New Delhi, Oct. 15 -- A salary hike is often seen as a step towards financial security, but higher earnings do not always translate into higher savings. As young professionals earn more, rising rent, lifestyle expenses and discretionary spending can absorb much of the additional income, leaving little money to build a financial cushion.

The problem is not necessarily how much a person earns, but how they manage the money that comes in each month. Uttam Agarwal, chief business officer at BajajCapital - La Premier, said lifestyle expenses often rise alongside income as young professionals spend more on better housing, convenience, travel and new experiences.

The challenge arises when spending increases without a corresponding rise in savi...