When carrying out any official procedure related to finances, aid, etc. They usually ask for several requirements that involve the use of a calculator. Especially in the case of aid, much is said about the family's per capita income, but how is that calculated? What is family per capita income?
In this article we explain the concept of per capita income and we will focus on the family, explaining how to calculate it.
What is the per capita income
Before explaining what family income per capita is, let's first clarify the term “income per capita”, also known as income per capita or GDP per capita. It is the result between the income level of a given country and its population. To get this number, divide the TAX ID No (gross domestic product) of that country divided by the number of its inhabitants. Therefore, with per capita income we are able to determine the level of well-being or wealth of the territory in question, at a given time.
The application of this index to use it as an indicator of stability or economic wealth of a certain country makes sense, really. By the calculation used to obtain per capita income the national income is related through GDP in a specific time period and the inhabitants of said territory. Not surprisingly, it is frequently used as a measure of comparison between different countries. In this way, the economic differences between different territories can be shown.
It should be noted that the GDP that is normally used to calculate per capita income is the one that It is expressed in nominal terms. What does this mean? Well, they use the current prices of the goods and services that have been produced during the period in question. It is unusual to use constant prices, such as real GDP.
Drawbacks
Although it is true that the calculation of per capita income is used officially, there are some people who do not agree with this method, and they have very valid arguments. It is a highly discussed ratio since it does not provide enough information. It does not take into account some aspects such as, for example, the inequality in terms of the distribution of wealth in the countries, the level of development of the territories or education. Although there is usually a direct relationship between the income of a certain place and aspects such as development, health and education, per capita income is not always able to show truthfully and absolutely the real standard of living of a citizen belonging to to a specific country.
Therefore it is understandable that many people say that per capita income does not correctly reflect reality in certain situations of social discontent or inequality. This factor is especially exposed when the economy of a country grows, but it is not reflected in the purchasing power of the citizen or in their quality of life, despite the fact that there is a macroeconomic improvement.
Family per capita income
Now that we understand the concept of per capita income, let's explain what family per capita income is. If at any time we have requested public aid, it is most likely that we have met various requirements, one of which is that the family per capita income does not exceed a certain amount of money, truth? Well then, we are going to explain what family income per capita is.
It is basically the same as per capita income but on a much smaller scale: A specific household. Therefore, the family income per capita It is the total of all household income divided by the eligible members in the family unit.
When we speak of computable members of the family unit, the following are included:
- Parents or guardians
- Children who are minors and not emancipated
- Children of legal age but who are considered incapacitated at the judicial level
How is the per capita income of a family calculated?
As we have already mentioned before, knowing our per capita family income is of the utmost importance if we want to ask for some help from the government. Since it seems like a somewhat complicated task, we are going to make it easier for you, explaining how to calculate family per capita income by following these steps:
- Find the latest statement of income, that of the previous year.
- Joint income statement: Add the amount in boxes 445, which would be the savings tax base, and 430, which would be the general tax base. The result of this sum is the annual income.
- Family per capita income: The amount obtained from the sum of boxes 430 and 445 must be divided by the total number of eligible members of the family unit in question.