3.3.1—Income vs wealth

Income is money or benefits received over a period, such as wages per month. Wealth is the value of assets owned at a point in time, such as property, savings and shares, minus liabilities.

Income can add to wealth through saving, while wealth can generate income through rent, interest or dividends. A person can have high income but low wealth, or low current income but substantial assets.

A graduate earning £40,000 a year has income; a homeowner’s house and pension fund form part of wealth.

Income is not “how much someone owns” and wealth is not simply one year’s earnings.