Final answer:
Income is the flow of money from work or investments, while wealth is the accumulation of assets minus debts, representing net worth. They are key concepts in understanding financial status and are essential for differentiating earnings and overall financial resources.
Step-by-step explanation:
Your author discusses various terms in regards to money. He makes the distinction between income, which refers to earnings from work, pension, or social security, and wealth which is your net worth. Income is the flow of money you receive from various sources like wages, salaries, commissions, tips, pension, and social security, often measured on a monthly or an annual basis. Wealth, on the other hand, is the total sum of all your assets (including money in bank accounts, financial investments, real estate, and personal property) minus all debts (such as a mortgage or credit card debt).
A common misconception is that income and wealth are interchangeable, but they represent different financial concepts. Income measures the money flow over a period of time, whereas wealth is the accumulation of resources and is a measure of net worth at a single point in time.