Some Basics to be known other than Money

All about your Money Honey… Part 5

You are here just to refresh yourself about some basics to be known other than Money - Income, Expense/Spending, Saving, Investment, Inflation and Deflation

What is Income?

Some Basics to be known other than Money (Income = Savings + All Expenses)

# Income is money earned by means of Employment (through Salary, Wages,
Allowance, Bonus) and Investments (derived as Interest, Dividend, Rent, Capital Appreciation).

# Income is the available amount of money for an individual to spend or save after taxes paid.

# Income on Hand is gross income earned minus taxes, allowances and deductions.

What is Expense?

# Expense is the amount spent in order to get something for living.

# "Expense is the basic committed spending towards Basic food and clothing needs, Essential & non-essential household expenses (like Groceries, Utilities, Rent, Mobile Charges, Cable & Maintenance etc.,), Insurance premiums, Charitable contributions, Taxes etc.,"

What is Saving?

# Saving is basically the difference between Income and Expenditure.

# Saving is the portion of disposable personal income accumulated for another chapter of your enjoyable life.

# Saving is more focused on safety of principal and less concerned with return.

Always please remember  

"YOUR EXPENSES SHOULD NEVER & EVER EXCEED YOUR INCOME".

What is Investment?

# Investment means putting your money to work to earn more money.

# Simply understood investment is nothing but postponed consumption . 
# Savers receive interest payments and investors expect to earn a return on investment.

What is Inflation?

# "Inflation is too much money chasing too few goods"

# Inflation is an economic term used to describe the rise in the prices of goods or services, over a period of time, usually annually which is expressed as a percentage rate.

# It is also a fall in the value of money which means have to pay more for the same product what we had earlier

# It can steadily erode the purchasing power of your income. So please keep in mind to "Always Invest a portion of your savings at a higher post-tax rate of returns than inflation rate" to counter-attack the increasing price level or to recover the the loss of purchasing power.

What is Deflation?

# "Deflation is too many goods and services chasing too few money"

# Deflation is just the opposite of Inflation. So it is sometimes referred as "Disinflation". It is also fairly unusual in most of the countries.

# Deflation is when prices of goods go down. 

# It paves way for recession and depression. 

# Increasing Money Supply is the common way to counter-attack more value for money.

Categories: Deflation, Expenses, Importance of Money, Income, Inflation, Investment, Key Differences, Money Basics, Money Management, Savings