Moving Ahead – Income, The First Step in our Journey

In my last post on Financial Literacy, I had talked about the whole game having three sides to it.

Let us, in this post, examine the first i.e., the income side.

All our efforts in life are to earn adequate income and more. Many of us opt for a job and work out a career plan thereon. Others with a family business would probably take this opportunity that already exists. There are many others who have been bitten by entrepreneurial bug and want to strike out on their own – the first generation entrepreneur.

It is also possible that later in life some would cross over from the comforts of a job to the wild thrills of striking out on their own and at the same time many will want to switch to a job after a few years of doing their own thing.

Whatever the choice made, it is the result of various influences in a person’s life, the past and current circumstances existing in that person’s life, upbringing, family background and such other intangibles.

Depending on the choice made and, how the person shapes up later in life will determine the level and flow of income. It logically follows that this will vary from person to person and keeps changing at different points of time in a person’s life.

At this stage it will be useful to examine “Income” in the light of the following factors:

• Age of the income earner,
• Quantum of total income in a period – say a year,
• Quantum of income at shorter intervals – say every month – whether fixed or fluctuating amounts,
• Regularity of income – Whether at regular intervals or are they random inflows,
• Possibility of increase in Income in future or decrease (in bad times) or what happens if it stops (due to death, disablement or retirement) or whether it remains flattish,
• Vulnerability of income to changing circumstances – These may be economic or from obsolescence of one’s skills or it could be for any personal reasons - health. E.g., Due to growth of supermarkets, smaller grocery shops could face squeeze in profit margins and incomes of that businessman may be threatened by competition. (There will be many similar or different live examples).

Everyday, we see differences between people. Incomes vary, levels of wealth vary, capabilities of earning are different, attitudes are different and a host of other things.

Let me now go back to my earlier post and highlight a point made then, which is very relevant here.

“Under each of these heads lie all the complex variables that interplay with each other and make each person’s financial situation as unique as it can be.”

I have attempted to list just a few variables that impact a person’s life in general and its effect on the monetary situation. In the next post, I will attempt to study “Income” from another perspective.