Direct income is the income which is in the form of direct money. It includes the income earned by members of family and it can be in the form of salary or earned through business.
Apart from this some people have immovable property like house, shop and land. They can get rent out of this. Money in the bank earns interest. So the money from all above sources comes under direct income.
Indirect income:
This is the income that the family gets in the form of facilities which is not provided, then the family has to spend from their own earnings.
E g: Rent free accommodation, free medical facilities free education, free transport facilities and other rebates on the items consumed daily.
Major types of family income: There are three major types of family income
Money income
Real income
Psychic income
Money income: Money income includes all the income received in the form of money or cash in terms of rupees(currency, coins , bank drafts or cheques in the particular currency of the country) Viz wages or salary , pensions, rents, gifts, interests earned from bank deposits another investments, insurance claims and bonuses etc
The following figure provides the details
Sources of Money Income Money income is defined as the purchasing power of the cash in hand over a given period of time. This period may be a day, a week, a month or even a year. Money income received in the form of wages and salaries is the payment or reward for any productive services rendered –physical or intellectual –i.e. a gardener’s service (wages) or teachers’ services (salary). These are money rewards for human ability expended. Rent is paid for using land or property of another person. Interest is paid for using savings of another person. Companies pay dividend to share holders. Business men make profit from their success in business. Money income is also received in the form of transfer, payments(majority of transfer payments are in the form of welfare payments) like maternity benefits, disablement benefits social security benefit , similarly pension income is paid for retired employee in recognition of their past service. Money income received keeps changing from time to time and also the fact that money income is received over a given period of time it should be regularly noted. Money income constitutes very important non human resources. Money is valued because of its purchasing power over goods and services like food, clothing, shelter, education etc, which are vital for human survival. Money performs important functions like
It is the very good medium of exchange
It measures the value or the worth of the commodity or services
It serves as a yard stick to measure the standard of living of any family in society.
Real income: Real income is defined as the flow of goods and services used or available to family for any given period (Gross and Crandall) Families receive real income. It comprises of goods and services which family enjoys over a given period of time. A house for example contributes to one’s enjoyment although it is not accounted for in the money income. The real values in income received are the goods and services and security and well-being that income (money) will purchase. Real income consists of both producers’ goods such as machinery, raw material, factory etc. It also includes consumer goods such as fruits and vegetables etc. Both these types of goods have wants and power of satisfaction. Real income is important for family’s living .If part of the house is closed off or when a washing machine is not used regularly the potential services of these items are not fully realized. Hence real income of a family depends upon the clever use of all items possessed by them. Real income is very important for a family .But if the prices of commodities rise and income remain the same then it will be difficult for the family to buy these goods and services. In this case we say value of rupee has gone down and the management of home becomes difficult. By proper management money can be saved and that can be utilized for wants and necessities of life.
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