The original Wealthy Barber book by David Chilton was one of my all-time, favourite personal finance books. When the author decided to introduce the second version of The Wealthy Barber, it was a no brainer for me to buy and read the book. Despite the disappointment that the book didn’t read like the first one, which I truly enjoyed, David Chilton still presents a plethora of information in the book that makes it a worthwhile read. If you enjoy reading blogs and short posts, then the new book would appeal to you because it has that feel and style. Each chapter is short and to the point. Perhaps the only drawback to this approach to writing is that someone may not get engrossed into the story as they did with the first Wealthy Barber book.
Thankfully, the language is still very easy to understand and it’s a book that is definitely aimed at the novice individual to personal finance. One of the things that would have made it easier to read would have been to include more diagrams and figures. Since the book is very text heavy, it may take the reader a bit more time to digest the information in each chapter.
The book has been updated to include newer topics and more strategies related to investing and personal finance. There are talks about debt, RESPs, TFSAs and index investing that weren’t as prevalent in the first book. Here are some of the highlights of the book that I found noteworthy while reading:
Choosing The Right Friends
True friends don’t judge you by the amount of money you have. Although it might feel embarrassing, the book makes a great point that it’s never a bad thing to say that something is too expensive for you to participate in. It’s not about being cheap or frugal. People tend to hide the fact that their own personal finances are in disarray and continue to try to “fit” in with the crowd. If your friends truly value you for the person you are, then money shouldn’t be something that stops you from hanging out.
Taking Too Much Debt
One of the more popular trends, recently, has been the fact that people have been taking on exorbitant amounts of debt to finance their homes, cars and renovations. The book talks about the fact that even though most individuals think of it as “good debt” to have a mortgage, it can become overwhelming once borrowing costs start to rise. The author coins the term “Under House Arrest” which is similar to being “house poor”. Sacrificing everything you have to buy a house certainly isn’t the proper way to be financially successful.
Your House Isn’t An Investment
Most people disagree with this statement, but the reality is many people tend to view their home as an investment. Despite the notion that people say they will sell their home later on in life, it rarely ever happens. Thus individuals lock all their wealth in their home. This “illusion of wealth” that the author talks about is what most Canadians fall into because owning a home is so important to their own emotional well-being.
Trying To Beat The Market
When is average not average? Well the author gives a great example of why beating the market is futile. Despite the fact that many people feel that the stock markets rise too slowly and that they can do much better, the stock market indexes generally beat 90% of managed funds and individual investors. If the stock market index was truly average, then it shouldn’t be beating 90% of investors. Want to be an A student? Stick with passive investing.
Would I pick this book to be my first read? Certainly not. Is it worth the read? Sure. The Millionaire Teacher and the original Wealthy Barber are definitely at the top of my list for books to read. Though this is a very informative book, I would feel that someone that is just starting out and learning about personal finance wouldn’t understand all the terminology and strategies that are presented. Once you get a better understanding of the basics, then reading this book becomes a stronger reference to reinforce that knowledge.