1-Sentence-Summary: The Financial Diet is a compendium of clever money tips for beginners, offering thrifty spending advice and sound money strategies in a wide range of areas, such as budgeting, investing, work, food, home, and even love.
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Favorite quote from the author:
How rich you are depends on your bank balance, but how rich you feel depends on your neighborhood. In that sense, growing up, Chelsea Fagan didn’t feel poor. At least not at first. Living in a low-income neighborhood in Charlotte, North Carolina, hand-me-downs and used toys were the norm.
When her family moved to Annapolis, Maryland, however, things began to change. Suddenly, Chelsea’s classmates’ parents owned yachts. People laughed at her off-brand clothing. This greatly damaged Chelsea’s relationship with money. She learned to equate dollars with self-worth.
Ten years later, she found herself dodging debt collectors’ calls and being perpetually broke. Eventually, Chelsea used the windfall of her first publishing deal, a sizable advance, to turn her life around.
Initially chronicling her budget on a Tumblr, The Financial Diet has now become a premier destination for women to talk about their money. Together with her co-founder, Lauren Ver Hage, Chelsea turned all the lessons she has learned about money into a book, also called The Financial Diet.
Here are 3 lessons that will help you, too, turn your financial life around:
- Have a few non-negotiable money rules, even if they’re not perfect.
- Learning to cook “Italian grandma style” will change your food budget forever.
- Don’t dream big — dream medium, and you’ll put less financial pressure on yourself.
Ready for a new financial diet? Here we go!
Lesson 1: Pick a few financial principles you’ll always stick to, like the 4 “don’t you dares.”
I still remember the only day I ever was in debt. My girlfriend at the time was even more broke than I was and asked me to lend her some money. I did, and when my rent payment hit, I suddenly stared at a negative bank balance of about 200 €. I was terrified.
That day, I learned that I literally can’t sleep when I’m in debt. So, to prevent more cold sweats, I made a rule for myself: Never take on debt. I know, I know. “What about buying a house? What about credit cards?” To that, I can only say: No rule is perfect — but that doesn’t mean you shouldn’t set any rules.
Here are four principles Chelsea suggests. She calls them her “don’t you dares:”
- Don’t you dare roll over your credit card debt month to month. If you can’t pay it back within a month, before the horrendous interest rates hit, don’t spend it at all.
- Don’t you dare live the CEO lifestyle. Bad spending is just bad spending, even if you’re busy running a company. You don’t need $300 haircuts and $100 cab rides any more after you start a business than you do now.
- Don’t you dare ignore your bank account. You should check your balance at least twice a week, Chelsea suggests.
- Don’t you dare wait for savings to magically appear. They won’t. Commit to a hard savings rate, then automate those payments.
Life is full of compromises one way or another. You might as well make some in advance and at least fully reap their benefits. Plus, you can always change your money rules once they really hinder you from moving forward.
Lesson 2: Take some inspiration from Italian grandmothers’ cooking to enjoy food more and save money.
From age 14 to 18, Chelsea painstakingly saved up $10,000 from working all throughout high school and saving 75% of each paycheck. Once she got full control over that money, she immediately blew it on fancy clothes, food, and parties.
When she later re-evaluated her relationships with those things, in the food section, she took a page out of her partner’s Italian grandmother’s book: Instead of obsessing over individual recipes and paying a lot of extra money for “assembly” and delivery, learn to cook with whatever you have. This way, you’ll spend less, fret less about grocery shopping, and enjoy food a lot more.
Here are some Italian grandmother secrets:
- If you have some oil, spices, garlic, and onions in your house, you can whip up a quick meal with almost anything, even if all else you have is two eggs or a bunch of three-day-old veggies.
- Cook in batches rather than meals. Eat leftovers the next day, freeze what can be frozen, and alternate between two batch-made dishes to cover several days worth of eating.
- Don’t grocery-shop while hungry, drunk, or angry. You’ll buy a lot of stuff you’ll either regret or not use.
Food is one of the biggest aspects of our lives. Learn to enjoy it without needing a lot of money to do so, and you’ll save thousands of dollars over the course of your life.
Lesson 3: Dream medium instead of big to pressure yourself less yet still make progress.
In a world full of flashy Instagram posts, millionaires showing off their villas on Youtube, and everyone bragging about their latest win on LinkedIn, going small is an act of rebellion.
On her now-famous Youtube channel, even at one million subscribers, Chelsea refreshingly talks about getting rid of clothes, an exotic-but-demanding plant, and fancy bed sheets. Instead of more, she shows you how to be happy with less.
When it comes to your dreams, Chelsea offers a similar approach: Instead of dreaming big and putting a lot of pressure on yourself — financial and otherwise — dream medium and enjoy the fruits of your honest labor.
Having big goals is great, and you should always earnestly pursue them, but a touch of realism is more likely to help you than hinder you. If you’re a single dad with two jobs and some student loans to pay off, there’s nothing wrong with taking life day by day until you’re debt-free. Then, you can still raise some money and launch your startup.
Everything is possible, but not anything is possible at any given time. When should you take risks, and when is it better to play it safe for a while? Take time to make big life decisions, and plan well in advance. Even if you dream medium, achieving your financial aspirations will still feel magical.
The Financial Diet Review
This book is a solid collection of finance tips for beginners. If you find that your relationship with money “just isn’t working,” this might be a great place to start. Watch some of Chelsea’s Youtube videos and browse the blog, and if you like her style, grab yourself a copy of The Financial Diet.
Who would I recommend our The Financial Diet summary to?
The 17-year-old whose parents saved for her and who’s about to get access to a larger sum of money for the first time, the 27-year-old, perpetually broke millennial who believes his relationship with money will never change, and anyone looking for some thrifty money-saving tips.