You will often hear people bowing out of a trip to an expensive fitness centre in Mississauga or asking for a break from the usual rate because they're on a "fixed income." But what does a fixed income really mean? Are only poor people and the elderly on a fixed income or does the term have other meanings as well? If you've been wondering about fixed incomes, this article should be able to give you a basic overview that will fill the gaps in your knowledge.

In the literal sense, any situation where the dividends meted out are on a set schedule and comprise set amounts of money is a fixed income. People who are living off the interest from their savings are on a fixed income, as are people who are on government pensions. Mortgage Canada may be receiving several sources of fixed income at once as the result of their investments into government bonds, foreign currency, asset backed securities, or corporate bonds. It is essentially like being on the receiving end of a fixed rate mortgage.

When the income is fixed, payments are always the same and are generally (but not always) delivered on a set schedule. You may think you're on a fixed income if you work for Oshawa Dental, but the fact is that you get periodic raises, holiday bonuses, overtime, and extra money for putting in extra hours, which makes you income fluctuate and gives you some control over how much you earn so you can increase or decrease your earnings to match your expenditures.

People who are on fixed incomes, such as retirees living off their government or private pensions, do not have that luxury. Unless their fixed income metes out a generous amount, they must budget carefully in advance to buy a time share on a Toronto condo, take a vacation, or splurge on a new television. This is why so many people plead out of expenditures citing a fixed income - the expense is not in their budget and they have not been given enough time to save for it.

Unlike a job, where you put in work selling London real estate to earn your money, in order to receive a fixed income you must make a sizeable monetary investment. That means paying into your pension fund while you are still working or taking a chunk of your inheritance and investing it in securities or bonds. Both pensions and investments are loans to companies who are then obliged to pay you interest and dividends in return for the contribution to your capital funds. Investing means gaining an interest in the company. Invest enough and you might gain enough control to influence its direction.