Despite the fact that he's made a living coaching people on personal finance, Colin Williams is not a big fan of budgets. Few people actually stick to them, he says. Instead, he recommends the "save first, spend later technique" of money management.
"However, I do recommend that everyone should check their spending for at least one month," the director and founder of Humble Savers says. "This can reveal a lot about your spending habits and the key areas you should focus on and the foundation to your budget."
Be sure to do this with a partner or friend, he adds - you need someone to hold you accountable.
On Humble Savers, Colin offers readers practical, easy-to-implement advice on everything from saving to investing to managing debt. Here, he shares some of his favorite tried-and-true money management tips.
Tell us about Humble Savers...when and why did you start the site?
The site commenced just over three years ago. I had been in financial services since 1987, mostly managing large teams of financial advisers. There seemed to be a big gap between those who wanted personal advice from an adviser and the majority of the public, who preferred to ignore professional advice. I put this down to a lack of knowledge and access to good advice.
To encourage the public to take a greater interest in their personal finances, I started Humble Savers. I believed we needed a mix of some simple tips, (often the best) some fun and some serious stuff. This combination makes advice more accessible.
Why are you so passionate about helping others save and invest money?
I have seen so many people waste money and end up living a life that could have been much better. Money isn't everything - we all know that. But so many people work very long hours and miss out on family time to build some wealth and to lose it recklessly or getting "ripped off" - it is just a crying shame!
Just being able to save that little more and invest it wisely can make a significant positive difference to people lives and help them pass that knowledge to their family.
What have been a few of your favorite money-saving tips you've come across over the years?
My favorite is the most simple: "Save first, spend later." The majority of people spend first and then try and save what's left over. If you put a certain amount of money away direct from wages to an account that is hard to access on impulse, you will soon see it grow - a simple technique that forces you to live within your means. A much easier concept than setting budgets, which all too often fail.
To stop people losing their money, my favorite is, "If it sounds to good to be true, it usually is." All too often there are property and investment advisers promoting incredible opportunities. Rarely do these opportunities work out. As we say in Australia, they are just a scam!
My last one is, "Avoid impulse purchases." This is easier said than done, but how often have we all gone out looking for something but ended up buying something completely different on the credit card? We can all get sucked into the marketing hype and sharp salespeople. The trick is to always take time and think about it. If that means sleeping on the decision, that is a better outcome than buying something you don't need.
What have been some of the most unique ways your readers have offered for saving money?
We had a lot of fun talking about different ways of saving power and thus reducing the power bills. I wouldn't recommend all the suggestions, such as "Shower with a friend!", but each to their own. We have also received a lot of ideas for saving frequent flier miles (points). Those schemes are complex but leave opportunities to use those points that we accumulate.
What are the most common questions or concerns your readers come to you with?
The biggest concern has been investing in a world that doesn't look safe. The Global Financial Crisis (GFC) shook up the financial world, with major corporations going broke. During this time, everyone's confidence in the "markets" has taken a real jolt.
What advice do you have for investing in today's economy? What investments look worthwhile? Which ones should we steer clear of?
Stick with the basics and only invest in things you can understand. The first place to start is with a educating yourself and a financial plan. Make sure you have your cash-flow sorted and you have funds set aside for emergencies. You then plan for short-term goals, such as holidays and cars and then make sure you have money left over to save for the long term.
What should we do to get our financial house in order before investing?
Educate yourself. As touched on earlier, keep a track of your spending for the last month and you'll soon learn a lot about yourself and where the money is being spent. Learn the difference between growth and depreciation. Investments should grow; investing in things that depreciate (lose value) like cars, clothes and so on will really hurt.
When should we enlist someone's help with investment decisions?
I believe from an early age, just as you start your first job. However, don't rely upon them to do everything for you. A good financial adviser is like a good doctor. They can design a plan of action, but you must be disciplined to stick with it and learn from your mistakes.
What are some of your current favorite personal finance tools or resources?
In Australia there is a new app called Pocketbook. It gives you daily updates about your spending and also alerts you when a major expense has been raised. You also get a great weekly summary. The tools at Mint are a great resource.
As you would have picked up, I'm a big supporter of educating yourself. I subscribe to many websites that give some great tips. The Simple Dollar has always been good at delivering simple yet effective ideas for getting your finances in order. I also like Carl Richards of Behavior Gap. We are the way that we behave, and if you can change your behavior, you can make a great difference to your financial wellbeing.