If you only read one personal finance book in your lifetime, make it “The Wealthy Barber” by David Chilton. I read his book a couple of years ago and it truly opened my eyes to the world of personal finance and the power it can wield. Chilton is soon releasing his second book (about 2 decades after the original) and I will definitely be doing a review of it when it hits bookstores everywhere. Mr. Chilton wrote the book after only a few years after graduating from university and becoming a financial professional. The real gift that he has is not just stating facts about Canadian financial system, but instead telling an entertaining story and teaching his readers through real-life examples.
Why a Barber?
The premise of the book is that Chilton is a barber (the original plot seen Chilton’s main character take up the trade of bartending, but to make it more palatable it soon became the barber) who has apparently grown quite well-sized “pot of gold” on a mere barber’s salary. The other three main characters all know each other, and coincidentally are all in some need for some financial advice. Conveniently they all have different financial situations (single, family, entrepreneur etc). When they go to the barber (who is also apparently a “common sense financial sage”) they get a week-by-week (nice digestible chunks) lessons.
For some reason, the way Chilton does this is brilliant. The financial theories that advisors and planners have been preaching for decades suddenly make sense (and cents…haha personal finance nerd joke) when applied to these three “everyday people” each week. His ability to have each of the characters personify the typical questions and concerns that people have is right on the money.
The 10% Rule
Some of the simple, yet incredibly effective advice that the barber gives out is to watch consumer debt, how to judge between universal and term life insurance, how to plan a will, tax efficiency, and much more; however, his core financial system revolves around this golden principle: Save 10% of your pre-tax income, or to put it into cliché terms, “Pay yourself first.” Chilton even shows how if you ignored the rest of his advice and just focused on this, you could probably retire fairly well-off by any standards.
A True “Must Read”
I can honestly say that if the average person invested a mere two hours of their time into reading this book, they would be immeasurably better off. It is so tough to argue with Chilton’s basic logic and examples. He doesn’t do any fancy For-Ex trading, or show examples of people earning $100,000+ a year. Instead he gives a concrete building plan to financial independence. Many of the ideas you see here on My University Money are just applications of the basic theories put forth by Chilton in, “The Wealthy Barber” (which has sold over 2 million copies, and can still be found in any decent personal finance section). I can’t wait for his next book to come out to see what golden nuggets Chilton has come up with in the years since he published is original masterpiece. If I was some sort of czar of education, I would make this mandatory reading for all high school students.
You can pick up your copy of The Wealthy Barber Updated 3rd Edition : Everyone’s Commonsense Guide to Becoming Financially Independent
I wholeheartedly agree that if someone where to read just one PF book, the Wealthy Barber would be it.
I think it was the first book I read too and it really turned me onto the idea of personal finance :)
Glad to hear he has a second book out, I’m very excited. 10 years later- it must be really good!