Income refers to the money an individual or entity earns over a specific period, typically measured in terms of weeks, months, or years. It can come from various sources, including:
- Employment: Wages or salary from a job.
- Self-Employment: Income generated from running one’s own business or freelance work.
- Investments: Profits earned from investments such as stocks, bonds, real estate, or mutual funds.
- Rental Income: Money earned from renting out property or assets.
- Pensions and Social Security: Regular payments received during retirement.
- Government Assistance: Payments from government programs, such as unemployment benefits or welfare.
- Royalties: Income from the use of intellectual property, like patents, copyrights, or trademarks.
- Dividends: Payments received from owning shares in a company.
It’s important to distinguish between gross income and net income. Gross income is the total earnings before deducting taxes and other expenses, while net income is the amount left after subtracting all deductions. Understanding your income is crucial for budgeting, financial planning, and meeting your financial goals.