Income and Expenses. Income Income from work A. Wage – money paid by the hour or unit of production. B. Salary – money paid on a weekly, monthly, or yearly.

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Presentation transcript:

Income and Expenses

Income Income from work A. Wage – money paid by the hour or unit of production. B. Salary – money paid on a weekly, monthly, or yearly basis.

Income from Wealth Wealth – the value of the things you own: house, car, belongings, bank accounts, savings, investments. Net worth – an individuals wealth after debts and other obligations have been subtracted. Wealth can be used to earn money.

Examples Rent – payment for use of someone elses property. Interest – income from allowing someone else to use your financial capital.

Wealth Accumulation Influenced by several factors Disposable income – take home pay after taxes. Income – when income increases people save and invest more. Less when income decreases. Expectations – When expectations are high people spend more and save less. When expectations are low people save more.

Current interest rates – higher interest rates promote savings. Taxes – tax rates on income from savings and investments can encourage or discourage savings.

The Dilemma Banks, insurance companies, stock brokerages try to persuade people to save or invest money. Businesses want you to spend more. You must decide what things to buy and also whether to save and invest.

Question In the current economic situation, do you think people should be spending more or saving more? Explain your answer based on what you have learned so far about the economy.