Have you ever had to fill out a form that asked for information of which you did not know exactly what it refers to: such as Household Income vs. Family Income vs. Per Capita Income.

Household income is an indicator of financial security, poverty, and inequality.

• Household income is an important risk factor used by lenders in loan underwriting and a helpful economic indicator of a region's standard of living.

• Household income depicts the standard of living of different households. It is also an excellent indicator of the local and national economies. This figure can also assist lenders in determining the risk of financing to a potential borrower.

• Household income influences eligibility for Health Insurance Marketplace insurance, financial assistance programs, and some tax breaks.

What Is Household Income?

Household income is defined as the total gross income before taxes, received within a 12-month period by all members of a household above a specified age.The Census Bureau notes this threshold as 15 and older.
It includes (but is not limited to) wages, salaries, self-employment earnings, Social Security benefits, pensions, retirement income, investment income, welfare payments, and income from other sources.

Household income comprises everyone who lives in the home, even if they are not related. Every member that lives under the same roof, including spouses and dependents, and every income earner contributes to household income. Everyone's earnings are considered, even if they aren't all used to maintain the home.

Household income includes any source of income from anyone who's living in your home, including:
Wages
Salaries
Payments from freelance work
Rental income
Social Security payments
Retirement account income
Interest income
Dividend income
Gain on sale of assets
Pension and annuities payments
Unemployment compensation
Food stamps
Canceled or forgiven debt
Alimony payments received
Welfare payments
Source

How to Calculate Household Income

1. Determine each person's gross income.
   Identify the gross income for each person over 15 who lives in the home. This is the income before taxes, and not net income. In addition to earnings or salaries, it is critical to include other kinds of income, including self-employment revenue, tips, and rental income.
2. Calculate the annual gross income per individual.
   To calculate annual income by multiplying the monthly gross income by 12. For instance, you know you make $800 per month in alimony payments. To get the annual gross income, multiply $800 by 12 which is the number of months in the year. Your yearly gross income in alimony is $9,600 per year. If you receive portion of your income in tips each month, estimate how much you earn in tips each month and multiply that amount by 12.
3. Total all gross income
   The final step is to combine all annual income together. This will give you the total annual household income.

Household Income vs. Family Income vs. Per Capita Income

• Only households occupied by two or more people related by birth, marriage, or adoption are considered for family income.

• When calculating per capita income, two-income earners in the same family or household are considered individually. It is the income earned by each person.

The Difference Between Average and Median Household Income

The Difference Between Average and Median Household Income
The average household income is calculated at by dividing the total earnings of all members of a household aged 15 years by the total number of people living in that house.

The median household income is the figure in the midpoint of all earnings. To illustrate this, let us say that five people earns $100K, $80K, $60K, $40K, and $20K. The midpoint of all earnings is $60K, therefore the median household income is $60,000.

Median Household Income by State 2023

Source

Here are the 10 states with the highest median household income:
District of Columbia - $90,842
Maryland - $87,063
New Jersey - $85,245
Massachusetts - $84,385
Hawaii - $83,173
Connecticut - $79,855
California - $78,672
New Hampshire - $77,923
Alaska - $77,790
Washington - $77,006

10 Countries with the Highest Median Income, March 2021 (PPP, Current Int$):
Luxembourg - 26,321
United Arab Emirates - 24,292
Norway - 22,684
Switzerland - 21,490
United States - 19,306
Canada - 18,652
Austria - 18,405
Sweden - 17,625
Denmark - 17,432
Netherlands - 17,154

How does your household income compare to the above?

Lenders frequently utilize statistics such as household income to determine how hazardous an applicant would be as a homeowner. It is also used by financial professionals in the housing business to analyze whether a typical property in a certain area is affordable to the average household.

You can determine your own household income and that will help you evaluate if your income is more or lower than the median. It will help you determine whether a lender would consider you a viable applicant for a loan.

Knowing what your household income is can help you with the financial planning for your family.

I will leave you with a quote:

"Bottoms in the investment world don't end with four-year lows; they end with 10- or 15-year lows." — Jim Rogers
While 10- to 15-year lows are not common, they do happen. During these times, don't be shy about going against the trend and investing; you could make a fortune by making a bold move or lose your shirt. Remember the first quote in this article and invest in an industry you've researched thoroughly. Then, be prepared to see your investment sink lower before it turns around and starts to pay off.

References:
https://www.census.gov/
https://www.hhs.gov/answers/health-insurance-reform/what-is-the-health-insurance-marketplace/index.html
https://www.investopedia.com/terms/n/netincome.asp
https://webtribunal.net/blog/how-to-calculate-household-income/
https://worldpopulationreview.com/state-rankings/median-household-income-by-state
https://www.investopedia.com/terms/h/household_income.asp
https://www.thebalancemoney.com/what-is-household-income-5188180
https://cc-seas.financialaid.columbia.edu/ask/faq/question/4612
https://www.jimrogers.com/breakfast-of-champions/
https://ecency.com/post/@leoglossary/leoglossary-main-menu

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@silversaver888

^{I am not a financial adviser. This article is not meant to be financial advice. My articles on cryptos, precious metals, and money share my personal opinion, experiences, and general information on cryptos, precious metals, and money.}

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