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Income
Definition
Income is money received regularly from work, investments, or other sources, providing the financial foundation for spending and saving.
Explanation
Income sources include salaries, wages, freelance earnings, business profits, investment returns, rental income, and government benefits. Active income comes from work, while passive income comes from investments or assets. Diversifying income sources reduces financial risk.
Understanding your total income is the first step in budgeting. After-tax income (net income) is what you actually have available to spend and save.
Example
A household with combined income of $85,000 from salaries, $3,000 from investments, and $2,000 from freelance work has a total income of $90,000.