1Y: Household Income Flashcards
What is Income?
Income refers to all wealth received over a period of time.
What are some common sources of household income? (8)
- Wages and Salaries: income from employment. Received as a reward for work.
- Pensions: paid to those who have retired from work.
- Child Benefit: a payment made to parents of children.
- Jobseeker’s Benefit: a payment to those who are unable to find employment.
- Family Income Supplement: a supplement is a top-up payment made to households with low levels of income.
- Interest on Savings: a reward to those who save money in banks, credit unions etc.
- Dividends on Shares: shareholders are the owners of a company. They may be rewarded for their investment by receiving a portion of company profits called a dividend.
- Rental Income: income from rent received on investment properties.
What is Benefit in Kind (BIK) Income?
Benefit in Kind refers to all sources of non-money income received by households and individuals. They are sometimes called ‘perks’.
A benefit in kind means that the household does not actually receive any cash but is provided with goods and services which have a money value.
What are some examples of BIK?
Examples include:
- Free Travel
- Medical cards
- Use of a company car
- Health insurance paid by employer
What is Regular Income and provide some examples?
Regular Income is received on an ongoing basis and the timing and amounts involved tend to be predictable.
Examples include:
- Wages & salaries
- Pensions
- Jobseeker’s benefit
- Child benefit
What is Irregular Income and provide some examples?
Irregular Income is far less predictable and will only be received from time to time. There is also less certainty about the amounts involved.
Examples include:
- Overtime payments for working extra hours
- Bonus payment for achieving certain targets
- Lottery wins
What is a Salary?
- A salary is a fixed annual payment made to an employee as a reward for work.
- For example, a salary of €48,000 per year. It is usually paid in equal (monthly) instalments.
What is a Wage?
- A wage is a payment received for work done.
- It is normally calculated on the basis of actual work completed, or, on the amount of time spent working.
- Wages are usually paid weekly and the amount is likely to vary from one week to the next.
What are the methods on Wages can be calculated? (3)
Wages may be calculated using a number of different methods including:
- Time Rate: wages calculated based on the number of hours worked.
- Piece Rate: wages calculated based on the number of items made or tasks completed.
- Commission: sales staff may be paid a % of the value of goods and services which they sell.
What is Overtime?
Overtime involves an extra payment to employees who work extra hours above and beyond their standard working week.
What is a Bonus?
- A bonus is an extra payment received for reaching an agreed performance target or deadline. It may also be awarded for work of a very high standard.
- It is a type of irregular income
What is Gross Pay?
Gross Pay is the employee’s income before anything is deducted from it.
What is Net Pay?
Net Pay describes workers income after all deductions are taken from it. Net pay is also called ‘take home pay’.
What are the two main types of deductions from pay and what are some examples?
Statutory Deductions; These are compulsory deductions which every worker is legally required to pay.
- Income Tax
- Pay Related Social Insurance (PRSI)
- Universal Social Charge (USC)
Voluntary Deductions; These deductions are not compulsory, but workers may choose to pay them.
- Payments for private health insurance or trade union membership
- Savings
What is Disposable Income?
Disposable Income is the income which remains after all income taxes and compulsory payments have been made.
Disposable income = Gross Income – Statutory Deductions.
