Author
LoansJagat Team
Read Time
8 Min
26 Jun 2025
Ritu Sharma, a 29-year-old school teacher from Pune, earns a monthly salary of ₹45,000. Like many working professionals, she often found herself wondering where all her money went by the end of the month. Determined to improve her financial habits, Ritu began tracking her expenses. She was surprised to discover that she had spent ₹13,500 on groceries alone the previous month.
Wanting to understand what chunk of her salary went into groceries, she quickly applied this formula: (Amount Spent ÷ Total Income) × 100
Which turned into: (₹13,500 ÷ ₹45,000) × 100 = 30%
This calculation showed her that nearly one-third of her income was going towards groceries. With this newfound insight, Ritu adjusted her spending habits and started budgeting smarter. Now, not only does she save more, but she also enjoys guilt-free shopping, knowing she’s in control of her money.
In simple terms, a percentage of money refers to a part of your total income or spending represented as a portion of 100. It helps break down finances in a way that’s easier to understand and compare. In everyday life, we often use percentages without even realising it—when discussing salary hikes, discounts on clothes, GST on bills, or how much of our earnings we’re saving.
Read More: Want to Cut Your Bills? Here's How to Calculate Your Electricity Bill Accurately
Understanding the percentage of money is key to:
Whether you’re planning a holiday, paying off a loan, or just grocery shopping, knowing how to calculate the percentage of your money going into each category can help you make smarter financial decisions.
Let’s say Ravi earns ₹60,000 per month and pays ₹12,000 in rent.
Rent % = (₹12,000 ÷ ₹60,000) × 100 = 20%
This tells Ravi that one-fifth of his income is spent on rent. With this, he can decide if it’s manageable or too high.
The fundamental formula used to calculate the percentage of money is:
(Part ÷ Total) × 100 = Percentage
This easy-to-remember formula helps break down how much of a particular amount (the "part") contributes to the whole (the "total").
The formula is handy for both individual finance tracking and business expense reports.
Let’s look at a few daily-life uses:
It’s all about seeing your money in relative terms, which is what percentage gives you, a comparison based on 100.
Priya earns ₹30,000 per month and saves ₹9,000.
Apply the formula:
(₹9,000 ÷ ₹30,000) × 100 = 30%
So Priya saves 30% of her income, which is a healthy savings rate by most financial standards.
Description | Total Income (₹) | Spent/Saved (₹) | Percentage (%) |
Rent | 50,000 | 15,000 | 30% |
Groceries | 45,000 | 10,000 | 22.22% |
Travel | 60,000 | 6,000 | 10% |
Investments | 55,000 | 11,000 | 20% |
By tracking these percentages, one can adjust expenses and boost savings efficiently.
Sometimes we need to measure how our income or expenses have changed over time. This is where the percentage increase or decrease comes in.
[(New Amount – Old Amount) ÷ Old Amount] × 100
Use this when your income or expenses have gone up.
[(Old Amount – New Amount) ÷ Old Amount] × 100
Use this when your expenses or income have been reduced.
Kiran used to pay ₹800 for her mobile bill. It recently increased to ₹1,000.
To find the percentage increase:
(₹1,000 – ₹800) ÷ ₹800 × 100 = (₹200 ÷ ₹800) × 100 = 25%
So, her mobile bill increased by 25%.
Category | Old Amount (₹) | New Amount (₹) | Change (%) |
Salary | 40,000 | 45,000 | +12.5% |
Electricity Bill | 2,000 | 1,800 | -10% |
Rent | 10,000 | 11,500 | +15% |
Internet Bill | 1,200 | 1,000 | -16.67% |
Knowing the percentage of increase or decrease helps you compare and adjust your monthly budget with ease. It also highlights where costs are getting out of hand.
Discounts are everywhere—from online shopping sites to retail stores and supermarket chains. Knowing how to calculate a
percentage discount can save you from getting fooled by fake offers or misleading price tags.
Discount Calculation Formula:
Discount = MRP × Discount (%)
Final Price = MRP – Discount
This formula helps you know the actual price you’ll pay after the discount is applied.
When Is It Useful?
Let’s say a ₹10,000 product has a 20% discount. You should instantly know you’re saving ₹2,000.
Anita wanted to buy a winter jacket worth ₹5,000. The store offered her a 30% discount.
Discount = ₹5,000 × 30% = ₹1,500
Final Price = ₹5,000 – ₹1,500 = ₹3,500
So Anita saved ₹1,500 and paid just ₹3,500.
Item | MRP (₹) | Discount (%) | Final Price (₹) |
Jeans | 2,000 | 25% | 1,500 |
Microwave | 10,000 | 10% | 9,000 |
Shoes | 3,000 | 20% | 2,400 |
Jacket | 5,000 | 30% | 3,500 |
In India, percentages play a huge role in how we pay taxes, especially GST (Goods and Services Tax) and service charges.
GST is a tax added to the base price of goods and services. It’s usually set at 5%, 12%, 18%, or 28%, depending on the item. For example, restaurant food often has 5% GST, while electronics usually attract 18%.
To calculate the final price:
Formula:
Final Price = Base Price + (Base Price × GST%)
Ajay booked a hotel room priced at ₹2,000. GST applicable = 12%.
GST Amount = ₹2,000 × 12% = ₹240
Final Amount = ₹2,000 + ₹240 = ₹2,240
Product | Base Price (₹) | GST (%) | Final Price (₹) |
Restaurant Meal | 500 | 5% | 525 |
Mobile Phone | 15,000 | 18% | 17,700 |
Flight Ticket | 3,000 | 12% | 3,360 |
Service charges (like in hotels or restaurants) are often 10%. VAT (Value Added Tax) is an older system, now mostly replaced by GST.
Understanding investment returns is key to growing your money. Returns are usually shown in percentages, whether you invest in mutual funds, SIPs, FDs, or stocks.
Learn More: Ready to Invest? Learn How to Start an SIP Investment Today
Formula:
Return % = (Profit ÷ Investment) × 100
Shruti invested ₹50,000 in a mutual fund. After a year, she got ₹55,000.
Profit = ₹55,000 - ₹50,000 = ₹5,000
Return % = (₹5,000 ÷ ₹50,000) × 100 = 10%
CAGR (Compound Annual Growth Rate) helps you understand how your money grew over time, especially in mutual funds or stock market investments. It's more accurate than simple average returns.
Tip: Always consider inflation and risk before calculating “real” returns.
Savings are the foundation of financial security. A common rule suggests saving 20% to 30% of your monthly income.
Mohan earns ₹75,000/month and saves ₹15,000.
Saving % = (₹15,000 ÷ ₹75,000) × 100 = 20%
He follows the 50-30-20 rule:
Split your savings:
Discipline and consistency are key to building wealth through saving.
Online calculators make percentage calculations fast and error-free. Whether it’s for GST, savings, SIP returns, or tax planning, tools are available on many platforms.
Manisha wants to invest ₹5,000/month for 5 years at 12% interest.
She uses Groww’s SIP calculator:
Returns = ₹4,00,000+ (approx.)
These platforms show charts, monthly breakdowns, and total maturity.
These tools help plan better and reduce human errors.
Percentage is used every day — even when we don’t realise it.
Rehan runs a mobile accessory store.
Profit % = (₹50 ÷ ₹100) × 100 = 50%
Even when checking cashback offers on apps or credit card discounts, the percentage helps you assess value.
It’s a life skill, not just a math topic.
Even a small mistake in percentage can cause big confusion. Let’s avoid common errors.
Explore More: Take Control of Your Finances: A Guide to Financial Independence in 2025
Do's | Don’ts |
Use the correct base value | Use total instead of base |
Verify with a calculator | Skip checking taxes |
Round off after the calculation | Round off before calculating |
Cross-check with examples | Guess without a formula |
Mastering percentages empowers you to handle money wisely. From shopping to saving, investing to budgeting, percentages simplify decision-making.
By learning to:
You can avoid debt, spend wisely, and grow your wealth steadily.
It also helps you understand offers better, negotiate smartly, and stay financially independent. So next time you hear “20% off” or “18% GST,” you’ll know exactly what it means for your wallet.
How to calculate 20% of ₹5,000?
Multiply ₹5,000 × 20% = ₹1,000.
What is the formula to calculate the percentage of savings?
(Savings ÷ Income) × 100.
How is the GST percentage calculated?
GST = Base Price × GST%.
Can I calculate investment returns using an online tool?
Yes, use tools like Groww or Zerodha.
Is rounding off before calculating a percentage a good practice?
No, always round off at the end.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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