“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” –Albert Einstein

Rabbits breed quickly. Unfortunately, your money grows far more slowly, hence the importance of compound interest.

One of the secrets to accumulating wealth is to get compound interest working for you as early as possible. There’s no mystery to compound interest. As simple as it is, few of us are invested long enough to let compounding work its magic.

In his excellent book, Wealthing Like Rabbits, author Robert R. Brown has set out to educate younger people with sound financial advice on the things they need to know to become financially successful.

Brown’s book seems written for people in their 20s and 30s. One of the biggest money mistakes people make is spending money we don’t have on stuff we don’t need to keep up with people who don’t matter. I see this in clients of all age groups, but particularly in my younger clients, who seem unwilling to put off big purchases until they can afford them.

As Brown writes, “Far too often we see Buddys and Buddy-Lous out there spending money they don’t have on things they don’t need so that they can appear wealthier than they are in a futile attempt to keep up with those damn Joneses. Screw the Joneses!

“And, by the way, the Joneses probably aren’t as well off as they look either. . .sadly, beneath the imitation wealth and artificial happiness there is often a lot of very authentic debt and stress.”

If you read The Millionaire Next Door, another excellent book, you’ll learn that most wealthy people don’t appear wealthy because they don’t flaunt it. They live in ordinary houses, drive ordinary cars and live ordinary lives. On the other hand, the Joneses next door may appear to be rich but may be up to their eyeballs in debt to live their lavish lifestyle. As Brown says, forget what others are doing or how “rich” they appear to be.

Those who think that living it up is fun are often beset with money worries. Big debts are very stressful, and I’m convinced that those people don’t enjoy life as much as they would if they had less stuff that they don’t need – and less worry.

Personal finance doesn’t have to be dry and boring, which Brown proves with this entertaining book. He combines clever story telling with humour and commonsense advice. I’m convinced that anyone who follows Brown’s recommendations will be far better off for it.

In one of my favourite stories, Brown talks about the famous video-game Mario Brothers as they look for homes with bags of golden coins. With the bank’s endorsement, Mario takes on a big mortgage to purchase a large home. His wiser brother Luigi, on the other hand, chooses a more affordable home.

As Brown reminds us, banks are in the business of making money. Unfortunately, their goals rarely align with ours, which often leads to encouraging customers to take on too much debt. Banks, he points out, “are not in the business of ensuring that your house purchase is a smart decision for you and your long-term financial health.”

This book is full of commonsense advice that, if practised faithfully, can set you up for success. Opportunity costs, debt, credit cards, lines of credit, RRSPs, RESPs, home buying, mortgages, budgets…it’s all here, and written in a style that will entertain and educate.

While the advice seems written for folks in their 20s and 30s, it’s quite appropriate for older Canadians. My experience is that those in their 40s, 50s and 60s generally have not mastered the fundamentals of personal finance either and they can also benefit from the good advice contained within these pages.