Chelsea Fagan, author of ‘The Financial Diet,’ on tips for budgeting, understanding investments and dealing with credit cards in your 20s.
Having a massive amount of credit card debt — and not a single clue what to do about it — is what led this millennial money expert to carve out an unlikely career in finance.
Teaching women like herself how to “give a s—t” about money became the basis of Chelsea Fagan’s website, tip-spewing YouTube channel and new book “The Financial Diet” out now. In it, she discusses important topics like overspending, student loan debt, retirement plans and negotiating an entry-level salary, all in a relatable, readable and, as Fagan would say, “not boring” way.
The 29-year-old New Yorker knew she had to start caring about her bank account after going on a spending spree at 18 that maxed out her credit card, saddling her with a $1,700 bill, no savings and a busted credit score.
“It was a dark time,” Fagan tells Moneyish, blaming the frivolous splurge on “clothes and dinner and stuff.”
“A huge part of the reason why I wanted to talk about money in the first place was because I was incredibly irresponsible with it,” she said. “I was living under the impression that if I had $1,000 in my checking account at any time, that was good enough. [But] I had no longer term savings, no retirement account, nothing.”
So after landing her first writing gig at 25, she simultaneously started a Tumblr blog tracking her budget and holding herself accountable for slip-ups. It received such positive reader feedback that she decided to launch a website in 2014 with other money-minded women to help her run it. “Like eating and dieting, money should be spent and saved in moderation,” says Fagan, which is why she decided to call her business and book “The Financial Diet.”
“We call it ‘the financial diet’ because the only diet that works in any meaningful way is moderation and balance, and not some restrictive punishment that’s depriving yourself,” says Fagan. “Those fail because they are completely unadapted to how people really live. You can go on a hyper-restrictive budget, but it’s going to be extremely easy to break that budget. And when you screw it up, you’ll buy whatever you want. Like how you eat, it’s a lot of moderation, and being really honest with yourself about what is really important to you, and taking it in baby steps.”
Here are some easy tips Fagan recommends to manage your money better:
Cut back. The easiest way to start maintaining a budget is by simply combing through your bank account and credit card statements for frivolous purchases — a second or third cup of coffee in one day; a surplus of Ubers; shoes — and don’t repeat them.
“Highlight all the purchases that you don’t remember making — miscellaneous food, going out with friends, anything — then you have an automatic list of things you can cut the next month,” says Fagan. “A lot of times we keep making the same kinds of purchases because we’re in the habit of making them. Take a hard look at purchases you’re making and ask yourself, is this meaningful: This gym membership; this regular ordering out on Seamless; living in this particular apartment? Don’t ever let yourself make purchases by habit.”
Fagan suggests using the free budgeting app Mint, which comprises all of your financial balances, bills and credit score so that your financial life is all in one place. And remember, don’t cut out everything you love; like going on a crash diet, it’s important to keep in some “treat” expenses.
“You’re not going to wake up one day and save 20% of your income if you’ve been saving zero,” notes Fagan. “You might be able to save 2% of your income once you start budgeting.”
Add on an extra income. Get a side hustle that doesn’t require much leg work. Set a goal to make just an extra $100 a month at first, and put that income into a specific savings account. Fagan suggests ways you can make money without leaving your bed by doing things such as reviewing products online via websites like Userlytics and UserFeel, which can earn you anywhere from $3 to $20 per review. You could also resell old clothing or school books with apps like Poshmark, Abebooks or Amazon, and become a virtual assistant online by doing administrative-type tasks like scheduling meetings, organizing documents or writing up basic sales pitches for around $10 to $30 an hour.
“It’s really good to demonstrate that you can do something outside of your basic 9-to-5 job,” Fagan notes.
Set up a retirement fund. Less than 50% of millennials are saving for retirement, according to Money Under 30. “Even though you think you’ll never get old, you will,” quips Fagan. “If you have an employer match, you damn well better be using it.”
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