Life 101: A Summary and Analysis of The Wealthy Barber by David Chilton for Practicing and Aspiring Managers

The fifth session taught in the barbershop is on the topic of saving, spending, and credit management. By following a few general rules, everyone can live comfortably later in life. In the sixth month, Miller discusses that the topic would be investing and income tax. He gives his insight on how to lower the total amount of taxes paid annually, as well as smart ways to invest. The final lesson in the barbershop is a combination of emergency fund rules, college savings for dependents, disability funds, and financial literacy.

The Ten Things Managers Need to Know from the Wealthy Barber

   
1.    Well over fifty percent of Americans retire into financial hardship. This is mainly because most people do not possess the basic knowledge of financial planning. It is never too early (or too late in some cases) to learn how to save, invest, and build a good financial reputation. Commit yourself to learning the basics of financial planning.

2.    The lack of a college degree is not the deciding factor on whether or not someone can become successful. There are many instances in life when a person may fall into a situation where earning a degree is not an achievable objective. A strong mind with a sound strategy is another road that can lead to financial success.

3.    The easiest way to save money is by paying yourself. By paying yourself, you create a fund for the future. Meaning any future endeavors you have planned, can become a reality by paying yourself. David Chilton explains that this process can be achieved by taking 10% of each pay check and investing it into a mutual fund

4.    Always save for retirement. Many people only rely on social security, but there are alternate ways to prepare you for life after work. Some of the alternatives available include: 401Ks, IRA, and various pension plans.

5.    Make investments that are smart! Don’t just jump at an opportunity because it is the popular thing at that particular time. A smart investment can be considered just paying down on student loans. Investments like these always yield positive results.

6.    Have an emergency fund that is large enough to fix a significant problem, but not a sum large enough for the temptation of spontaneous purchases. People often tend to dip into their savings accounts, when it is not meant for everyday use. Control the urge to use the money in your savings account.

7.    Spending freely is a taboo in daily financing. If you don’t have to, then don’t spend it. The advice is to be frugal with your day to day spending, by creating for yourself a budget. Budgeting can prevent you from becoming wasteful with money.

8.    Disability insurance should not be over looked. There is no way of knowing what may happen to yourself from the day you begin working until retirement day. Having disability insurance ensures that your way of life is protected. In the case of an accident, this insurance allows the holder to continue living comfortably.

9.    Everyone should have a will and life insurance. Sometimes our loved ones may pass away, leaving only bills to be paid by their survivors. Life insurance is a good preventative for those types of situations. Having a will makes it easier for the remaining family to know exactly how to allocate the assets left behind.

10.    One should make it a priority to be aware of what is going on in the financial world.  It would be of great benefit to know what is going on in the economy, if one is to make smart investments. There are various magazines, books, and website available to keep people informed of the latest in finance.