Generation Wisdom

What is the difference between gross income and net income?

Gross Income is how much money you make before any deductions have been taken out of your wage.  For example, If you earn $11/hr and worked 40 hrs your check should be $440.  But is your check ever the full anount?  No, because you do not receive your gross income you receive your net income.

Net Income is your paycheck after deductions have been taken out.  Most commonly, Federal and State taxes are taken out of your paycheck.  There are a number of other deductions that can be taken out of your gross income such as retirement or stock payments, insurance premiums and others.

The bottom line is gross income is a total income of ones earnings and net income is what you actually get after taxes and other deductions.

One thing that separates very successful people from unsuccessful people is mind set. How you think is a determinant of who you are regardless of your occupation. We can change who we are by changing our perspectives through our minds. If you believe you will fail then you will. Your mind is a powerful tool in your life.

Having a financial mind set is not being greedy. In fact, my definition of a successful financial mind set is making wise choices to secure an abundant financial future for yourself and household, while helping others when you can. True financial character is not having or wanting wealth, but putting yourself in a position to abound and bless others.

There is no point to physical riches if you don’t enjoy them. By that I mean happiness is more important than money. If how you acquire wealth kills your happiness it’s not worth the price of your heart. Money is good, but its not everything life has to offer you.

Your credit is like your financial reputation. 

It is just like a friend who always borrows money and never repays you.  After a few times of loaning them that $5’s they never give back you wise up and realize they are never going to repay you.  So you stop lending them your money.  But what happens when you have a friend who always gives back what they borrow?  You as a lender happily let them borrow, because they have a great reputation.  Their is no question about their integrity, because they have proven it to you.

Credit is the exact same thing.  Bad credit is someone with a bad financial reputation, and good credit is someone with a good financial reputation.  The lender looks at your credit score and determines what kind of reputation you have, because he wants to know you’ll be the kind of person with integrity to pay him back.

If you have any questions about credit send me an email generationwisdom@yahoo.com or drop me a comment at the end of this posting.

Your credit reputation is very important!  With bad credit or no credit you’ll be over charged by companies, banks and you may not even qualify for credit.  Here are some reasons you’ll want good credit as an adult: to get a cell phone account, have decent car insurance rates, receive home loans or car loans, get credit cards…the list goes on.  At one financial meeting I went to the speaker said soon employers will judge your ability to do a job you are applying for based on your credit scores.  For all these reasons and more I want to stress the importance of having a good financial reputation. 

Take care of your financial future today by learning what you need to do in order to build a great financial reputation through your credit score.

The yearly financial cycles are divided into four quarters.  Each quarter consists of three months: Q1 is January through March, Q2 is April through June, Q3 is July through September and Q4 is October through December.

The Gross Domestic Product (GDP) is a measurement of a nation’s wealth.  GDP measures national economies by calculating national income and outputs.  The GDP is calculated by adding up the total market value of all the goods and services produced in a specific country.  So, the short version to understand GDP: you add up every product made or service supplied in the country and you will have a number called the GDP.

A recession is a period of time where the country’s GDP did not grow or is negative.  The textbook definition is two business quarters in a row that have no GDP growth or have negative GDP growth, meaning a loss.  If a recession is not corrected in the economy the recession can lead to a depression. 

As budgets get tighter, and households begin to clutch every penny we see America changing.  Yes, the current GDP figures (see National Economic Accounts Posting) show we are in a recession, but not a depression.

These financial times are challenging and unnerving as so many changes are taking place in America and around the world.  You’re young and free.  Now is the time to learn and plan ahead.  Your financial future is in your hands.  If you understand how money works and how to use money responsibly you can secure a bright financial future by making smart choices with your money.  I call this Financial Wisdom, and that is what I hope to teach you on this website.  Read the rest of this entry »

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