MEANING AND DIFFERENCE BETWEEN INCOME AND WEALTH

1. Income:
   • Meaning: Income refers to the money that an individual or a business receives regularly for providing goods or services, or through investments. It is typically measured over a specific period, like a month or a year.
2. Wealth:
   • Meaning: Wealth refers to the total assets owned by an individual, family, business, or community at a specific point in time. It includes not just money but also possessions, investments, real estate, and other assets.

Now, let’s illustrate the key differences between income and wealth with a table:

Aspect	Income	Wealth
Definition	Money earned regularly over a period.	Total assets owned at a specific point.
Nature	Flow	Stock
Measurement	Periodic (e.g., monthly, annually)	At a point in time
Examples	Salary, wages, dividends, interests, rent.	Savings, investments, property, stocks.
Impact	Indicates the financial inflow.	Indicates the overall financial position.
Variability	Can fluctuate frequently.	Changes with financial decisions and market conditions.
Focus	Reflects earnings and spending capacity.	Reflects accumulated assets and net worth.
Importance	Necessary for day-to-day expenses.	Important for long-term financial security and stability.

Key difference points:

1. Nature: Income is a flow, representing money earned over a specific period, while wealth is a stock, representing the total assets at a point in time.
2. Measurement: Income is measured periodically (monthly, annually), whereas wealth is measured at a specific moment.
3. Examples: Income includes salary, wages, dividends, etc., while wealth comprises savings, investments, properties, etc.
4. Impact: Income indicates the flow of financial resources, while wealth indicates the overall financial position and net worth.
5. Variability: Income can fluctuate frequently due to changes in employment, investments, etc., while wealth changes with financial decisions and market conditions.
6. Focus: Income reflects earnings and spending capacity, while wealth reflects accumulated assets and net worth.
7. Importance: Income is crucial for day-to-day expenses, while wealth is important for long-term financial security and stability.