Transcript Earned Income

Lesson 2:
Types of Income
Objectives:
• Identify sources of income.
• Identify various forms of income.
• Determine how the average wage or salary
for different jobs differs by the level of
education, job skill, or years of experience.
Earned Income
Earned income is any income generated
by working.
Source of earned income:
Labor
Forms of income:
Wage – hourly rate of pay
Salary – yearly rate of pay
Commission – percentage of sales
Earned Income
These are three employees of the same company.
What types of income are they earning?
Mark:
10% of every sale
Commission
Betty:
Regular pay - $10/hr
Overtime - $15/hr
Wage
Rita:
$70,000 - annually
Salary
Portfolio Income
Portfolio income is any income
generated by selling an investment at a
higher price than you paid for it.
Source of portfolio income:
Investments
Forms of income:
Stock Investments
Real Estate
Other Assets
Portfolio Income
Are the following examples of portfolio income?
Example 1:
Yes
Victor’s granny,
Wilma, is too elderly
to drive. She has
asked Victor to help
her sell her 1960
Buick Electra 225.
Because the car is in
excellent condition
and is an antique, it is
worth $45,000.
Wilma paid $15,000.
Example 2:
No
Mathis purchased an
apartment building,
and his mortgage is
$15,000 a month.
Mathis has tenants
who pay $20,000 a
month.
Example 3: No
Cecilia purchased
stock to build up her
investment portfolio.
Passive Income
Passive income is money you earn from
assets you have purchased or created.
Passive income is generally recurring
income.
Source of passive income:
Assets purchased or created
Forms of income:
Rental income
Business income
Creating and selling intellectual
property
Passive Income
Are the following examples of passive income?
Example 1:
Yes
Ariel is a pop star and
singer/songwriter.
Ariel’s latest project
has gone platinum.
She will receive $.45
for every song that is
sold.
Example 2: Yes
Mathis purchased an
apartment building,
and his mortgage is
$15,000 a month.
Mathis has tenants
who pay $20,000 a
month.
Summary:
• Identify sources of income.
• Identify various forms of income.
• Determine how the average wage or salary
for different jobs differs by the level of
education, job skill, or years of experience.