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What is a Household Income?

Tricia Christensen
Updated Jan 21, 2024
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Household income can be defined in a couple of different ways and is subject to a number of exceptions. Principally, this income is the sum of all gross amounts earned or collected by members of the household, and may include income made by teenagers, though this isn’t always the case. One person or several can earn this income, and information about it is used in various statistical reports, or it may be requested from people when they apply for things like government aid or credit.

It can be challenging to define what constitutes a household, or determine what money is defined as income. A household is not always all people who live in the same house. In most cases, roommates don’t pool their resources together, and they have no supportive financial obligation to each other. Theoretically, a big house with ten roommates could generate ten separate household income reports — one for each unrelated individual.

On the other hand, household income doesn’t necessarily have to be income made by people who are all related. A couple that decides to care for an elderly woman might need to count any income she brings if it is pooled with theirs. In the end, the way people decide what the income of the household is has to do with whether they share the money.

There may be some noted exceptions. A teen earner who doesn’t make very much money typically does not contribute to the household income. Various regions may define this differently, but unless the teen’s income is directly pooled with parental income or is very large, it usually isn’t included.

There are varied types of income that may be considered. Money earned at a job is contrasted to sources of income like social security, interest earnings, retirement pay, or unemployment. Whenever information about household income is required, people may need to figure out what counts and what doesn’t, and this could differ depending on who is requesting the income report.

A slightly dissimilar definition of household income can confuse matters. For many credit and loan applications, people are asked to report this income. In these cases, it usually means wages or other verifiable funds that are reported by the principal earners and the people jointly applying for any kind of loan. In this situation, it is inappropriate to report the income of anyone who won’t share in the responsibility of repaying the loan, such as the elderly woman the couple is caring for, or the teenage earner. Only those people who will be principal borrowers report income.

People who don’t earn any money still might need to know household income to apply for things like student financial aid or welfare benefits. A teen mom living at home could need to report the income of her parents in order to qualify for welfare support, and if that income is high, she may not qualify. Similarly, most applications for student aid request dependent students to list personal and household or family income.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a WiseGeek contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By Primemobi — On Jan 02, 2014
The yearly household income in my region is extremely low. Well over half of all households in the county in which I reside depend on some type of government transfer payment. There is an average of 60 percent of students in our county schools receiving free or reduced lunches based on household income data.
Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a WiseGeek contributor, Tricia...
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