45 of 45 people found the following review helpful:
4.0 out of 5 stars
Excellent beginners guide to financial planning, August 2, 2004
This review is from: The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent (Paperback)
This book was required reading as part of a Master's course on Personal Financial Planning. The book is an excellent beginners guide to financial planning. The format of the book can either be pleasing and interesting or wordy and rather boring, depending on the background of the reader.
Unlike many financial planning books, this book has a plot. The plot revolves around 3 people, the main character (Dave, a teacher), his self-employed, wealthy sister (Cathy, Landscape Business owner), and their friend (Tom, a plant worker). Dave goes looking for financial advice and after asking his father, he is pointed to Roy, the town barber. The 4 of them have monthly meetings as they get their hair cut, where Roy teaches them a tidbit on financial planning at each meeting. The topics covered include The Ten Percent Solution (fun money for retirement), Wills and Life Insurance, Planning for Retirement, Real Estate Investment, Saving, and Taxes.
The book is somewhat like giving an appetizer to a person who has not eaten in a week, it helps, but it is not enough. The book does cover many excellent points, such as compound interest, one of the most important concepts in saving. The idea of a Ten Percent Fund is outstanding and is something I would not have thought of. The book then does an admirable job explaining why a person should have a will. The book begins to trail off with the life insurance section. This is the first point in the book where the reader should be calculating numbers. However, there are no worksheets, poor and insufficient examples, several suggestions, and no equations to make your own calculations; in short, if I was not aware of how to calculate how much life insurance to get, I think I would have still been clueless after this chapter. The planning for retirement section does an admirable job explaining various retirement savings vehicles, but there is little or no mention on figuring out how much a person should save. Once again, there are no worksheets or equations to walk a person though calculating or estimating how much they should be saving for retirement. The chapters on real estate and taxes were informative and were definitely worth reading. The chapter on saving was ho hum; it covered some points, but was mostly common sense.
I think the book could have benefited from a chapter dedicated to changing your investment types as the date of a goal approaches, such as retirement. The information on asset allocation is spread throughout the entire book. I also think the book could also greatly benefit from some detailed examples, especially on the life insurance sections and retirement sections.
The book starts out making it sound like life could be good if a person could save 10% and invest is wisely. By the end of the book, the ten percent fund is separate from retirement savings and saving for your children's education. Though no numbers are used after introducing the ten percent fund, I estimate a person needs to save and invest 20% of their income to save for play money, retirement, and children's college education. I think most people would have difficulties saving that much.
The book is an excellent beginning point in the world of financial planning. I feel the book discusses the items most people would be interested in; however, I think the book could benefit from more detail. The plot makes the reading interesting, but slow and inconvenient to locate information in past chapters. I think the book is definitely worth reading for people who are inexperienced in planning their finances for the future, especially young people just getting out into the world. The earlier saving starts, the less painful it is.
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40 of 41 people found the following review helpful:
5.0 out of 5 stars
An outstanding, if corny, introduction to personal finance, March 15, 2000
This review is from: The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent (Paperback)
The Wealthy Barber has been a treasured resource in my household since the first edition. It was given to each child, cousin, grandchild, etc., in their mid-to-late teens, and to anyone else who needed remedial help in understanding the basics of starting a financially sound life. While written in a fairly goofy style, the stories and characters make it a bit more palatable than a textbook, especially for youngsters. And it doesn't get into complex issues or try to sell you anything (a la Motley Fool) -- it simply provides a great starting point -- and if it were the only book you ever read on finance, it would be enough. I highly recommend this for all teenagers, college students, young newlyweds, or anyone else who needs to start at the very beginning.
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25 of 25 people found the following review helpful:
5.0 out of 5 stars
Absolutely anyone can retire a millionaire..., May 27, 2001
This review is from: The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent (Paperback)
...if you apply the principles in The Wealthy Barber soon enough!
Soon enough. Those are very important words, and they remind me of the main reason that I tend to hate books about financial planning... they usually make me feel as if the old maxim that says "the best time to plant an oak tree is twenty years ago" was coined by someone just after they reviewed my own financial portfolio! But this book is so different... it is everywhere ENCOURAGING, and ANYONE (at any age) can begin to benefit from its principles. In a light, humorous, and UN-technical way, Chilton's fictional "wealthy barber" Roy lets us in on some very basic but dynamic financial advice, such as:
- invest 10% of all you make for long-term growth. (ie. mutual funds). - pay yourself first. (have the money come right out of your bank account before you get a chance to spend it). - take advantage of the benefits of dollar-cost averaging.
He goes on to talk about life insurance, wills, real estate, income tax, and of course... the "eighth wonder of the world" the magic of compound interest, which is, simply put, interest on principal and interest, not just simple interest on principal. Listen to this scenario (from ch.4): "If you had started putting $30.00 a month away, the equivalent of a dollar a day, at age eighteen and you continued until age sixty-five, averaging a 15% annual return, how much would you end up with?" Someone in the story hazards a guess and says $70,000? The barber tells him the correct answer... (are you ready for this)? It is approximately $2,000,000. It's enough to make an oak tree turn into a weeping willow! Nobody told me about this stuff when I was an acorn!
This is why I believe that this easy-to-read book about the path to future self-reliance/prosperity should be MANDATORY reading in high-school... there should be a course called Wealthy-Barberism. A great gift for a graduate, and written in a lively engaging way that will encourage the rest of us that it is never too late to start using our common cents!
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