What is expenditure income ratio?

The expenditure-income ratio is a financial metric that compares an individual's or household's total expenditures to their total income over a specific period. It is calculated by dividing total expenses by total income, often expressed as a percentage. A lower ratio indicates better financial health, suggesting that a person is spending less than they earn, while a higher ratio may signal potential financial strain or reliance on debt. This ratio helps in budgeting and assessing overall financial stability.