Income Definition

Although there are many highly technical definitions of income, for personal finances a generic definition usually suffices: income is the sum of all wages, interests, profits, and other forms of money received during a specified period of time, typically one calendar year. Your income is what you make on your paychecks, what you make on your investments, and whatever extra you make from home businesses or rental properties.

The various categories of income subsequently become more complex-gross income is the whole enchilada while disposable income is the whole enchilada less Uncle Sam’s considerable bite. Various other types of income denote ever-decreasing amounts of money left over after some other bite is taken out. Eventually you get to discretionary income which is the disposable income remaining after you pay the rent, pay the bills, and buy food for the month-for most Americans, another name for that would be pocket change.