LowestRates Reads: The Wealthy Barber by David Chilton

We’re back this week with another book in our personal finance book review series! Last week, our review was of Wealthing Like Rabbits by Robert R Brown. This week, Maureen Genore reviews a well-loved personal finance classic.

Book title: The Wealthy Barber

Year published: 1989

Author name & bio: David Chilton is an author, investor, business owner, and TV personality (most notably as a Dragon on Dragon’s Den). He self-published his first book, The Wealthy Barber, in 1989, and in 2011, published a follow-up, The Wealthy Barber Returns. He currently resides in Waterloo, Ontario, where he runs his own financial planning business and publishing company. You can find David on Twitter.

What’s this book all about

The Wealthy Barber is an international bestselling classic. Despite being the oldest book we’ve reviewed so far, it’s key principles are timeless and apply today more than ever. It’s written in a very quirky (and, ok, sometimes cheesy) way, with plenty of dad jokes sprinkled throughout — which I’ll admit is a big part of why I liked it. Unlike most other personal finance books, the advice in this book is offered by way of a narrative. The story is set in Sarnia, Ontario and outlines the tale of three young professionals that learn the basics of financial planning from an unlikely source: their friendly neighbourhood barber.

Who should read this book?

Anyone looking to start out on the road to financial success would welcome the advice in this book. More specifically, anyone aged 20 to 45 who’s struggling to make all of life’s scary financial decisions would benefit from giving this a read.

3 biggest takeaways

1. Pay yourself first.
   
   This is by far the most important piece of advice in the book, with each new piece of advice building off of it. The advice itself is rather simple: take 10% of your income and invest it for long-term growth. Chilton stresses that the 10% needs to come right off the top, before you pay your mortgage or your phone bill and before you go out for dinner. The argument is that you’ll hardly notice the effect of 10% less money in your everyday life, but you’ll still reap the benefits down the road (thanks, compound interest!). For many people, this may be easier said than done, but if you take away anything from this book, it should be the importance of applying this principle to your finances as soon as you possibly can. (BRB, setting up an automatic transfer to my savings!)

2. You don’t have to make huge sacrifices to your standard of living to find financial success.
   
   Another powerful message in The Wealthy Barber is Chilton’s recognition that most people aren’t willing to dramatically alter their standard of living now for future gain. While both budgeting and tracking your spending are discussed in this book, the main message is that as long as your main financial obligations are met BEFORE you spend on the things you want, you’ll be ahead of the game. If that sounds simple, it’s because it is. Pay for the boring stuff first, and go crazy with what’s left! As the wealthy barber puts it, “How we spend our discretionary income has astonishingly little impact on our financial future.” Operative word being discretionary.

3. You can have a bright financial future even if you aren’t an investment whiz or makin’ the big bucks.
   
   The most reassuring takeaway for me was that, regardless of your income and financial knowledge, you (yes, you!) can achieve your financial goals. Obviously, sometimes life happens and you might not always be where you want to be at a given time, but if you’re in it for the long haul, you don’t need to be a genius to have a comfortable future. It’s comforting to know that you don’t need to spend a lot of time managing your investments or studying the stock market. The most important thing will be on your side if you start young and contribute regularly: time.

Favourite quote from book

“Wealth beyond your wildest dreams is possible if you learn the golden secret: Invest ten percent of all you make for long-term growth. If you follow that one simple rule, someday you’ll be very rich.”