Shortcut Trick
Ratio of Expenditure to Savings = 75 : 25 = 3 : 1.
Net increase in Income (20%) = [ (RatioExp × %IncreaseExp) + (RatioSav × %IncreaseSav) ] ÷ Total Ratio
20 = [ (3 × 10) + (1 × x) ] ÷ 4
80 = 30 + x ⇒ x = 50%.
∴ The correct answer is 50%.
Alternate Method
Given: Initial Income spending = 75%, Income increase = 20%, Expenditure increase = 10%.
Formula Used: Income = Expenditure + Savings
⇒ Let Initial Income = 100
⇒ Initial Expenditure = 75% of 100 = 75
⇒ Initial Savings = 100 − 75 = 25
⇒ New Income = 100 + 20% of 100 = 120
⇒ New Expenditure = 75 + 10% of 75 = 75 + 7.5 = 82.5
⇒ New Savings = 120 − 82.5 = 37.5
⇒ Increase in Savings = 37.5 − 25 = 12.5
⇒ Percentage Increase = (12.5 ÷ 25) × 100 = 50%
∴ The correct answer is 50%.
Additional Information
Percentage Change Formula
The percentage increase or decrease is calculated as: [(New Value − Old Value) ÷ Old Value] × 100.
Income-Expenditure Relationship
Total Income is always the sum of Expenditure and Savings. If any two components change, the third must adjust to maintain this balance.
Alligation Method in Income
Income % change can be viewed as the weighted average of Expenditure % change and Savings % change based on their respective initial ratios.