Why Stream? Well look at it this way, if you are working, you don't expect to get your salary for just one month in a year right? Similarly, if you are in business, you don't make money in just one transaction. Every transaction is ka-ching to your cash register.
Why do you need to know what it is? It's because your life is defined by it.
Big words Josef...er, Sherwin. (Thank you Business Mirror for rectifying it hehe).
Let me explain to you in BIG words (too).
There are only three, yes, three sources that one can get income from, be it passive or active. These are:
I would guess that 80% of the population get their income from salaries. 19% from business income, and 1% from investment income. These are just guesstimates.
Well in between those percentages are illicit activities. But that's beside the point. :-)
If you are a person who derives 100% of your income from your salary, and you don't work in a multinational company or a call center, your salary is probably in the range of Php 10,000 to Php 12,000, GROSS. Really gross, when you think about it. (It will rise as you work longer. But working longer means your employer becomes richer. Do you like that?)
This person is probably still living with his/her parents. And is helping his/her sibling get better education, pay part or most of the utilities of the house, pay for his/her parents health care, etc.
What kind of life does this person have? Close to none? The person doesn't even have any left (if there is) to save or invest!
Your income defines who you are - your lifestyle, your place in society, your capacity to help your family and society, your investment capability. Am I putting a price tag on a person's head? No. Is money a necessary instrument to attain basic needs? Yes.
I am not promoting consumerism nor excessive extravagance. However, I believe that people who say money is not important are either idealistic, or idiotic. We have to be practical, and we have to be honest. Personal finance is about doing what's good for your money, AND having the right attitude towards it. It's just that sometimes people equate money with happiness - that is why some people will never be happy because they feel don't have enough money yet (and they will probably never be happy since they lack this term called contentment).
Let's be practical folks. Have you checked the price of baby's milk lately? What about school tuition? Even a trip to the movie house costs the equivalent of a meal. Speaking of meal, have you actually thought about the cost of a VALUE MEAL? The cost of a decent VALUE MEAL almost reaches a hundred, even more! But the costs doesn't end there. What's the cost of cholesterol, have you thought about that?
If you earn more, you will be able to eat healthier foods. I know for a fact that vegetables are more expensive than meat. If a person were to have a balanced diet, then that means the person has to have MONEY to buy himself one. Money and a balanced diet are not directly related of course. But having a bigger amount of money means the person can afford to buy a diversified set of food to eat.
If you earn more, you have money to invest or save with. If you earn more you can secure your kid's future. If you have more money, you can have a house to live in.
Etc. Etc. Etc.
Your income defines the kind of life you have. Know it. Next, we will discuss why it is called primary, how the three interact, and how you will (hopefully) secure your financial future if you master the PISS.
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