Disposable income

The income of the population is the sum of material goods and money resources produced or received over a certain period of time. The role of income is that the level of consumption directly depends on the size of that.

Monetary income includes all financial income in the form of wages, income from entrepreneurial activities, various benefits, pensions, scholarships, from property, interest on deposits, rents, dividends, profits from sales of securities, services provided, and so on.

The level of income is an important indicator of the well-being of members of society, since it determines the possibilities of the spiritual and material life of the individual: getting good education, rest, meeting needs, maintaining health.

For the analysis of the level of income and their dynamics, indicators such as nominal, real and disposable income are used. Let us consider them in more detail.

Nominal income is the absolute size of the monetary income, the designated pensions, accrued wages, expressed in actual prices in effect.

Disposable income is the amount that can be used for personal savings and consumption. To measure dynamics, the indicator of real disposable income is used, which is calculated taking into account the price index. Thus, if you want to calculate the disposable income, the formula looks like this: disposable income = nominal income - taxes - mandatory payments.

Real incomes include the quantity of services and goods that a consumer can purchase over a certain period of time for disposable income. In other words, adjusted for the dynamics of the price level, that is, the quotient from the division of disposable income into the consumer price index.

There is also another definition of the concept, which means a part of the national income intended to meet the needs of the population and is created in the production process. Thus, the gross national disposable income must compensate labor costs, that is, all the mental and physical abilities of the population that have been expended in production.

However, in modern society there is an uneven distribution of national income. As a result, in certain categories of the population, resources are insufficient to maintain vital forces at the required level. In this case, the state is forced at the expense of the budget, and entrepreneurs through their own profit replenish the finances of the population and thereby increase the disposable income.

At every stage of life, a citizen of a country and his family have different opportunities to receive money. At the same time, at each stage they have their own needs, they face the tasks relevant to the stages of life. And they seek to satisfy needs in many ways.

Disposable income depends on lifestyle, class, working capacity, health, market opportunities, labor market conditions, risk situation and other factors.

Belonging to the social class obliges the citizen to lead a certain way of life, inherent in that. To ensure the ability to act according to value representations, to satisfy needs and interests, a certain level of income is required.

Stable consumption is provided by accumulation of funds, creation of funds and their redistribution. Those surpluses that were formed in favorable years are redistributed and then used in less profitable periods. This allows us to meet the needs of the population and maintain a stable standard of living.