We’ve all been there. You’re looking at a paycheck, a crypto chart, or maybe just the price of eggs at the grocery store, and you realize things have changed. Prices went up. Your portfolio dipped then surged. But by how much, exactly? Most of us stare at the screen and think, "How do I find a percentage increase without making a fool of myself?" It’s one of those basic math skills that evaporates the second we leave high school, yet it’s arguably the most important number in your financial life. Honestly, it’s just the gap between two numbers expressed as a fraction of where you started.
Numbers can be slippery. If your rent goes from $1,000 to $1,200, that’s a $200 jump. Easy. But if your friend’s rent goes from $2,000 to $2,200, they also saw a $200 jump. Are those the same? Not even close. Your rent hiked by 20%, while theirs only went up by 10%. That’s why we use percentages. They give us context. They tell us the "weight" of the change. Without them, we're just guessing at the impact of our spending and earning.
The One Formula You Actually Need
Forget the complicated jargon. To figure this out, you need three steps. First, subtract the old number from the new number. This gives you the "absolute change." Second, take that change and divide it by the original (old) number. Third, multiply that result by 100.
Basically:
$Percentage Increase = \frac{New Amount - Original Amount}{Original Amount} \times 100$
Let’s say you bought a share of a tech stock for $150 last year. Today, it’s worth $185.
- $185 - 150 = 35$ (The profit)
- $35 / 150 = 0.2333$
- $0.2333 \times 100 = 23.33%$
That’s it. You found it. You’re up twenty-three percent. It’s a clean way to see growth without getting bogged down in the raw dollar amounts which can sometimes hide the truth of a bad investment or a great raise.
Why People Get This Wrong (And Why It Matters)
The biggest mistake? Dividing by the new number instead of the old one. It’s a classic trap. If you divide that $35 profit by the current $185 price, you get 18.9%. That’s wrong. You always, always compare the change back to the starting point. Think of the original number as the floor. You’re measuring how far you’ve climbed off that floor. If you measure from the ceiling (the new price), the scale is totally off.
In the world of business, these errors are more than just "oops" moments. They are expensive. If a retail manager calculates a price hike incorrectly, they might miss their margin targets. If a marketing lead misreports a 50% increase in lead generation because they used the wrong denominator, they’re going to have a very awkward meeting with the VP next month.
Real World Scenarios: More Than Just Schoolwork
Let’s talk about your salary. Suppose you’re making $65,000 a year. Your boss calls you in and says, "Great job, we’re bumping you to $71,000." You feel good. But how good?
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$71,000 - 65,000 = 6,000$
$6,000 / 65,000 = 0.0923$
That’s a 9.2% raise. In a year where inflation might be sitting at 3% or 4%, you’ve made significant real-world gains. But if inflation was 10%? You actually took a pay cut in terms of purchasing power, even though your bank account looks bigger. This is why knowing how to find a percentage increase is a survival skill. It allows you to peer through the "money illusion" and see what’s actually happening to your wealth.
The "New Divided by Old" Shortcut
If you’re on the go and using a phone calculator, there’s an even faster way. I use this one constantly. Just divide the new number by the old number and subtract 1.
Take our stock example again ($185 / $150). You get 1.2333. Subtract the 1, and you’re left with 0.2333. Move the decimal two spots over. Boom. 23.3%. It skips the subtraction step at the beginning, which makes it much harder to mess up when you're typing with your thumbs on a crowded subway.
When the "Increase" is Actually a Decrease
Sometimes you do the math and get a negative number. Don't panic. That just means you have a percentage decrease. If you bought a vintage jacket for $200 and sold it for $150, the math looks like this:
$150 - 200 = -50$
$-50 / 200 = -0.25$
Multiply by 100 and you’ve got a 25% loss. It works exactly the same way. The formula is robust. It doesn't care if you're making money or losing it; it just tells you the magnitude of the shift.
Percentage Points vs. Percentages: Don't Mix Them Up
This is where things get hairy, especially in news reporting or politics. If interest rates go from 3% to 4%, did they go up by 1%?
No.
They went up by one percentage point.
But the percentage increase is actually 33.3%.
Think about it: $(4 - 3) / 3 = 1 / 3 = 0.333$.
If a news anchor says "Rates rose by 1% today," they are technically saying that a 3% rate became 3.03%. That’s a tiny nudge. If they rose by one "percentage point," that's a massive jump. Knowing the difference makes you a much more skeptical and informed consumer of information. Most people—including some journalists—get this wrong every single day.
The Compounding Trap
One thing to keep in mind is that percentage increases don't just stack like blocks. They compound. If your business grows by 10% this month and 10% next month, you didn't grow by 20% over two months. You grew by 21%.
Why? Because in the second month, you're growing 10% on top of the already-grown amount from month one.
- Start: $100
- Month 1: $110 (10% increase)
- Month 2: $121 (10% of $110 is $11, so $110 + $11 = $121)
From $100 to $121 is a 21% increase. This is the "magic" of compound interest that financial advisors like Dave Ramsey or Suze Orman always talk about. It works for you when you're investing, but it works against you when you're looking at debt or inflation.
Practical Steps to Master This
You don't need to be a math whiz to get this right every time. It's about rhythm.
- Always identify your "Before" and "After" numbers first. Label them if you have to.
- Do the "New minus Old" check. If the result is positive, it’s an increase. If negative, it’s a decrease.
- Keep the "Before" number as your divisor. It’s the anchor.
- Sanity check the result. If your price doubled, that's a 100% increase. If your result says 10% or 1000%, you know you took a wrong turn somewhere.
To really get comfortable, start running the numbers on small things. Check the percentage increase on your last utility bill compared to the same month last year. Look at the price of your favorite coffee. When you start seeing the world in percentages rather than just flat numbers, you start seeing the real velocity of your life. It changes how you negotiate raises, how you view "sales" at the mall, and how you manage your expectations for the future.
Stop guessing. Grab a calculator, use the "New / Old - 1" trick, and get the real story behind the numbers.