The Wealthy Barber: What Every Canadian Needs to Know About This Classic Financial Guide
Have you ever wondered how everyday Canadians can achieve financial freedom without feeling like they’re climbing Mount Everest?
David Chilton’s The Wealthy Barber has been a trusted financial guide for millions of Canadians since it first hit the shelves in 1989. While the book may be a little dated in its examples (cassette tapes, anyone?), its core advice remains refreshingly practical, easy to follow, and—most importantly—effective. Chilton doesn’t use intimidating financial jargon or push impossible goals. Instead, he serves up sensible money advice wrapped in relatable storytelling. (Note: I was among the first to purchase his book, and kept it handy until it disappeared during my last move. Saving 10% of my gross income has always been my mantra.)
This post will break down the key lessons from The Wealthy Barber, explain how they apply to modern Canadian finances, and leave you with actionable steps to start making smarter money moves today. Spoiler: you don’t need to be rich to follow Chilton’s advice—you just need a willingness to start small. (I was earning minimum wage at best when I started saving.)
What Makes The Wealthy Barber So Special?
At its heart, The Wealthy Barber is a personal finance book written for everyday people. The magic lies in its approach: instead of lecturing readers with dry facts and figures, Chilton weaves his lessons into a story about three friends seeking financial advice from a barber, Roy. Yes, a barber!
Roy’s wisdom is approachable and down-to-earth, just like the advice you’d expect from a friend over coffee. This simplicity is why the book has resonated with generations of Canadians. Its lessons—pay yourself first, avoid debt traps, and invest for the long term—are timeless and surprisingly easy to implement, no matter your starting point.
Lesson 1: Pay Yourself First
This is the crown jewel of Chilton’s advice: always set aside at least 10% of your income for savings before paying for anything else. Why? Because if you wait until the end of the month, there’s rarely anything left.
How It Works
When you “pay yourself first,” you prioritize saving over spending. The idea is to automate this process so it happens without much thought.
Real-Life Example: Sarah’s Small Step
Sarah is a 32-year-old graphic designer in Vancouver. She used to save “whatever was left” at the end of the month, which, let’s be honest, wasn’t much. After reading The Wealthy Barber, Sarah set up an automatic transfer of $300 from her chequing account to her TFSA right after payday. In just one year, she saved $3,600 without even feeling the pinch.
Takeaway Tip
Most Canadian banks offer free tools to set up automatic savings. Log into your banking app today and set a recurring transfer into a savings account or investment account. It takes five minutes, but the impact can last a lifetime.
Lesson 2: Don’t Fear Investing
Investing often feels intimidating, but Roy simplifies it: start early, invest consistently, and keep it boring. This isn’t about chasing hot stocks or trying to time the market—it’s about steady, long-term growth.
The Magic of Compound Interest
Chilton emphasizes the power of compound interest, where your money earns interest, and then that interest earns interest. Over time, this snowball effect can turn small contributions into a significant nest egg.
Real-Life Example: Emma’s TFSA
Emma, a 28-year-old teacher in Halifax, was nervous about investing. After reading The Wealthy Barber, she opened a TFSA and started contributing $200 monthly to a balanced ETF portfolio. With an average annual return of 6%, Emma could have nearly $200,000 by the time she’s 60—just from her small monthly contributions.
Takeaway Tip
If you’re new to investing, consider starting with a robo-advisor or a low-cost ETF portfolio through a Canadian platform like Wealthsimple or Questrade. These options are user-friendly and perfect for beginners. (David, my much younger co-author, has always invested in EFT and never used any advisor. He has done well. David explains his process in Investing Made as Easy As One Two Three)
Lesson 3: Avoid Debt Like the Plague
Chilton doesn’t mince words when it comes to debt: it’s the enemy of financial freedom. While some debt, like a mortgage, can be considered “good debt,” things like credit card balances and high-interest loans are financial quicksand.
The Snowball Effect of Debt
Carrying a balance on your credit card? That 20% interest rate is eating away at your future wealth. Roy advises paying off high-interest debt as quickly as possible.
Real-Life Example: Mike’s Debt-Free Journey
Mike, a 40-year-old dad from Calgary, had $10,000 in credit card debt, costing him over $2,000 a year in interest. Inspired by the book, Mike focused on aggressively paying it off, starting with the card with the highest interest rate. He also cut unnecessary expenses like takeout and subscriptions. In two years, he was debt-free and saving that $2,000 instead of giving it to the bank. (Read also my article about paying off debt Personal Financial Development: Managing Your Debt.)
Takeaway Tip
Struggling with debt? Start by tracking your spending to see where your money goes. Most Canadian banks offer free budgeting tools through their apps. Use these to identify areas to cut back and free up cash to pay off your debts faster.
If you prefer spreadsheets, we have a couple for free Free Planning Materials.
Lesson 4: Protect Yourself with Insurance
Life happens—whether it’s an unexpected illness, a car accident, or job loss. Roy emphasizes the importance of having the right insurance to protect yourself and your family.
Types of Insurance Canadians Should Consider
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Life Insurance:
Essential if you have dependents.
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Disability Insurance:
Covers a portion of your income if you can’t work.
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Critical Illness Insurance:
Provides a lump sum if you’re diagnosed with a serious illness.
Real-Life Example: John’s Safety Net
John, a self-employed photographer in Toronto, thought he didn’t need insurance. After breaking his leg in a skiing accident, he realized how wrong he was. He had no income for three months and drained his savings to cover bills. Now, John has disability insurance through his provincial association, giving him peace of mind.
Takeaway Tip
Not sure where to start? Speak with an insurance advisor or use comparison tools like Ratehub.ca to find the best options for your needs.
Lesson 5: Plan for Retirement
Retirement may feel like a distant goal, but the earlier you start, the easier it becomes. Roy’s advice? Contribute regularly to retirement accounts like RRSPs and take advantage of employer-matching programs if available. The retirement contribution is not part of the 10% that you are saving and investing!
Real-Life Example: Nadia’s RRSP Strategy
Nadia, a 35-year-old marketing manager in Montreal, contributes $500 monthly to her RRSP. She also takes advantage of her company’s 4% salary match, effectively doubling her savings. Thanks to her early start, Nadia is on track to retire comfortably at 60.
Takeaway Tip
If you’re unsure how much you need for retirement, check out Canada’s Retirement Income Calculator online. It’s free and easy to use!
Lesson 6: Spend Smarter
Chilton isn’t against spending; he’s against mindless spending. Roy advises tracking where your money goes and aligning your spending with your values.
Real-Life Example: The Latte Dilemma
James, a 29-year-old in Edmonton, used to spend $5 daily on fancy coffee. After reading The Wealthy Barber, he started making coffee at home and put the $100 monthly savings into his TFSA. Over 20 years, that $100/month at a 6% return could grow to $48,000.
Takeaway Tip
Try using a free budgeting app, like the ones offered by most Canadian banks, to track your expenses. Seeing where your money goes can help you cut back without feeling deprived.
Conclusion: Small Steps, Big Impact
David Chilton’s The Wealthy Barber proves that you don’t need to be a financial expert—or wealthy—to take control of your finances. By paying yourself first, investing wisely, avoiding debt, and protecting your future, you can build a strong financial foundation one step at a time.
Actionable Steps Recap
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Automate Your Savings:
Set up a monthly transfer to a savings or investment account.
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Start Investing:
Open a TFSA or RRSP and contribute regularly, even if it’s just $50/month.
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Tackle Debt:
Focus on paying off high-interest debt first.
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Get Insured:
Protect yourself with life, disability, or critical illness insurance.
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Budget Smart:
Track your spending and cut back on expenses that don’t add value to your life.
Remember, the key to financial success isn’t about massive changes or sacrificing all your joys—it’s about small, consistent actions. So why not start today? Future you will thank you.
For more from The Wealthy Barber
Disclaimer for ManageYourMoney.ca
The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.
As always, I am not a qualified financial advisor. I just relate financial management to my own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of mine came from expensive experiences. Jim does not provide advice on any specific investments
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