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What Is Economic Income?

Economic income refers to the part of someone’s income that is left over at the end of a certain period of time, after all the essentials have been paid. This period of time can be a month, a year, or any particular span of time following the the inflow of money. Economic income is also referred to as surplus. In essence, economic income allows an individual to spend on non-essentials - however way he or she wishes to - and continue to be able to fulfill his financial obligations.

Economic income covers both realized and unrealized income. Realized income is simply income that you have received - in cash. Unrealized income, on the other hand, is “paper profit” - the income is yours but you do not hold the cold cash.

The concept of economic income is applicable both to individuals and business entities as well. For individuals, having economic income can mean that they can build up their savings account or even invest the money in other things. Economic income can also be used for leisure and entertainment purposes such as going on a vacation, purchasing a new flatscreen TV, and so on.

For businesses, economic income works in the same way. Having a surplus at the end of a specific period can mean that the business can put the money back into operations. This surplus is what remains as the profit after all expenses have been paid, including the taxes. They can choose to expand the business in order to make more money. They can also choose to invest the money in other things. A business’s economic income may also be used to give bonuses to employees.

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