Families set to have £482 extra income this year

earnings boost

earnings boostThere could be good news for earners everywhere, if the Ernst & Young ITEM Club has got it right, as the group has predicted that our incomes are finally set to receive a boost in the next couple of years.

The average earner will see their finances boosted by extra income of £482 this year, loosening the purse strings that have constricted consumer spending over the last five years.

By 2013, the key forecasting group predicts this figure will rise to £624, giving us significantly more freedom when it comes to family budgeting. How could you best make use of the extra income?

Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "After the tightest squeeze on consumer incomes in a generation, the worst is now behind us and most people should start to feel a bit better off by the end of the year."

But this will only happen so long as oil prices continue to fall, pushing inflation back towards the Government's 2% target by the end of the year and bringing prices in line with wages.

Slow and steady recovery

However, this does not mean everybody can suddenly go splashing the cash. Although spending growth is forecast at 0.8% this year and 1.1% in 2013, high streets will not see an instant revival because many of us still need to pay off debt.

Families must remain cautious with their money, keeping a vigilant mindset as we certainly are not out of the woods yet.

Mr Goodwin added: "It's an improving outlook for the UK high street but it's going to be a slow and steady recovery.

"We still need to keep our fingers tightly crossed. The eurozone crisis continues to cast a long shadow and consumer confidence could easily take another hit if the situation worsens, particularly if unemployment nudges up."

Stay savvy when shopping

With this in mind, it is important to try and save money wherever possible by using various shopping tips.

For instance, don't get caught out by the 'contrast effect'.

Shops often put different priced products next to each other to make you buy the more expensive one, tricking you into thinking it is the best, when the least expensive one is perfectly adequate for your needs already.

Also, keep an eye out for vouchers and discounts. Whether the saving is large or small, always remember that every penny saved can go a long way!