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.

Income Stream

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.

Expected income

When accurately forecast over the coming months, expected income becomes the basis for a detailed, monthly spending plan.

Received income

The income that you have received is the money that you use monthly for spending, to pay bills and to set aside for savings.


While they may seem trivial, how you deposit the income you receive is a key part of your income stream. Your spending plan, that is based on your expected income, will work only if the amount of each deposit is never less than the expected amount. A deposit can be more than an expected amount, but, never less.

Types of Income Streams

There are two types of income streams.

1. Predictable 
2. Unpredictable
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.

Predictable income

A predictable income is received on an expected schedule with each receipt being a fairly consistent amount.

Unpredictable income

An unpredictable income is received on an unknown schedule and each receipt amount can be sporadic.

Managed vs Unmanaged

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.

Managed income

A managed income is included in your monthly spending plan. All managed incomes are deposited into the one checking account that you manage with your spending plan (budget).

Unmanaged income

An unmanaged income is not included in your monthly spending plan. Nor is the money received from unmanaged income streams deposited in the checking account that is used for managed incomes.

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