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. Income can be defined or calculated differently depending on the source or use of the money; you’ve probably heard or seen terms like “tax-exempt income”, “disposable income”, or “earned income” before. These specific definitions of income apply in situations and it’s important to note when a term other than just “income” is used.
Income = money you receive