Household income is the total amount of money earned by every member of a single household.
Individuals do not have to be related in any way to be considered members of the same household.
Household income is an important risk measure used by lenders for underwriting loans and a useful economic indicator of an area’s standard of living.
Formula to calculate household income.
It is usually calculated as a gross amount rather than net figure, before deducting taxes or with holdings.
To calculate it, total the gross earnings of each person living in the home who is 15 years old or older.
Example:
Calculate the household income if;
The father earns $ 5,000 per month.
The mother earns $ 7,000 per month.
Their son earns $ 2,000 per month.
There in law who has been living with them earns $ 200 per month.
Therefore;
= 5,000 + 7,000 + 2,000 + 200
= $14,200
