The Wealthy Barber

Synopsis

OVER TWO MILLION COPIES SOLD!  "Quite simply the best financial self-help book" (Money Book Club, Book-of-the-Month Club)-now revised and updated
 
"One of the most effective tools for teaching personal finance basics."-Arthur Andersen
 
In this updated edition of one of the biggest-selling financial-planning books ever, David Chilton simplifies the complex puzzles of personal finance and helps you achieve financial independence. With the help of his fictional barber, Roy, and a large dose of humor, Chilton shows you how you can take control of your financial future-slowly, steadily, and with sure success. Chilton's plan (detailed in an entertaining story) is no get-rich-quick scheme, but it does make financial independence possible on nothing more than an average salary. Even if you consider yourself a financial "basket case," Chilton explains how you can easily put an effective financial plan into action.

Summary

Chapter 1: Why You Feel So Poor

* Americans are facing a savings crisis due to excessive spending and a lack of financial literacy.
* Wealth accumulation requires a consistent savings plan and wise investment decisions.

Chapter 2: The Rule of 72

* This rule shows how long it takes to double your money at a given interest rate.
* Example: If you invest $1,000 at 5% interest, it will take 14.4 years to double your money ($1,000 x 5% = $50; $50 x 2 = $1,000; 14.4 = log(2) / log(1 + 0.05)).

Chapter 3: The Wealthy Barber's Five Golden Rules

* Save 10% of your income before anything else.
* Invest your savings in a diversified portfolio.
* Don't borrow money to invest or buy things you don't need.
* Live below your means.
* Don't panic when the market fluctuates.

Chapter 4: The Mortgage Mistake

* Paying off your mortgage as quickly as possible is not always the best financial decision.
* Investing the money you would have put towards extra mortgage payments can potentially earn a higher return over time.

Chapter 5: The Credit Card Trap

* Credit card debt is a major obstacle to wealth accumulation.
* Pay off your credit card balances in full each month and avoid carrying a balance.

Chapter 6: The Retirement Mirage

* Social Security and employer-sponsored retirement plans may not be enough to provide for your retirement.
* Supplement these sources with additional savings and investments.

Chapter 7: The Insurance Illusion

* Insurance is essential for protecting yourself from financial risks, but don't overbuy it.
* Consider your needs carefully and only purchase policies that provide necessary coverage.

Chapter 8: The Estate Planning Maze

* Estate planning ensures that your assets are distributed according to your wishes after your death.
* Consider creating a will, living trust, and power of attorney for health care and financial matters.

Chapter 9: The Wealthy Barber's Money Makeover

* This chapter provides a step-by-step plan for creating a budget, reducing debt, and saving for the future.
* Example: Create a budget that allocates 50% of your income to essentials, 30% to savings, and 20% to discretionary spending.