The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent

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Unlike many other popular personal finance books, The Wealthy Barber takes the form of a novel. The basic plot centers around Dave, who’s an expecting father who realizes he doesn’t feel financially prepared, his sister Cathy, who has a successful business but doesn’t know a lot about investing, and their friend Tom. All of them are in their late 20s to early 30s, and they periodically go to visit a barber in Sarnia, Ontario, who they’ve heard has become quite wealthy. The three friends wonder how this man, named Roy, has gotten so wealthy on a barber’s salary, and end up visiting him frequently as he dishes out financial advice while cutting hair. Overall, The Wealthy Barber is lauded for its straightforward, jargon-free language and ability to break down financial subjects without talking over its audiences’ head, while also not talking down to them. The book’s novelistic form provides just enough character development, plot, and dialogue to keep things moving while not distracting from its primary purpose: Dispensing financial advice. The basis of the book is Roy's advice to "save 10 per cent of all that you earn and invest it for long-term growth." In that, it draws from the advice first set forth in The Richest Man in Babylon. Subsequent chapters discuss wills and life insurance, RRSPs, buying a home, income tax and saving and spending. The Wealthy Barber is the best book of its type that I have ever read. In fact, for many Americans, it is possibly the only book they need. I wish I had written it.” —Jerry Mason, director of Education, Interanational Association of Financial Planners The Wealthy Barber: The Common Sense Guide to Successful Financial Planning. Toronto: Stoddart. 1989. ISBN 0-7737-5318-4.

Dave is an expecting father who realizes he is not financially prepared. His worries lead him to seek financial advice from the local barber.RESPs. I don't remember too much of this, because I don't have kids. But there was some other advice in the chapter: emergency funds, disability insurance, and staying informed. Roy tells them his story of becoming wealthy and he says an old man once told him to "Invest ten percent of all you make for long term growth." Roy goes on to tell them that if they saved 30 dollars a month from age 18 to age 65 at 15% annual return, they would end up with 2 million dollars. The main idea is to accept that one cannot have everything and avoid impulse buying by removing temptations which trigger overspending. This may be achieved through analysis and modification of one's personal behaviour (if you overspend on clothes, stop going to the mall and reading fashion blogs), and avoiding bad debt in the form of credit cards which carry very high interest charges, though some debt may be necessary (mortgages for example). Ultimately, wealth depends more on savings than income. Chilton's bottom line, which is emphasized in his first book as well, is that we should all save 10-15% of our earnings. Investment and income tax. If you have debt, pay off the loan with the highest interest rate first. Credit cards before mortgages. Investing is hard. I like to think I'm a halfway intelligent human being, but an understanding of the financial world has evaded me for longer than I would have liked. I cringe at government paperwork, nod and agree with suggestions at bank meetings, and hand over bank statements to my more money-savvy wife. My brother, an accountant, has tried to break down some key facts for me, but it's always come out as too jargon-filled or has made it seem like excessive effort would be required. The eldritch and arcane world of finance just didn't seem like anything I'd ever master.

The book is structured around a story of three people in their late 20s visiting Roy, the title character, for lessons in financial planning. Each chapter of the book describes a different visit and a different element of financial planning. Each month along with their lessons the three students are required to start carrying out the actions prescribed by Roy. In addition to these individuals, Roy also shares his financial knowledge with the customers of his barber shop.What I found really interesting were the sections on insurance, wills, and other elements that I consider to be in the weeds. A few years ago I started taking out some whole life insurance to supplement my company's group policy, but, according to Chilton, I shouldn't have been doing that at all, for reasons that are made really clear in the book! Save 10% of your income for long-term growth. Pay yourself first. He talks about mutual funds and investing here too. My favourite line from this chapter is when he talks about why it's harder to budget for individuals than it is for businesses: "...for too many people, a want becomes a need." Save for your retirement. Put as much into your RRSPs as you can-- this is, of course, in addition to your 10%. Start young, so you can take advantage of compounding interest. Think about buying a home. I loved this chapter. I'm in no position to buy a home, but I so often feel pressured to, even though it's not the right decision for me. Chilton writes: "Let me start by saying that whoever the ubiquitous 'they' are who say 'renting is like throwing your money away' aren't accurate. I've read that opinion in several well-known financial planning guides, and I just don't know where the authors are coming from."