Income is money you receive, either from active, portfolio or passive sources, that you don't have to pay back. Income is what makes your household finances possible.
Receiving income, however, is much more than getting some type of paycheck. Understanding the larger concept of an income stream, and what an income stream makes possible, is fundamental to the effective management of your everyday personal finances.
Your income has two parts which are the money you:
1. Have already received, and you
2. Expect to receive in the future
The bridge between these two parts of your income is deposits which convert expected income into received income.
Viewed together expected income, deposits and received income make up your income stream.
There are two types of income streams.
Predictable incomes can be either salary or hourly based. The difference is not what the income is called (salary, hourly), but, whether the amount received each time is fairly consistent or changes based on time worked.
In some instances, what is called a salary income must be forecast on an hourly basis because pay periods are such that paycheck amounts are not consistent.
If you have multiple income streams, you may not want to include all of your income sources in your
day-to-day financial planning.
The income streams that you include in your spending plan are referred to as managed incomes. Income streams which do not contribute to household day-to-day finance planning are called unmanaged incomes.