BrightDime Basics: Income
So far in Basics we’ve talked about Net Worth, what it’s made up of (Assets and Liabilities), and the best tool for understanding a snapshot of what you own and what you owe: the Balance Sheet. Now we’re moving on to how your money moves, both in and out of your accounts.
Income is simply money you’ve received. A paycheck, cash you got from a side job, rent you receive from a rental property you own, interest earned on a savings account are all income. Some income is steady (paychecks often are the same every two week or every month) and some is irregular and varies, like interest and investment income. Knowing your income is important because it’s the starting point for the decisions you make on what to do with your money. Knowing what you can count on coming in every month is the starting point for deciding what you can afford to spend and where to spend it. You’ve probably heard terms like “tax-exempt income”, “disposable income”, or “earned income” before. That’s because income can be defined or calculated differently depending on the source or use of the money. We’ll cover these and note which ones you need to pay the most attention to over the next few weeks. For now, just remember…
Income = money you receive
Want to catch up on the Basics? You can read them all here. Have questions about income? BrightDime coaches are ready to chat. Just login and get started.