What is income?
Income is money that you receive, whether earned, gifted, or loaned to you. Income may be a lump sum, or you may receive it regularly through a job or allowance.
For planning purposes, think of income on a monthly basis. For example, if you receive a financial aid disbursement of $1,200 to use over a three-month period, think of it as $400 of income per month.
What are expenses?
An expense is the cost of something. Think of your expenses in categories:
- fixed needs are necessary expenses that stay the same each month (i.e. rent, loan repayment)
- variable needs are necessary expenses that vary from month to month (i.e. groceries, transportation)
- wants are optional expenses (i.e. entertainment, eating out)