Types of Income
We all want to learn how to make more money right? When most people think “income,” their mind goes right to a traditional employee wage. But there are actually numerous types of income, all of which can be utilized to help increase your financial health and make your life more financially comfortable. The following guide to the different types of income. It is designed to help anyone better understand the most common types of income in today’s economy.
Hourly Income
An hourly income is also known as an employee’s hourly income. An hourly income is paid per every hour that the employee works. This means that their income will vary depending on how many hours they work per day, per week, per month, and so on. Hourly incomes may be set by the amount of hours that an employee is scheduled or how many hours an employee chooses to work. If someone is being paid an hourly income, they may be entitled to bonus payments if they work bonus or overtime hours.
Fixed Wage Income
A fixed wage income is also known as an employee’s salary income. A fixed wage income is an income in the form of a fixed payment paid every year, typically divided into different period payments. For instance, someone on a fixed income of $120,000 might be paid $3,000 per week or $12,000 per month. Fixed wage incomes are not affected by how many hours someone works.
Business Owner Income
Unlike employees, business owners do not technically “get a salary” from their business. Instead, business owners can pay themselves according to different schedules or methods. The most common types of income for business owners are called distributive share and draw. Draw refers to a direct payment to the business owner from the business, whereas a distributive share refers to the business owner’s share in regards to the business’s total income, gains, losses, credits or deductions. Typically, a business owner will take a draw rather than a distributive share; these are more common for partners or certain types of corporative shareholders.
Investor Income
Investor income refers to income that comes from investments. This differs from running a business or being paid an hourly or fixed wage. Investments can include purchasing stocks, opening CODs or certain types of savings accounts, and so on. Investor income is sometimes considered passive income, particularly for investments that are designed to be left alone during the investment period so that they can accrue interest. However, many types of investments in today’s market are active, requiring vigilance over their worth in order to get the most value of out them in the end.
Conclusion
In today’s economy, many people choose to not limit themselves to only one time of income. It is very common and often recommended for people to have more than one type of income. This is so we can learn to bring in more money and have a more solid financial state. For instance, someone who is receiving an hourly employee wage may invest a percentage of their income into investments. The example investor can now gain additional income through investments while still receiving their hourly age.
