25 Financial Planning Tips From the Wealthy Barber

December 22, 2011

By Heather Compton

My Season Favorites
There are two things I especially love about this time of year – advent calendars and finding treasures to fill the Christmas socks or stockings. Our adult children are really too old for both but giving them gives me special pleasure so they are continuing traditions at our house. In my mind, a Christmas sock isn’t complete without a book and I alternate easy reading with “teaching books” that I believe will “natter” eloquently on my behalf.

A Great Christmas Gift: The Wealthy Barber Returns

This year’s book choice is “The Wealthy Barber Returns” by David Chilton. You may remember “The Wealthy Barber”, a Canadian best-seller 20 years ago. David has returned with valuable money messages for a new generation and a great refresher course for the rest of us. It is both easy reading and full of his signature humor and practical, down-to-earth opinions and observations on the world of personal finance.



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25 Financial Planning Tips

In honor of the season I can’t resist sharing with you 25 of his pithy observations, advent calendar style. My apologies to David – I have frequently lifted his words verbatim – he expresses himself so well! So here, in no particular order –

    • Sound financial planning isn’t rocket science, just common sense, vanilla products and time-tested principles.
    • Reverse mortgages turn finance’s most powerful force – compound interest – into an enemy instead of a friend.
    • Owning a house, even a spectacular, fully paid for house isn’t a retirement plan, it’s where you live.
    • Perceived risks in the stock market are inversely correlated to actual risks. It’s when most think the market is safe that it isn’t (after a long upward climb) & when most think it isn’t that it is.
    • Unless you are born into – or marry into – wealth you’ll have to spend less than you earn.
    • It’s hard to save because no one out there really wants you to – not banks, real estate agents, credit card companies, your kids or friends looking for company on an evening out.
    • We have become consumed with consumption!
    • Choose your friends carefully – our “reference group” has a huge influence on our spending. Hang out with financially savvy people in your own bracket.
    • Learn to say, with conviction “Sorry but I can’t afford it” – it’s liberating and true and something others will accept and respect.

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    • Credit cards are evil; they allow us to act impulsively on our impulses.
    •  Gaining a view of the world’s “have not’s” is a great way to add perspective and gratitude to your own life…and no, “Everyone” really doesn’t have one.
    • Oscar Wilde said “I can resist everything except temptation” – so either avoid it by just not going to the mall or reduce your ability to give into it – don’t take the credit cards along for the trip.
    • Spending begets spending – a new coat of paint in the bedroom is usually followed closely by a new duvet and towels too. It’s the “Diderot Effect”.
    • Bank’s efforts to load you up with as much credit as you can service is decidedly not in your best interest – it’s in theirs.
    • Look at potential inheritances as future bonuses and not an excuse to avoid saving.
    • Ben Franklin warned “Beware of little expenses. A small leak will sink a great ship.”
    • Don’t take debt into retirement. It drains cash flow, creates worry and subjects you to interest rate risk when you can least afford it.
    • Live in a truly affordable home, stretching to buy the house inevitably leads to stretching to furnish it, maintain it, heat it and pay the taxes too.
    • Expense summaries (keeping track of where the dollars go) really are valuable. They help you to limit your spending and also to prioritize it.
    • Is it “splurge worthy”? Efficient spenders focus on dollar costs but also “joy units” received. Extra spending in one area requires extra discipline in others.
    • People who live within their means are less stressed and happier. When we are satisfied with what we have we are truly wealthy.
    • Forced savings techniques are the single biggest key to achieving one’s financial goals- save first and then go ahead and spend the rest.
    • If you are prone to overspending a personal or secured line of credit is a flexible and efficient accomplice! Avoid them – the money is the bank’s, not yours.
    • Three spending areas catch most people off guard: 1. Cars; 2. Dining out; and 3. little things. Not necessarily the highest or most foolish spending areas, just where they spent way more than they thought they were.
    • The Best for Last
      Most advent calendars save the best treat for the 25th day as a reward for your patience. I’ll end with one of my favorites.

Before any of us go too wild with Christmas spending it’s useful to remember the best things in life aren’t things. Even long-coveted possessions go from “wow” to “whatever” remarkably quickly.

It’s true that I’m careful with money but this book really is worth the price of a copy for each of the kids! I wonder if author David Chilton has any advice to ensure they actually read it? My warmest wishes to all of you for a holiday season filled with love, laughter and abundance.

About the Authors: Heather Compton has presented seminars on financial and retirement lifestyle issues for over 30 years. She retired as Vice President and Senior Investment Advisor with a major financial services company. Heather and husband Dennis Blas co-present retirement seminars for a variety of corporate clients and are the co-authors of Retirement Rocks! Canadian Boomers Invest in Life. You can find their book online or in independent bookstores. See more of their advice at Retirement Rocks.

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