LAST week we identified cost-cutting stategies that the average Joe, struggling to make ends meet, could use to increase savings. Today we highlight how Joe can go about boosting income.

Wealth advisors frequently identify three different types of income:

* Earned Income (or Active Income): This generally refers to payment — usually in the form of salaries or wages — one receives in exchange for actively participating in a trade or business. For example, the income earned from your regular job.

* Portfolio Income: Income from investments in paper assets, such as stocks or bonds.

* Passive Income: Earnings that do not require active participation, such as property rental payments and royalties. This type of income usually has a lot of tax advantages.

We have already established that Joe can’t rely on just one source of income, especially one that only allows for savings of just over $2,000 per month. A good option for him/her is to earn extra cash through a part-time job at another company or by using his/her entrepreneurial skills in a personal business venture.

Cherryl Hanson-Simpson, financial consultant and money coach, and founder of Financially SMART. Services tells Sunday Finance that many Jamaicans try to think of ways to supplement or replace their incomes, but generally there is a lack of knowledge about all the possible options they could choose from.

“We need to become more aware about the wide variety of income-generating opportunities that are available locally and internationally,” says Hanson-Simpson. “Look for ways to earn more by identifying people’s needs and problems in your community, school, workplace or church; and become creative in using your skills and talents to fill their needs and solve their problems.”

Financially SMART. Services hosts interactive one-hour seminars showcasing opportunities within dozens of areas that people can look to for simple income generating ideas, including the Internet, agriculture, food, and trading. The Internet, for example, Hanson-Simpson explains, has “millions of prospective customers available” and the “options for earning online are almost endless”.

By generating more earned income, Joe increases his/her disposable income and expands his/her opportunities for investment.

One of the most basic rules of investment is to convert as much earned income into portfolio or passive income. According to Gary Peart, CEO of Mayberry Investments Limited, considering Joe’s modest monthly savings, other than looking at alternative means to increasing earned income, Joe should seriously look at investing in local equities.

“You can’t buy real estate because you don’t have enough money, but through stocks, you can get ownership in a company that’s doing really well with that money,” advises Peart, who is bullish on the local equity market against the background of the Jamaica Debt Exchange (JDX) programme which will see interest rates on domestic government bonds significantly slashed.

“If you look at this debt restructuring, while companies will take a hit once restructuring is done, after the restructuring, with interest rates at 12 per cent, it means that asset prices are going to jump, real estate prices are going to move back up and also equities,” he says, adding that “…if you’re only getting 12 per cent on fixed income, the equity market can easily give you 15 to 20 per cent.”

Peart also suggests that Joe can increase his income through global bonds.

“Right now global bonds are yielding 10 and 11 per cent, so if you’re earning 10 to 20 on Jamaican dollars, why not buy a global bond that is earning 11 per cent in US dollars,” he says.

The Mayberry CEO also chips in that Joe can invest in his education, financing a degree or a certificate course in an area where he/she lacks expertise.

“Once he gets that qualification, he can come back in the job market and demand a higher salary,” Peart advises