10 ways to boost your income in this new financial year
Whether it’s from work, savings or investments, Australians’ incomes have been squeezed, but now is a great time to rekindle some cash growth. Here’s how.
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Incomes have taken a beating during the COVID-19 pandemic as workers have lost hours and jobs, investors’ rental and dividend payments shrunk and savers’ interest rates have fallen to almost zero.
But the new financial year brings new opportunities, and it’s wise to be open to them as Australia’s economy recovers from its biggest hit since the Great Depression.
Dixon Advisory head of advice Nerida Cole said the outlook for the economy and incomes was changing quickly.
People who are nimble enough to adapt in the 2020-21 financial year will do better financially than those stuck in the past.
1 YOUR JOB
Workers who have held onto employment during COVID-19 may feel uncomfortable asking their battered boss for a pay rise, but there are alternatives.
“Look at opportunities for overtime or a new role that has a pay rise associated with it – some industries are under the pump,” Ms Cole said.
2 YOUR SKILLS
“Think about training opportunities that will set you up for a role or industry with a better pay outlook,” Ms Cole said.
Some training organisations have offered free courses in areas such as leadership and social media marketing, and dmca advisory accountant Jarrad Basnec said training expenses in industries related to your work could be tax-deductible.
“Many university courses are now changing their fee structure and the HECS program could be more affordable depending on the course you choose,” he said.
3 SPEND LESS
“In current times it might be a good idea to think of boosting your income not by earning more, but by consciously spending less,” Mr Basnec said.
Now was a great time to review where your money went, and expenses such as planned travel could be redirected to investments or other income-boosting strategies, he said.
New research by MyState Bank found Australians have resolved to spend less in 2020-21 on travel, transport, furniture, fast food and clothing.
“Being isolated has also compelled more Australians to consider new and more innovative and cost-efficient ways of doing things, like swapping out memberships at physical gyms for fitness apps,” said Heather McGovern, MyState’s general manager of customer experience.
4 WORKING FROM HOME
About 40 per cent of Australians have worked from home in some form during COVID-19, and social distancing in workplaces means many will continue to.
This can increase income by saving employees money on petrol, carparking, public transport and the expensive habit of buying lunch daily. Use those savings to grow your income.
5 SIDE HUSTLES
Second jobs have boomed as workers started side gigs ranging from renting out rooms to ferrying food, people and other goods.
Dixon’s Ms Cole said while Uber driving was not as busy during the pandemic, other side hustles were popular including IT support and home maintenance.
“And also home organisers – if you are a big organisation freak that may be good for you,” she said.
6 BANK DEPOSITS
Plunging interest rates in the past decade have wiped out most of the income available from deposit accounts.
However, people can boost their interest by keeping an eye on savings specials and higher-interest honeymoon periods.
It involves extra research and potential switching between financial institutions.
Look beyond the big four banks and consider online savings accounts that are still paying interest above 1.8 per cent, or term deposits paying more than 1.5 per cent.
7 SHARE DIVIDENDS
Big banks and other major companies have reduced or stopped their recent dividends, but share specialists expect them to recover in the year ahead.
Ms Cole said people with a longer-term time frame could consider switching funds from cash to shares but should understand that shares were riskier.
“A lot of companies have cut dividends but it still can look pretty enticing to people compared with cash,” she said.
“Don’t jump into a yield trap by buying something that looks good in the moment but in six months they downgrade their earnings.”
8 RENTAL PROPERTIES
COVID-19 has prompted eviction bans and more properties flooding some markets as short-stay accommodation switched back to traditional rentals, squeezing the income of the nation’s 2.2 million landlords.
Ms Cole said many landlords would take a hit this year but should look beyond that.
“What can you do to make your property more attractive for families, professionals or students?” she said.
“That might give you a few more people competing for your property rather than having to take a big discount for the next 12 months as well.”
9 CUT INTEREST COSTS
Refinancing your mortgage or consolidating high-interest debt into a low-interest loan can deliver an instant income hit.
CreationWealth senior financial adviser Andrew Zbik said people who switched could potentially get better deals than existing borrowers.
“Roughly every three years I have completely refinanced my personal debt,” he said.
“In the current environment banks are bending over backwards for new customers. There’s some attractive rates on home loan debt.”
10 SELL ASSETS
Investors usually try to grow assets rather than sell them down, but this period of lower incomes may create opportunities for some to sell shares, property or other investments and end up with a lower tax bill.
Mr Zbik said now might be a good time to liquidate some assets with capital gains “particularly if you have dropped down to the next marginal tax rate”.
“A lot of people won’t sell an asset they have made a profit on because they don’t want to pay extra tax,” he said.
Originally published as 10 ways to boost your income in this new financial year