2003).

Not that I'm arguing with any of the numbers: life can be lived at any point on the financial ladder and (err... apart from having to go to work ) I certainly wouldn't turn down stepping up a rung or two.


One of the biggest items on the ex-pat worker's budget is education. The international schools charge vast amounts of money. Whether they are actually worth it, compared to a top-class Indian school or not, is a debate that I'd like to observe (I'm not a parent) in another thread sometime, but I suspect that their prices are based on the uncertainty of their customers.

boredinmumbai

Fair point though you can easily have a lunch under Rs. 200 that is not coming from a street vendor or an out & out gross looking place.

It would be very interesting to see how your per day expenses stack up, especially in regards to money spent on food and entertainment.

I'm surprised at how big the numbers came out to be as well I mean, even in US, those kind of numbers would put you in the top 5-10% of all household income groups. I still don't see where to shave off the expenses so that it will move the needle in any meaningful way. The biggest culprits, taxes, housing, and savings (not a culprit but you get what I mean) alone shave off roughly 60% of your gross right off the bat. Throw in your kid's education and you now stand at 70% of your gross . Stuff like eating out, entertainment, cars, drivers are all things at the margins and won't make a huge dent one way or the other.

You mention schools and I'm certainly curious there as well. The Rs. 4 lakh figure was mainly derived from one of the Bangalore threads.

One thing is for sure. Living in Mumbai, which doesn't represent all of India just as all of India is not Mumbai, is not for the financially weak-hearted. Not only that, but the slice of Mumbai life I'm referring is admittedly in favor of the good life.

capt_mahajan

I won't comment on the breakups- every person is entitled to decide his/her lifestyle, but...

You mean an expat upper middle class life, I presume.

Aishah

An upper upper middle class lifestyle it seems to me! I guess this is Mumbai, but where I live our annual living expenses may come to the monthly ones quoted here... And I'm very comfortable, well-fed and happy! Different lifestyles for different people (I can see where expenses lie with children's education etc. however)- and I don't eat out that often. I have my small splurges in Delhi - food is more expensive in some places, but good eating at less cost also available there.
This is a very interesting post bored... are you really?? Do you like Mumbai for living there?

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shashank.aggarwal

5 to 7 lacs per month !!!!! [Whoa]. Thats startling !! I am sure there are very seriously wrong assumptions in the calculations..

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capt_mahajan

There are a few figures which won't work for an Indian family- education etc. Plus many upper middle class Indian families living in Mumbai for a decent length of time buy their own apartment, so thats one expense off the monthly expenses list, though maintenance costs get added on.

Others: (just noting them, nothing else)

=Medical/dental expenses are high
-savings are built in, and taxes
-Education is expat. For one child.
-Eating out is high, so is clothing, misc expenses and some others.

(reminder: 1% of 60 lacs is 60000 rupees)

so some numbers I find startling:


annual expenses

Clothing/entertainment (outside meals) 180000

Medical dental: 300000 annually, for a family of 3

the rounding off by 8 lacs is the most startling, given taxes, savings (at 9 lacs annually), holidays and most everything has been factored in.

An (above middle) middle class Indian family may well be living on 8 lacs annually, maybe after housing. In Mumbai.

bips

you cannot be serious! i think you will put many people off coming to mumbai. mumbai is very interesting not boring at all.

boredinmumbai

Capt., thank you for the constructive input. One thing that has become clear is that my model is extremely sensitive to fixed costs (eg. housing @ 1 lakh) vs. variable costs (eg. savings @ 15%). I mean, if one earned Rs. 100 per year, one can still save Rs. 15 for savings but will not be able to make rent, which is fixed at 1 lakh. So, the math crunching that occurs becomes heavily dependent on the most expensive ticket item, which happens to be housing and then the answer is iterated over and over till the final tally of costs and the initial salary match exactly. Just how sensitive the model is to fixed costs, let me highlight with numbers.

Based on my initial parameters, here's what everything costs. The numbers are just a touch different owning to some fat-fingering by me yesterday but are correct and close to 51.9 lakh figure from yesterday. Numbers which are based on %, and are thus calculated, show up with 2 decimal points, otherwise, no decimal points.

Now assume that dear mummy/daddy have left you a flat such that you have zero rent costs. Assume maintenance is taken care of under misc. expenses. Then you may think that the annual salary needed would be Rs. 52 lakhs - 1 lakh * 12 months = Rs. 40 lakhs. But that would be wrong. Why? Because now the next highest fixed cost to cover is schooling. Cover that and the model quickly iterates to find a solution (Rs. 26.5 lakhs) that is roughly 50% of the previous.

As they say, garbage in, garbage out. The real question is can we help convert some of my assumptions around variable costs, such as medical @ 5%, to a realistic fixed cost for a family of 3 based on real input from Mumbaikars? Ditto goes for clothing. Taxes need to stay at 25% based on what I know and savings should stay at 15% based on prudent fiscal policy. Love to hear more input on the assumptions.

Cheers

skk

ref #12 - Cool data. Thanks for putting all that stuff up. I'll work it and add my own context as time passes and I think harder and deeper about it.

-skk

shashank.aggarwal

what I would like to know in this case is cost of living in other major cities of the world, while maintaining the same standard, say London, New York & Tokyo.

Secondly, as far as my knowledge goes this cost will be same in all major Indian metros, except for some variation in the rent part. Which I guess will not impact the overall yearly figure by more than 10-15%..

capt_mahajan

Normal medical/dental costs should not be more than 3000 a month, annualised, provided family is free from any chronic disease or does not require very expensive and regular dental care. It may even be less.

Of course, hospitalisation and others can set you back.. but medical insurance covers that. (below 45, for an Indian, rough costs about 20000 a year for a family of 3, given a 5 lakh coverage annually for each of them)

Assuming no medical insurance, ballpark figure for a private room-based-treatment in a major city with all paid is around 8/10000 a day, all inclusive excpet without major surgery. This in a private corporate hospital. Can be a little less or a little more, depending on treatment required, and how much the hospital takes you for a ride with unneccessary tests and procedures.


Clothing, assuming one arrives without having to renew a wardrobe, family of 3, buy two or three clothes a month and odd shoes, 5000 or so a month, average. But I am talking of middle class moderately expensive brands. If one buys an expensive suit or a silk saree every month, this gets knocked to hell and back.

28000 a month for eating out translates to 1000 a day. Of course, one can easily spend 7000 a week eating out once (3 people) at an expensive place. Prudent Indians, even if they ate at the same place, would have a couple of drinks at home before going there and maybe a drink or so there. As we know, drinks cost more than the food most of the time

Yes. In my experience, once you disallow rent, there is not much difference.

Except that 2 major metros- Delhi and Mumbai- are more expensive for eating out than others, everything else being the same.

And transport costs can vary widely, depending on number of family members and what they are doing and how.