The Financial Diet | Chelsea Fagan

Summary of: The Financial Diet: A Total Beginner’s Guide to Getting Good with Money
By: Chelsea Fagan

Introduction

Embark on a journey towards financial wellness with Chelsea Fagan’s ‘The Financial Diet: A Total Beginner’s Guide to Getting Good with Money’. The book summary guides the readers through Fagan’s four easy-to-remember ‘don’t you dare’ rules that can help avert common financial mistakes. Learn about the importance of having a budget, utilizing the 50/30/20 plan, and making your money work for you. Gain insights into wise investing, networking for career growth, and adopting a healthy approach to food. Ultimately, learn how to dream medium and speak openly about money for a fulfilling and financially secure life.

Financial Diet Rules

The book emphasizes four “don’t you dare” financial rules to shape a healthy mindset towards saving money. Avoid credit if you cannot pay it off within a month; do not fall prey to the CEO lifestyle; keep track of your bank balance every week; never think saving will happen automatically. Following these simple rules will help you avoid common financial mistakes and work towards a stable financial future.

Mastering your Financial Freedom

To gain financial freedom, master your spending and savings by creating a budget. Track your income, expenses, and savings for at least two months and analyze the results. Then, adopt a system like the 50/30/20 plan, where you allocate 50% of your income to fixed costs, 30% to lifestyle expenses, and 20% to savings. This system provides a simple framework to monitor your expenses and make adjustments as needed, allowing you to get more value out of your money.

Take Control of Your Money

Learn the advantages of investing and how to make your money work for you using the rule of 72.

Are you working for your money or is your money working for you? This is a critical question, and if you are unsure of the answer, it’s time to become your money’s boss and make it work for you. The key is to invest it regardless of the amount, as early and as much as possible. Being young is an advantage because you have more time to multiply your wealth. The rule of 72 is critical to understanding how investments can grow your money. By dividing the number 72 by the annual interest rate, you can determine how long it will take an investment to double in value. For instance, a return of 7 percent will double your money in 10.28 years.

This knowledge should encourage you to consider investing money instead of spending it, as a dollar saved and invested is significantly more valuable than a dollar spent. For example, instead of buying a new dress for $100, you can consider investing this amount which will grow to $200 in ten years and continue to grow in value over time.

Don’t believe the misconception that investing is for the elderly. Young people have a significant advantage when it comes to investing, giving your money plenty of time to multiply. Take control of your money and start investing today.

Investing Made Simple

Investing doesn’t have to be complicated. Two things to do before you start: build an emergency fund and pay off your debt. The best starting point is a retirement account, like a 401(k). Once you’ve sorted those, there are low-risk index funds or individual stock options available. Get started by speaking to your HR advisor or attending a free financial workshop.

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