The Wealthy Barber – David Chilton. 1 of My Favourite Finance Books.
The Wealthy Barber – David Chilton
One of my top finance books out there is the original Wealthy Barber by David Chilton. Maybe it strikes a chord with me because the barber shop is based in Sarnia Ontario. My sister used to live there and I would go there from time to time. I never actually looked for this barbershop though.
Since I was such a fan of this book when the new wealthy barber returns came out, I had to have it. I tell ya right now I wasn’t a fan get this one instead. While his 2nd book is good the original reads like a novel and really sucks ya in.
About the Book
The book is based on 3 siblings who are tired of making money and having nothing to show from it. One day Dave (one of the kids) asks his dad about money and he mention’s to go see Roy at the barbershop. His folks learned everything from Roy and say they should learn whenever they get their haircuts there. Dave tells his sister and other brother about what his dad says luckily for them they need a haircut. Off to the barbershop.
Over the course of the summer Roy the barber teaches them about the basics of finances. Saving, good debt vs bad, wills life insurance, Real estate, mutual funds, stocks and RRSP’S. (the new one talks about tfsa’s) In the tfsa regard its a little dated since they weren’t around at the time of writing.
Every month they go for a new haircut and learn something new and get homework. They then tell the barber and his sidekicks about what they have done and have been learning. The book tends to push mutual funds which I don’t agree with but at the time there were no index funds. That would probably be the better option now!
Pay Yourself First
The barber stresses paying yourself first… It seems so simple in hindsight but when I first read it, I was skeptical. He recommends 10% of your cheque, every time! I was broke when we read this. How could we save 10% each payday?
I followed the advice though and to this day we still pay ourselves first. My wife is always shocked every other week (when she gets paid) and her cheque is automatically deposited to our account at 3-5am. At 7am we wake up and say woot nice one! Then 15min later its barely like she got paid. I move that money right away.
I really believe you spend more if your chequing account is really high. So by instantly moving it to other accounts you don’t see it and really don’t miss it. Pay yourself first and enjoy the rest! This is one of the top things I have learned in every book I’ve read.
Like I have stated before The Wealthy Barber is one of my favourite finance books out there. For sure in my top 3. Alongside Dave Ramsey’s Total Money Makeover and The Richest Man in Babylon.
It is a fantastic book for starters looking to learn about finances. Its principles are solid and the pay yourself first idea is still a massive part of my life and one I am thankful I learned. Just wish I learned this way back.
I find used copies of The Wealthy Barber in value villages and thrift stores all the time. I like to buy the odd one and give it to friends who seem to be a little interested in learning more about finances. If you are interested in the book and would like to check it out, feel free to click the amazon link below or check your local thrift shop.
The Wealthy Barber: The Common Sense Guide to Successful Financial Planning
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.
A must read for anyone interested in finance!
I was fortunate enough to have read this book in my mid twenties and applied the knowledge from this book to save about 15% of my income on an annual basis. After I got married, I encouraged my wife to do the same.
We directed all of our savings to our RRSP accounts first to get a tax break and then use the tax refund to maximize our TFSA accounts. Pay yourself first is definitely a great way to save. It gets easier if you start this early and only spend what’s left after you pay yourself. After ten years, you’ll see a sizeable amount in your accounts.
I like David Chilton’s style of writing. Both the books are interesting.
Hmmm like i said wasnt a fan of the second. I think it was the dissapointment finding out the first book wasnt based on real people.
Nice review PCI. I completely agree that you spend more when your checking account is high as that’s a problem I’m trying to break. If I have easy access to money I’m just going to spend it.
Pay yourself first was a huge change in mindset st behavior for me and I think a powerful idea to adopt for building wealth. I used to live paycheck to paycheck without being able to save for anything. But once I started paying myself first, it made life a little less stressful.
One suggestion if possible is that it also helps to have money sent to an account directly from your paycheck without it even arriving in your checking account. That’s ideal as you learn to love without that money.
Again great review.
The automatic deposits are definally a good option. I personally dont do it. I like to decide what accounts to fund each paycheck. Ie if i throw 500$ in my sons resp i like to see the govt match 20% before adding another 5! =) haha
Back in 1989, an investment adviser (Anyone could call themselves that back then) gave me the original version of The Wealthy Barber published in 1989. The book unequivocally stated 15% annual rates of return would be the norm going forward. Your RRSP should double every 7 years even at a “conservative” 10%/yr.
I was young and naïve. 30 years later I am sadder, wiser and much poorer. It turned out Mr. Chilton was very young and had essentially no investment expertise at the time he wrote the book. I did see him in an interview years later, they asked him if he was rich and he said he was. From following his own advice? “No, from writing my book! Haw, haw!”
Do yourself a favour and find a copy of the 1989 original. Read it, compare his predictions to what has actually transpired. Then make an informed decision if this man knows anything about investing.
Sorry to hear. Those do sound like high rates of return.
Did he emphasize paying yourself first? If he did and you were saving 10% of your income what were you investing in?
Sounds like you should be richer today if you took that advice and got returns half of what he stated.
Ill try to find the 1989 one and give it a read.