THE WEALTHY BARBER RETURNS – Book Summary

INSIGHTS INTO SAVING, SPENDING, AND BORROWING

In The Wealthy Barber Returns the author argues that unless you marry into wealth or come from a very well-to-do family (both highly advisable strategies, by the way), you’ll have to learn to spend less than you make.

Macroeconomic Studies formula that you can use: 

DY = C + S where DY is Disposable Income C is Consumption (a fancy word for spending) S is Savings. In other words, every after-tax dollar we receive can either be spent (consumed) or saved. For many, the more accurate formula is DY = C. The S has been completely Shunned.

The bottom line is we love C! C is fun. S is boring. C is living in the moment. The S is that rainy-day crap. C is high-definition TVs, hot tubs, and fancy wine. S is discipline, unfulfilled desires, and deferred gratification.

C stands for Carpe diem. S stands for Sacrifice. Why do we choose C? Better question: Why wouldn’t we? Long live C! Death to S! logic. Remember, later in life we’ll all stop working, and our DY (Disposable Income) will no longer come from our employment income — it will have to come from our S.

No S means no DY. No DY means no C.  Maybe S isn’t so bad after all! It may stand for Sacrifice during our working years, but during our retirement, it stands for Salvation.

Keep C high enough to enjoy life now but also funds S enough to provide a good lifestyle later.

Instead of trying to raise your savings rate dramatically, a seemingly impossible goal, in The Wealthy Barber Returns the authors urges the readers to start by cutting your spending. You don’t have to become a miser and live a life of austerity. You just have to exercise a little discipline and a little common sense.