Key Terms

Gross Income: The total earnings before any deductions, such as taxes or other withholdings.

Net Income: The amount of money left after deducting taxes and other mandatory deductions from gross income; also known as take-home pay.

Salary: A fixed regular payment, typically paid monthly or bi-monthly, often associated with a salaried position.

Wages: Payment for work done, usually based on an hourly rate, and often associated with hourly or part-time employment.

Commission: Compensation based on a percentage of sales or transactions, common in sales and certain service industries.

Bonus: Additional payment beyond regular salary or wages, often provided as a reward for exceptional performance or achievement.

Overtime: Additional pay for hours worked beyond the standard workweek or workday.

Benefits: Non-monetary compensation provided by employers, including health insurance, retirement plans, and other perks.

Pension: A fixed sum paid regularly to a retired person, typically as a result of a retirement savings plan.

Dividends: Payments distributed to shareholders from a company's profits, often associated with ownership of stocks.

Interest: Money earned on savings accounts, investments, or loans.

Royalties: Payments made to an owner for the use of their property, usually intellectual property like books, music, or patents.

Freelance Income: Earnings from self-employment or contract work, where individuals are not permanently employed by a single employer.

Passive Income: Money earned with little effort or direct involvement, often generated from investments or rental properties.

Side Hustle Income: Additional income generated from part-time or secondary work, beyond one's primary source of income.

Retirement Income: Funds received during retirement, which may include pensions, social security, and withdrawals from retirement savings.

Social Security: A government program providing financial assistance to individuals who are retired, disabled, or survivors of deceased workers.

Taxable Income: The portion of income subject to taxation after allowable deductions and exemptions.

Adjusted Gross Income (AGI): Total income minus specific deductions, used to determine taxable income.

Multiple Streams of Income: Having income from various sources, providing financial diversification and stability.