What Is Accessible Income? How Can You Calculate Accessible Income?

Accessible income means the money you have left to spend and save after you’ve paid your taxes and all the important bills, like your house, food, and other necessary stuff. It’s like the money you have for fun things and saving for the future. Let’s learn more about accessible income in this article.

Accessible income is the money you have for things you want, like toys, going out, or saving for special things after you’ve taken out the money you need for taxes and important stuff like food and rent. 

To figure out your accessible income, you begin with all the money you make, like from your job or any extra money you get, and then you take away the money you have to spend on necessary things.

Being smart with your money after paying for important things is important. You can use this money to save for cool things, buy something you want, pay off any money you owe, and improve your life. But it would help if you also considered the future, like saving for big things. It’s like balancing having fun now and being safe with your money for later.

Before we explore the different types of accessible income and their role in our lives, let’s first answer the primary question, “What is accessible income?

What is accessible income? 

Accessible income is like the money you have to spend and save after you’ve taken care of all your important money stuff. It’s like the money you use for fun things or saving for special stuff. It’s important because it helps you figure out how much money you have for the things you like.

Accessible income is like a money adventure. First, we start with all the money you make from your job, bonuses, rent, and other ways you get money. But then, we have to take out some money for taxes. These are like the rules that say we must give the government some money. Once we take out the tax money, we have what’s left: your accessible income.

Okay, so we’ve taken out the tax money, but there are still other important things we have to pay for, like our house or apartment, water, food, going to the doctor, getting around, and paying off any money we owe. After we’ve paid for all those things, we see how much money we have left. That leftover money is called our accessible income. We can use this money for fun things, saving for the future, or other things we want to do that aren’t super important.

Using our accessible income wisely is important for making good plans with our money. We can use this money to do many cool things, like saving for a rainy day, when we’re old and want to stop working, or even buy something like pieces of companies or houses. To make sure we do it right, we make a money plan called a budget. This plan helps us figure out what we want to do with our money and how to make it happen.

Everyone’s accessible income is different because some people make more money, pay different taxes, or have bigger bills to pay. And guess what? It can change as things change, like when we get more money at work or if the government makes new money rules. So, it’s important to keep looking at our money plan and make changes when we need to. This helps us use our money in the best way for the things we want to do now and in the future.

What are the different types of accessible income? 

Accessible income comes from different places, like when you work, or maybe you get some money as a gift. Knowing where your money is coming from is important because it helps you make good plans with your money and know how much you can spend or save.

  • Earned income 
  • Passive income 
  • Investment income 
  • Retirement income 
  • Government assistance 
  • Business income 
  • Rental income 
  • Miscellaneous income 

Earned income

Earned income is the money you get when you do a job or work for someone. It’s like your allowance for helping with chores but for grown-ups. But remember, some of that money goes to taxes, like when you buy a toy, and some goes to the store. So, you don’t get all of it, just what’s left after paying taxes.

Passive income 

Passive income is like money that comes in without you having to work a lot. It’s like when you have a toy that makes sounds or does something fun. For grown-ups, it’s when they have houses and people pay them to live in them or when they have money in a special place, and it makes more money over time. It’s like having different ways to get money without working all the time.

Investment income 

Investment income is like making money from your money. Grown-ups put their money in special things like company pieces (stocks), loans (bonds), or a mix of them (mutual funds), and sometimes even houses. When they sell those special things for more money than they paid or when they get paid a little extra because they let someone borrow their money, that’s how they make investment income. It helps them have more money for fun things or save up for big stuff.

Retirement income 

Retirement income is like a special kind of money grown-ups get when they stop working because they’re old. It comes from different places, like a savings plan they had at work (401K), money they saved for a long time (pensions), and even money from the government (social security). It helps them have money to enjoy life when they’re not working anymore.

Government assistance 

Once in a while, when individuals make some extreme memories with cash, the public authority helps them. It resembles when your companion shares their toys when you feel sad. The public authority gives them money to purchase food, pay for a spot to live, and do other significant things when they don’t have work or when things are extreme. It resembles a well-being net to assist them until things improve.

Business income

Business pay resembles the cash individuals make from their shops or organizations. Suppose you had a lemonade stand, and you offered lemonade to individuals. The cash you make from selling lemonade is your business pay. Adults have their own enterprises, similar to stores or businesses, and the income they generate from these ventures helps them acquire the items they need while also improving their respective establishments. 

Rental income

Rental pay is when somebody has a house or a store and allows others to reside or work there. However, those individuals need to pay cash to utilize the spot. In this way, the money the individual gets from permitting others to use their place is rental pay. It resembles that if you had a treehouse and allowed your companions to play in it. However, they needed to offer you some candy as a trade-off. That candy is like rental income for you.

Miscellaneous income 

Miscellaneous income is like surprise money that you didn’t expect to get. It can be gifts from family, like when your grandma gives you money for your birthday. Or it could be a prize you win in a contest or even finding some money on the ground. It’s not something that happens daily, but when it does, it can add to your money jar.

What are the benefits of having an accessible income? 

Having money you can use for fun and saving is really great! It helps you feel safe and ready for anything. You can buy the things you need, save for cool stuff, and improve your life. It’s like having a superpower that makes life easier and more fun.

  • Financial security 
  • Improved quality of life 
  • Debt management 
  • Savings and investments 
  • Retirement planning 
  • Education and skill development 
  • Philanthropy and giving back 
  • Entrepreneurship and business ventures 
  • Peace of mind 

Financial security

Accessible income is like a safety net that helps people pay for important things like their home, food, doctor visits, and school. It’s like having an umbrella when it suddenly rains – it keeps you dry and safe. So, if something unexpected happens, like someone getting sick or losing their job, accessible income can help them stay okay and not worry too much.

Improved quality of life 

Accessible income is like having extra money to do fun stuff! You can go on trips, go to the movies, and have lots of fun. It’s like having your own treasure chest of money for all the fun things you want to do, and it makes life more exciting and enjoyable.

Debt management

Sometimes, grown-ups have to borrow money to buy important things like a house or to go to school. But when they have extra money, like accessible income, they can use it to repay the borrowed money. It’s like finishing a big puzzle piece, and it makes them feel really good because they don’t owe as much money, and they have more money to save and do fun things.

Savings and investments 

Accessible income is like magic money you can save for when you’re older. You can put it in a special savings jar for emergencies or a special account for when you stop working and want to relax. Some people even use it to buy parts of companies or houses, and those can grow into even more money. So, it’s like planting seeds to have a big tree of money in the future.

Retirement planning

Accessible income is an extraordinary method for putting something aside when you’re old and don’t want to work any longer. It resembles placing cash in a money box you can open when you’re more established. The best part is, assuming you begin placing cash in that money box when you’re youthful, it grows a ton and makes your life very comfortable when you’re old and resigned.

Education and skill development 

Accessible income helps people go to school and learn new things. Imagine you want to become a superhero, and you need to go to a superhero school to learn all the cool powers. Accessible income is like the money that helps you go to that school and get super smart. So, it’s like having the power to learn and become even better at your job!

Philanthropy and giving back

Accessible income is like having extra money that you can use to help others and make the world a better place. You can give some of it to people who need it or support things like animal shelters or clean-up projects in your neighborhood. It feels really good to help others with your accessible income, making the world happier and kinder.

Entrepreneurship and business ventures

Accessible income is like having money to start your very own business or make an excellent idea come to life. It’s like when you want to open a lemonade stand and need some money to buy lemons, cups, and a stand. Accessible income helps people start their dream businesses and make amazing things happen.

Peace of mind 

Accessible income is like having a cozy blanket of money that keeps you warm and safe. When you have enough money for the things you need, like food and a place to live, you don’t always have to be scared or worried. You can be happy and enjoy your life without always thinking about money problems.

How can you calculate accessible income? 

Calculating accessible income is like figuring out how much money you have to spend on fun things and saving after you’ve paid for everything you need, like food, your home, and other important stuff. It’s like making a list of all your money and seeing how much you have left to use in the future.

  • Start with gross income 
  • Deduct taxes 
  • Account for essential expenses 
  • Subtract essential expenses 
  • Determine discretionary income 
  • Allocate accessible income 
  • Review and adjust regularly 
  • Consider windfalls and one-time income 

Start with gross income

To calculate accessible income, you start by looking at all the money you get before any of it is taken away. This includes the money you earn from working, like your allowance, any extra jobs, or even money you get for your birthday. It’s like counting all the coins in your piggy bank before you spend any of it.

Deduct taxes

Next, you take away some of the money for taxes. Just like when you buy a toy, you have to pay a little extra for taxes. The government takes a part of your money to help with important things like schools and hospitals. After you’ve paid those taxes, the money left is your ‘take-home pay.’ It’s what you can use for your own things.

Account for essential expenses 

Now, we need to determine what you must pay for every month. These are things like where you live, the water and lights in your house, the food you eat, and even going to the doctor sometimes. If you borrowed money for school or have a special card to buy things, those must be paid too. We’re making a list of all these things you have to pay for.

Subtract essential expenses

Now, we’re going to do some math. We take away all the things you have to pay for from the money you have left after taxes. It’s like taking away the cost of your house, food, and other important stuff. This helps us know how much money you have left for fun things and saving.

Determine discretionary income 

Now, we get to the exciting part! After we take away all the important money for things like your house and food, what’s left is your ‘fun and save’ money. You can use it to buy your favorite things, go to the movies, save for a super cool future adventure, or anything you want. It’s like your special money for all the fun stuff!

Allocate accessible income

Now, we can decide what to do with your ‘fun and save’ money. We can put some of it in a special jar for emergencies, so if something unexpected happens, you’re ready. Some can go into an account that grows over time for when you’re older and might not want to work. And the rest is for all the fun stuff you love, like going on cool trips. It’s like making a plan for your money so you can do all the things you want.

Review and adjust regularly 

Remember, things can change in life, just like how you might change your mind about what games you want to play. So, it’s important to look at your money plan from time to time. You may have new ideas or different things you want to do. We can make your money plan match what you want, like saving for something special.

Consider windfalls and one-time income 

Sometimes, you might get extra money as a surprise, like finding money in your pocket or getting a gift. That’s like getting a bonus! We can use that money for something special, like saving for a big adventure. It’s like adding extra fun to your money plan!


Accessible income is like the special money you can use for everything you want, like toys, adventures, and saving for big goals. Knowing how much of this special money you have after paying for important stuff like your house and food is important. This helps you plan a happy and secure future where you can do everything you dream of.

We need to do some counting and thinking to find the amount of your special money. First, we see how much money you get before you give some to the government for taxes. Then, we take away the money you use for important things like your home and food. Whatever is left is your special money for fun and saving. And remember, it’s good to check your plan sometimes to make sure it still fits with what you want to do.