Income is the elixir of financial life. It is what pays the bills and the mortgage as well as allowing us to enjoy some of life’s finer things, such as holidays in the sun.
I’ve just come back from a magical week in sunny Majorca traipsing up and down the gradients of the Serra de Tramuntana and I enjoyed every single arduous minute of it. Something I could not have afforded without the income I earn from my scribblings as a journalist.
Yet most of us want more of this magical income (it is only natural). Indeed, if there is one question I get asked as a financial journalist every working day of my life, it is this:
“How can I boost my income, Mr Prestridge? Please help.”
It is a question I find more difficult to answer if the person is retired, especially in the light of the benign interest rate environment we find ourselves in. But even for those working, there are no easy answers, especially as wage inflation continues to lag behind price inflation and we live in a world where uncertainty created by the Brexit vote refuses to go away. Near full employment is a great economic achievement, but for most it has not resulted in a boost to their standard of living and the income available at their finger-tips.
Of course, one of the best ways to ‘boost’ your income is to ensure your household bills are under control. That means locking into the best energy and phone tariffs and checking that when the renewal notice comes in for your car or home insurance, you are not paying over the odds.
I have recently been examining the ins and outs of the motor and home insurance markets in some depth (sad, eh? But it earns me an income). They are dysfunctional markets, which bizarrely fail to reward loyalty. Indeed, the opposite. The longer you stay loyal, the greater the probability your renewal premium will be costlier than comparable cover available elsewhere.
No one should show unremitting loyalty to an insurer. At renewal, you should automatically check whether it is offering equivalent cover to new customers at a cheaper price. You should also use a comparison website to see if a rival is offering comparable cover at a lower price. If either of these searches comes up with cheaper premiums, go back to your insurer and challenge them to meet the price. Sometimes they will. If not, move.
Cutting your mortgage payments (if you still have one) is also a great way of enhancing your income. I can think of no better time to review your home loan than now, given the propensity of low rates available. If you can fi x your rate at under 3%, jump at the chance.
Using cashback websites to make purchases can be financially rewarding. Although I have yet to tread into such territory, many of my friends have and swear blind by it.
I also think that those who are comfortable with others using their home, should consider the income-boosting potential of renting out a room and taking advantage of the annual tax-free allowance of £7,500. If this is too big a commitment, then maybe you could rent out your drive to commuters (if you live near a railway station) or rent a room on a daily basis.
And do not forget the therapeutic effect of putting up a stand at a local car boot sale and getting rid of unwanted items. My mother and younger sister are car boot diehards and are itching to get their hands on some of my possessions that lurk in a lock-up garage (everything from first day covers through to football programmes).
When it comes to those approaching retirement or already there, it is also a question of squeezing the maximum income from savings and investments. That means chasing the best savings rates. It should also incorporate looking at income-friendly vehicles such as equity income investment trusts and bond funds.
My modest self-invested personal pension contains holdings in income investment trusts City of London, Edinburgh, and Scottish Mortgage that have a knack of delivering a rising annual income.
I am not taking any of the income that is being generated inside my pension (I could because I am just over age 55), but I will as I drift into semi-retirement (journalists never retire, I am reliably told). My investment trust holdings should then come into their own.
Indeed, maximising income from your pension is crucial. My dad died recently, but two thirds of his pension annuity lives on for the benefit of my never ageing mother. For that, I thank the advice given by financial advisory firm Alan Steel Asset Management. Oh yes, a good adviser should help you build income to last a lifetime.
Find more ideas on how to boost your income with the Moneywise 50 ways to make money guide.
Jeff Prestridge is the personal finance editor of The Mail on Sunday. He won the Contribution to Personal Finance Education category at the Santander Media Awards 2016. Email him at columnists@moneywise.co.uk
Read more of Jeff's Moneywise articles.
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