How does income differ from wealth?

Income and wealth are fundamental concepts in economics and financial literacy, and understanding the distinction between the two is crucial for analyzing economic conditions and social inequalities.

Income refers to the flow of money received, especially on a regular basis, for work, investments, or other sources. This includes wages, salaries, bonuses, and returns from investments. In contrast, wealth represents the accumulation of assets owned by an individual or entity, which can include cash, property, stocks, and other forms of assets. Thus, wealth is a stock measure, reflecting what you own at a particular point in time.

The correct understanding is that income is the money coming in over time, while wealth is what you have at a given moment. Therefore, the assertion that income is assets earned and wealth is assets already owned accurately highlights this distinction, emphasizing the temporal element of income as a continuous flow of resources in contrast to wealth as a snapshot of accumulated resources. This differentiation is essential for analyzing economic status and developing strategies for economic planning and inequality mitigation.