The Wealthy Barber Returns
I wasn’t always interested in personal finance or investing.
Sure, many years ago, I piled money into mutual funds for my RRSP, I was cognizant of paying down my high-interest debt and probably like you, I figured an emergency fund was a good idea. I did these things because they made some sense. But like millions of Canadians, I not only got some reinforcement these were absolutely the right things to do, I found out I was missing out on other essential elements in my financial plan when I read The Wealthy Barber. Insert David Chilton here with a huge thank you.
David Chilton wrote The Wealthy Barber in 1989 which went on to sell over 2 million copies and made David a household name in the process. Over a few lessons, the tale in The Wealthy Barber eavesdropped on conversations between Roy, the barber with other characters named Dave, Dave’s sister, Cathy and Tom about the basics of financial planning. Roy, our unlikely hero, starts off with the golden lesson of “pay yourself first” and the story evolves with wit and sensibility from there, talking about a 10% long-term savings commitment that when combined with other sound financial habits can help you retire with hundreds of thousands of dollars over the years. The Wealthy Barber was and still is timeless advice.
Since reading David’s best-seller, I’ve tried to emulate much of what Roy the barber told Dave, Cathy and Tom. I’ve made some mistakes and strayed from my financial path now and again over the years because, well, life happens. I lost my focus and only in the last five years or so did I gain it back. So, when I heard The Wealthy Barber Returns was hitting the shelves last fall, after a couple of decades from the original Barber release, I knew I had to buy the next one. I’m very glad I did.
The Wealthy Barber Returns has a familiar title but the format is anything but. This is not a novel, more like a collection of short stories or opinions from David as he chats to Canadians about money management principles or in some cases lack thereof. David’s book is sub-divided into two main sections. The first, offers David’s insights about saving, spending and borrowing. The second, David shares his random thoughts about personal finance and in some cases, he is quite random. Throughout the book, David’s wit shines and you get the sense he’s in your living room, watching Hockey Night in Canada over a beer with you discussing all things money between whistles and periods in the game.
In The Wealthy Barber Returns, you get a sense of how frustrated David is with the savings behaviours and rates of Canadians, encouraging you, me, and everyone else to do much more of it. Yet he does this without being overly pushy. You also get the sense of how passionate David is about personal finance, with his goal to make you a better saver, a smarter investor and give you more confidence as you read his book. In the end, The Wealthy Barber Returns improves your financial literacy so you can make better financial decisions. Not many financial books can make this unbiased claim.
The Wealthy Barber Returns does not speak from some ivory tower. David was humble to acknowledge some facts in the original were a little off the mark – like you could expect your RRSP mutual funds to make double-digit returns. Not in this decade David! Heck, I don’t even own mutual funds anymore! David also fell on his sword a bit when he argued in The Wealthy Barber that instead of an emergency fund, people should just set up a line of credit for the appropriate amount. “Whoops” David proclaims in his new book.
20 years later, you’ll find our returning barber is now a strong advocate of passive investing using index funds or exchange traded funds (ETFs), living within your means, saving first and enjoying the rest – the latter which is nothing new but refreshing because life is for the living. I think that’s the reason I liked this book so much. Great writing combined with a common-sense approach every Canadian can employ and embrace. This book covers saving, paying-down debt, understanding mortgages, TFSAs, RRSPs (including which account he prefers), life insurance, dividend-paying stocks and he even has a potpourri section.
Have you read The Wealthy Barber Returns? Do you like it as much as I did?