Luisa Rollenhagen is a journalist and investor who writes about financial planning for Wealthsimple. She is a past winner of the David James Burrell Prize for journalistic achievement and her work has been published in GQ Magazine and BuzzFeed. Luisa earned her M.A. in Journalism at New York University and is now based in Berlin, Germany.
When it comes to managing personal finances, it can often feel overwhelming and anxiety-inducing to even begin getting a grip on all the terms, strategies, and options out there. The Internet obviously offers a plethora of information, but it can be nice to have everything gathered in one spot. That’s where you might be tempted to reach for an old-fashioned book. But just a brief walk down the personal finance section of any bookstore will reveal hundreds of titles. As someone with limited time and limited patience, you want to know what book to go for. That’s where we come in. We’ve looked at some of the most popular personal finance books on the market, and reviewed them to make the decision a bit easier for you. First up: The Wealthy Barber by David Chilton.Wealthsimple offers an automated way to grow your money like the world's most sophisticated investors. Get started and we'll build you a personalized investment portfolio in a matter of minutes.
What The Wealthy Barber is about
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.
Each chapter is structured around a certain nugget of financial advice, and a certain level of personal anecdote where Roy’s backstory intersects with the wisdom he’s picked up along the way. The book covers topics like saving, getting started on investing, what to think about when getting insurance, RRSPs, taxes, and purchasing a property.
Key takeaways from The Wealthy Barber
While Roy dishes out quite a bit of financial advice throughout the course of the three friends’ visits—about 200 pages worth, in fact—there are some ideas he keeps returning to:
Pay yourself first
This is perhaps one of the simplest and yet most effective lessons of the book. Roy tells Dave, Cathy, and Tom about something he calls the 10 percent solution. This refers to the way Roy says he got rich: By squirreling away 10 percent of his salary every year. Of course, it gets a little more complex as the book goes on, and Roy elaborates that saving 10 percent doesn’t mean just socking it all in a low-interest savings account. But the key takeaway remains the same: By saving and investing a certain percentage of your income every year, you’re setting yourself up for a more successful retirement down the line. And 10 percent is a nice, round number that doesn’t sound that scary, but will still have a positive effect on your finances.
Invest in low-risk, interest-paying securities
While investing is a highly personal choice, Roy tells his young disciples to start off with low-cost mutual funds and settling in for the long-term by ignoring short-term market instabilities and instead focus on investments that’ll grow for 10, 15, or even 20 years. He does discourage the three friends from stock picking, telling them that this amounts to speculation instead of sound financial planning.
Have a (professionally drafted) will
On a less cheery note, Roy advises everyone to draft a will in order to make things easier for an estate executor, as well as on any loved ones and friends. It’s a bummer, but Roy nonetheless keeps insisting on it throughout the book.
Real estate isn’t for everyone
While buying your own home might seem like one of the most secure financial strategies out there, Roy is actually a bit more hesitant. He acknowledges that it’s a solid investment, but if you’re just starting out on your financial journey and won’t be able to cover a large part of the down payment, he suggests that renting might be better.
A review of The Wealthy Barber
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 financial advice in the book is straightforward and simple. The advice is accessible, doable, and non-intimidating and focused on long-term, sustainable growth and habits, instead of relying on get-rich-quick schemes or stock-picking tips, which often comes to mind when thinking of financial-help books. ‘
This is a book for absolute beginners—newbies who are just now starting to think about their financial journeys and are unsure where to start or how to feel about certain subjects will surely appreciate the book’s hand-holding approach. Other readers who might already be further along in their journey or are looking for investment advice that goes beyond “low-risk, long-term mutual funds” may get frustrated by the book. Anyone looking for more specialised advice on how to trade commodities or more in-depth financial perspectives won’t find them in this book.
The simplistic style also bleeds into the storytelling: Dialogue can feel a bit stilted, the plot can become a touch predictable. After all, Chilton isn’t a novelist; he’s giving you basic financial advice, packaged within a digestible story. If you’ve already got the foundations of personal finance down, then you might find yourself getting bored with the book.
About The Wealthy Barber author
David Chilton is a Canadian author, investor, and television personality who appeared as a judge on the show Dragon’s Den, a reality-TV show about Canadian entrepreneurs trying to secure funding from investors. In 1989 Chilton rose to fame as his book became an instant best-seller, selling over two million copies and rising to the top of finance-book bestseller lists.
Where to get the book
If you’re interested in checking out The Wealthy Barber for yourself and getting a good, back-to-basics overview of personal finance concepts, then you can get the most recent updated third edition of the book on Amazon or in bookstores. Depending on where you buy it and whether it’s new or used, you can find a copy for CDN $15-30.
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