Consumers' incomes and types of spending

A consumer is someone who buys goods and services for his own or his family's needs; in economics we often call this a household. Everything – money and goods – that comes to a person during a month or a year is that person's income. Income received for work is wages: piece-rate (by the quantity of products made), time-rate (by time worked) or a monthly salary (a time-rate fixed for a month). There is also non-money income, for example vegetables grown on a family plot. Pensions, stipends and benefits are state aid (social transfers). Spending is of two kinds: compulsory (food, clothes, transport, housing payments – one cannot live without them) and free (expensive items, entertainment). One person's compulsory spending for a month is called the consumer basket. A family budget is a table of income and spending: if income is larger, the surplus is saved; if spending is larger, the shortfall is covered by borrowing or selling property, which is not good. According to the law found by the German statistician Ernst Engel, as income rises the share of food in total spending falls.