- Income
- Income is a flow of money received, often measured on a monthly or an annual basis.
- Wealth
- Wealth is the value of all the assets a household owns, such as bank savings, investments, a pension fund and a home, minus its debts.
Sources of income
Can you name five sources of income?
Four pay for the use of a factor of production; the fifth comes from the state.
Wages and salaries are payments for labour: the work a person does for an employer.
Can you think of an example?
A nurse is paid a monthly salary by an NHS trust for the shifts she works.
Rent is payment received for letting someone else use land or property that you own.
Can you think of an example?
A landlord receives £900 a month from the tenant of a flat she owns.
Interest is payment for lending money, such as savings held in a bank account or a government bond.
Can you think of an example?
A saver with £10,000 in an account paying 4 per cent a year receives £400 of interest.
Profit is what an entrepreneur keeps after a business pays its costs; dividends are the part of a company's profit paid to its shareholders.
Can you think of an example?
A café owner keeps what is left after paying staff and suppliers; shareholders in a café chain receive dividends.
Transfer payments are money paid by the state, such as benefits and the state pension, with no good or service given in return.
Can you think of an example?
Universal Credit for a family on a low income; the state pension for a retired person.