Talking Cash: Wealthy Barber returns with more sage financial advice
The first book sold over two million copies in Canada and is probably the first book any Canadian should read about financial planning. It was written featuring fictional characters discussing their issues with personal finance, with advice being dispensed by the titular character, the so-called wealthy barber. Chilton's personal financial advice to the reader was related through this character.
The new book is a bit different. Chilton has ignored the fictional format to present a book that is basically a varying mix of short chapters on individual finance topics, such as lines of credit, budgeting and saving for retirement. It's one of those books that you can open up to pretty much any chapter and start reading and you won't be lost, as each chapter works like a brief anecdote about its particular topic.
Although there's been a change in the book's format, Chilton's advice hasn't changed much from 1989. There are really three key points from the original. These points are worth repeating here because they're probably the best (and simplest) advice you'll ever get about financial planning:
1. Pay yourself first. Chilton thinks budgeting doesn't work because people are too easily dissuaded from sticking to a budget. Instead, you need to save about 10 to 15 per cent of your income right off the top (other financial planners advise for up to 30 per cent). For example, you could have an automatic withdrawal setup to immediately deposit 15 per cent of your paycheque into an RRSP every time you're paid.
2. Spend less than you make. This is self-explanatory. Don't use credit to buy things you can't afford, because this erodes your saving power. You have to live within your means, which has been a huge problem for Canadians over the last 20 or so years.
3. Avoid debt, and pay it off as quickly as you can. Paying down debt is probably the best return you'll get on your money, better than any investment. You need to avoid debt as much as possible and pay down your debt as quickly as possible.
The Wealthy Barber Returns is simply an affirmation of these personal financial principals. The question really was whether the advice Chilton offered in the 1989 book was still valid after the 2008 economic meltdown. The answer is a resounding yes. It is more valid than ever, actually, as many Canadians have not heeded this advice at all and have done quite the opposite by loading up on debt and living beyond their means. The new book is only worth reading after you've finished the original, and I highly recommend getting a copy of the original. Want a money-saving tip? Try the London Public Library.
Jeremy Wall is studying Professional Financial Services at Fanshawe College. He holds an Honour's Bachelor of Arts from the University of Western Ontario.