Hello again learners! It is Fenrir here. Today we are going to talk about the fuel that powers your life. Your income. We often think of income as just the money we get from a job but it is actually much more diverse than that. We need to understand where it comes from how it changes and how to grow it.Hi everyone! I am Leda. I want to help you understand exactly what happens to your money before it even hits your bank account because what you earn and what you keep are two different things.Greetings. I am Charon. I will be guiding you through the world of taxes and why they are a crucial part of our society here in Europe.And I am Aoede. I will show you how to keep your financial records safe and how your spending choices affect the world around us.Let us start with the basics. Sources of Income. Most people rely on Earned Income which comes from employment or self employment. But you should also know about Unearned Income. This can come from assets like renting out a room dividends from stocks or interest from savings. It is money that your money makes for you. There are also government benefits available for those who meet specific requirements such as unemployment support or disability allowances. Knowing these sources is vital. You must also understand that your net income may fluctuate. If you are an entrepreneur or work in the gig economy your income might be high one month and low the next. Even in a steady job income changes over time due to different career paths. A career that requires years of study might have a low income at the start but a much higher income later. We encourage you to be comfortable discussing income with others. It should not be a secret. Talking about it helps us learn and ensures we are being paid fairly. However remember that you must declare all sources of income to the tax authorities. Hiding income is illegal.That is a great overview Fenrir. Once you start earning you will receive a Pay Slip or an Income Statement. This document is the key to your financial truth. You need to understand the entries on it. The most important distinction is between Gross Income and Net Income. Gross income is the total amount your employer pays you. Net income is what actually arrives in your bank account. The difference is Deductions. Some deductions are automatic and mandatory like income tax. But others are actually for your benefit. For example contributions to a pension plan or social security are earmarked for building assets and providing you with rights later in life like healthcare or retirement income. You must check your pay slip every single month. Check your actual income against your expected income. If they differ seek to analyze why. Is there a mistake? Did a tax rate change? If you find an error ask for it to be corrected immediately. Do not be shy. It is your money. When you make decisions about spending always use your Net Income not your Gross. If you use the Gross number you will overspend. Also consider the full pay package. Sometimes a job with a lower salary is actually better if it has great insurance or pension contributions. Finally think about your income needs. Your expenditure should ideally not exceed your income. You need to assess your current needs but also make a realistic assessment of your future needs especially for retirement.Planning for the long term brings us to the topic everyone loves to hate. Taxes. But let us look at it differently. Taxes are the subscription fee we pay for civilization. In the European Union taxes are collected to fund public spending. They pay for our hospitals schools roads and emergency services. If taxes are not paid these services collapse. You need to understand what can happen if taxes are not paid. You could face fines legal action or even prison in extreme cases. It is important to accept that paying taxes owed is a civic duty. You should know how to check your tax obligations. Most countries now have online services offered by tax administrations where you can file returns and check your status. Dealing with tax matters online is efficient and transparent. You should also be aware of the different types of taxes. There are taxes on income but also taxes on goods often called Value Added Tax or VAT. There are also different tax treatments for financial products. For example some savings accounts or pensions might have deferred tax obligations meaning you pay the tax later when you take the money out. Other products might be tax free. When you are choosing financial products take these tax treatments into account. It can make a huge difference to your final return. Monitor your personal obligations and rights in light of tax policies.Organization is the best way to handle taxes Charon. This brings us to Financial Records and Contracts. In your life you will sign many contracts. Employment contracts rental agreements or service contracts for your phone. You must understand the legal implications of signing. When you sign you are agreeing to the terms and conditions. If you do not read them you might agree to something bad like high fees or long lock in periods. Today we often sign things digitally. You must understand that an electronic signature can have the same legal value as a signature in person. It is binding. So only sign if you are comfortable. If you are unsure be willing to ask for advice before signing. Once you have signed or received a financial record like a receipt or a contract you need to store it safely. Check the record before filing it in an orderly way. You need to be able to retrieve documents when necessary especially for tax purposes or warranty claims. In the case of electronic documents be aware of the existence of cloud storage. Storing documents in the cloud is convenient because you can access them from anywhere but you must understand the security implications. Use strong passwords and two factor authentication. Also keep multiple backups. If your cloud account gets hacked or your computer breaks you do not want to lose your financial history. Query uncertainties. If a record looks wrong ask the provider for a written copy.Speaking of power we also have power as consumers. This is where Sustainability comes in. Every time you spend your income you are voting for the kind of world you want. You should be aware that purchased goods or services might have different environmental and social impacts. Some products are made in factories that pollute the air or mistreat their workers. Others are made sustainably and ethically. You can factor your environmental social and governance preferences into your decision to purchase. This means you might choose to buy a slightly more expensive shirt because you know it was made with organic cotton by workers who are paid a fair wage. Be motivated to learn more about the origin and production conditions of what you buy. Question the information disclosed by the seller. Is it true or is it just marketing? We call this avoiding greenwashing. Governance performance matters too. Is the company run honestly? By being motivated to question and learn you use your income to support good practices.That is such a powerful thought Fenrir. Money is not just coins and notes. It is a tool that connects us to our community and the world.Indeed. To recap remember that income comes from many sources and you must plan for fluctuations. Always check your pay slip to understand Gross versus Net income.And remember to keep your contracts and records organized and safe. Use digital tools to help you but keep backups.And finally think before you buy. Your income is your power. Use it wisely to build a great life and a better world.Thank you for listening learners. You are now one step closer to mastering your financial future.Stay curious and keep asking questions about your money.We will see you in the next lesson. Goodbye for now!
