Household Income

Sound financial management starts with gaining a good understanding of your household income and expenses.
Household income is the combined incomes of everyone sharing a household. In our experience this will most frequently mean a couple that are both “income contributors”. Household income includes every form of income such as salaries, wages, rental income, retirement income, investment gains, and child support, amongst others.

To understand your financial position it is important to differentiate between gross income, net income and net disposable income:

  • Gross income is income before income tax and other deductions. For individuals, standard deductions usually include items such as provident fund, unemployment insurance and medical aid.
  • Net income is income available after the above mentioned deductions have been taken into account.
  • Net disposable income refers to the income which is left over after taking into account all your expenditures. A negative net disposable income means that your expenses exceed your available income. An increasingly precarious financial situation can be expected if this “deficit” is not brought under control and eliminated.