What is Income?

Understand the basics of income and its importance in your financial life.

What is income?

Income is money you receive, typically in exchange for work or services. As a high school student, your income might come from various sources:

• Part-time job wages
• Allowance from parents or guardians
• Gifts
• Earnings from odd jobs or freelance work

Why is understanding income important?

Understanding your income is crucial because it's the foundation of your financial plan. Knowing how much money you have coming in helps you make informed decisions about spending, saving, and working towards your financial goals.

What's the difference between gross income and net income?

Gross income is the total amount you earn before any deductions. Net income, often called "take-home pay," is what you actually receive after deductions like taxes.

For example, if you earn $10 per hour and work 10 hours, your gross income is $100. However, after taxes and other deductions, your net income might be around $85-$90.

How does income relate to your financial goals?

Your income directly impacts your ability to achieve your financial goals. The more you earn (and effectively manage), the faster you can reach your objectives. However, it's not just about earning more – it's also about using what you earn wisely.