The Wealthy Barber - Beginning with a Classic...
We all have to start this journey somewhere - so I grabbed 'The Wealthy Barber' by David Chilton (updated 3rd edition) from the local library. Here is a synopsis of his advice...
1.) Set aside 10% of all your income for long-term growth.
2.) Invest that 10% in mutual funds (1st choice), real estate (2nd choice-more risk).
3.) Get a will.
4.) Buy only the insurance you need - renewable, convertable, term insurance.
5.) Prepare your retirement fund by knowing what's coming your way and supplementing it. (Chilton refers entirely to the US pensioning systems, but we have lots of knowledgable expertise in Canada to research re: RRSP contrib. and GIC, etc. etc.)
6.) Own your home - one within your means and pay your mortgage off early, if possible.
7.) Save on day to day expenses
- "A dollar saved is two dollars earned";take the time to find the best deals, be thrifty.
- Keep a detailed household financial summary (budget) and learn from it. For example, you may find the operation of that brand new car is more expensive than a used one or that brown-bagging office lunches could save you $3000 a year!.
- Don't use a credit card, instead save to buy.
- Save for smaller consumer items in a competitive guaranteed invesment vehicle.
- Borrowing to buy encourages you to live outside your means... so don't!
8.) Investment advice:
- One of the best investments is to pay-off non-deductable debt (car, credit card, etc.)
- Of the stock market? Buy commodities or gold, have fun but don't rely on the market for financial planning.
9.) Income tax advice:
-"A dollar saved is a two dollars earned" - in reduced tax.
- Pay as little tax upfront as possible.
- Do your own taxes, as least preliminarily and learn from it.
- Go into business (a legitimate business) and benefit from business expense write-offs.
- Read up on advice from the professionals.
10.) Having an emergency fund of $10,000 just sitting around earning low interest is hogwash. $2000-$3000 is sufficient enough cushion for emergencies. If you want more, get a line of credit.
11.) Allow you child to earn some of their own college money. Purchase the rest with monthly payments into an equity mutual fund. Get family to help save.
12.) With a 1 in 4 chance of being disabled for 1 year during your working life, make sure you have appropriate disability insurance.
Overall, sensible if somewhat American in the specific content.
A little chatty in an attempt to be story-telling-ish, but you could pick through it easily enough. The book definitely gives you a sense of having all your bases covered financially. This strategy sets your mind at ease and was worth the read.
1.) Set aside 10% of all your income for long-term growth.
2.) Invest that 10% in mutual funds (1st choice), real estate (2nd choice-more risk).
3.) Get a will.
4.) Buy only the insurance you need - renewable, convertable, term insurance.
5.) Prepare your retirement fund by knowing what's coming your way and supplementing it. (Chilton refers entirely to the US pensioning systems, but we have lots of knowledgable expertise in Canada to research re: RRSP contrib. and GIC, etc. etc.)
6.) Own your home - one within your means and pay your mortgage off early, if possible.
7.) Save on day to day expenses
- "A dollar saved is two dollars earned";take the time to find the best deals, be thrifty.
- Keep a detailed household financial summary (budget) and learn from it. For example, you may find the operation of that brand new car is more expensive than a used one or that brown-bagging office lunches could save you $3000 a year!.
- Don't use a credit card, instead save to buy.
- Save for smaller consumer items in a competitive guaranteed invesment vehicle.
- Borrowing to buy encourages you to live outside your means... so don't!
8.) Investment advice:
- One of the best investments is to pay-off non-deductable debt (car, credit card, etc.)
- Of the stock market? Buy commodities or gold, have fun but don't rely on the market for financial planning.
9.) Income tax advice:
-"A dollar saved is a two dollars earned" - in reduced tax.
- Pay as little tax upfront as possible.
- Do your own taxes, as least preliminarily and learn from it.
- Go into business (a legitimate business) and benefit from business expense write-offs.
- Read up on advice from the professionals.
10.) Having an emergency fund of $10,000 just sitting around earning low interest is hogwash. $2000-$3000 is sufficient enough cushion for emergencies. If you want more, get a line of credit.
11.) Allow you child to earn some of their own college money. Purchase the rest with monthly payments into an equity mutual fund. Get family to help save.
12.) With a 1 in 4 chance of being disabled for 1 year during your working life, make sure you have appropriate disability insurance.
Overall, sensible if somewhat American in the specific content.
A little chatty in an attempt to be story-telling-ish, but you could pick through it easily enough. The book definitely gives you a sense of having all your bases covered financially. This strategy sets your mind at ease and was worth the read.
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