Mikestrathdee’s Blog

Wealthy Barber returns provides formula that is delightful, dangerous
November 17, 2011, 8:06 pm
Filed under: Debt, Financial Management, Generosity

A version of this column appeared in the November, 2011 edition of Christian Week Ontario

Looking for something fun to read that will improve your financial savvy at the same time?

David Chilton’s new book, The Wealthy Barber Returns is both delightful and dangerous for a Christian reader.

Chilton, a Canadian author and speaker whose first book, the Wealthy Barber, sold millions of copies  over the past several decades, delights by reducing often dry concepts to short and snappy stories. I’m told that prior to penning the Wealthy Barber; he read a couple hundred personal finance books, distilling them down to common themes and principles.

The Wealthy Barber Returns contains a great synthesis of anecdotes, principles and stories from multiple sources. Several of the chapters provide decent fodder for anyone teaching financial literacy.

One of my favorite chapters, “Ditto Diderot,” summarizes a French philosopher’s rueful reflections on how his decision to replace a dressing gown led to financial difficulties. Each new item he replaced led to discontent with something else, and spurred another purchase, emptying Diderot’s purse in the process. The warning is as relevant now as it was when penned several centuries ago.

But for all the marvelously (un)common sense calls to live within your means in Chilton’s new book and the original Wealthy Barber, there’s a lot missing. Neither book touches on planning issues that are crucial for readers of this paper.

Recently a speaker at a Canadian Council of Christian Charities conference said that a person who isn’t giving, isn’t living.

Chilton’s financial worldview is sadly lacking in a financial and spiritual dimension we need to balance in our planning. His only reference to giving is a put down, warning people not to count on an inheritance to float their retirement boat in case “your benefactors surprise you by leaving most of their estate to a charity.”

At a national financial planners gathering this spring, a prominent speaker suggested that with all the savings products we are urged to contribute to – RESPs, RRSPs, TFSAs and even RDSPs (if you have disabled children), most families can’t hope to do them all. We need to prioritize and make choices.

For Christians, the situation is even more complex. Looking beyond ourselves by making meaningful gifts to church and other charities complicates things.

Chilton promotes a “pay yourself first” approach by saving 10 per cent. That only works for mature Christians if we modify the formula so we pay God first, then save 10 per cent. For people who tithe (give 10 per cent), that requires living on 80 per cent (or less) of their salary. Recent studies indicate that the average Canadian is spending $1.49 for each dollar earned. Many churchgoers struggle with a similarly nasty gap between outgo and income.

There is no question that we need to spend less (or earn more without increasing spending, or some combination of the two.)

But to what end? In what do we trust and put our hope?

What difficult tradeoffs are we willing to make to ensure that we are both found faithful in our use of whatever financial resources have been entrusted to us by God, and still live within our means?

The author who melds answers to those questions with the secular wisdom of the Chiltons of this world will be doing us all a great service.