Shortcut Trick
Ratio of Savings to Expenditure = 25% : (100% − 25%) = 25 : 75 = 1 : 3
Income change is the weighted average of Savings change and Expenditure change.
Let the percentage increase in savings be x%.
⇒ (1 × x + 3 × 20) ÷ (1 + 3) = 29
⇒ x + 60 = 116 ⇒ x = 56
∴ The correct answer is 56%.
Alternate Method
Initial
Income = 100
Exp = 75
Sav = 25
Final
New Income = 129 (+29%)
New Exp = 90 (+20%)
New Sav = 39
+56%
Given:
Savings = 25% of Income
Increase in Expenditure = 20%
Increase in Income = 29%
Calculations:
Let the initial income of Radha be 100.
⇒ Initial Savings = 25% of 100 = 25
⇒ Initial Expenditure = Income − Savings = 100 − 25 = 75
Her income increases by 29%.
⇒ New Income = 100 + 29 = 129
Her expenditure increases by 20%.
⇒ New Expenditure = 75 + (20% of 75) = 75 + 15 = 90
⇒ New Savings = New Income − New Expenditure
⇒ New Savings = 129 − 90 = 39
Increase in Savings = New Savings − Initial Savings
⇒ Increase in Savings = 39 − 25 = 14
Percentage increase in Savings = (Increase ÷ Initial Savings) × 100
⇒ Percentage increase = (14 ÷ 25) × 100 = 14 × 4 = 56%
∴ The correct answer is 56%.
Additional Information
Income, Expenditure & Savings Relationship
Income = Expenditure + Savings. Any change in Income will be directly reflected as a proportional change in both Expenditure and Savings.
Percentage Change Formula
Percentage Change = (Final Value − Initial Value) ÷ Initial Value × 100. It is used to calculate the relative increase or decrease in a quantity over time.
Weighted Average Method
When a base quantity is divided into two parts, the overall percentage change is the weighted average of the percentage changes of the parts: Overall % = (Ratio1 × %1 + Ratio2 × %2) ÷ (Ratio1 + Ratio2).