Chelsea Fagan got her first credit card when she was a senior in high school. She quickly maxed it out, racking up debt that would burden her through her early twenties. Then, in 2014, Chelsea started a blog as a way to keep track of her spending habits and get her financial life back on track. She called it “The Financial Diet.”

This week on How I Built This Lab, Guy talks with Chelsea about how she turned that blog into the multimedia personal finance business it is today. Plus, Chelsea shares why she prioritizes employee satisfaction over growth and explains her judicious approach to brand partnerships.

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This week our production team is taking a quick break, a much deserved break because we produce 88 episodes of the show every year.

And so they're taking a break to spend some time with their friends and families.

So this week on How I Built This Lab, we're going to bring you an episode from our archives that aired back in July.

And since the new year is kind of a time for us to make resolutions, we thought, you know, why not some resolutions around money?

So we decided to re-air this interview with Chelsea Fagan of The Financial Diet.

Chelsea hit her financial rock bottom in her early 20s.

And so she resolved to kind of crawl out of it by tracking her personal spending and then writing a blog that eventually turned into a multi-million dollar media brand that now helps other people take control of their finances.

So if you wanna learn more about your finances or you wanna learn about how to build a business, here's the episode for you.

Hello and welcome to How I Built This Lab.

The Financial Diet is a media company that offers up personal finance advice.

It started out as a blog back in 2014 when Chelsea Fagan was trying to get her own financial life back on track after racking up credit card debt and developing bad spending habits in her late teens and early 20s.

Eventually, her blog turned into a video blog, a newsletter, a podcast, and live events.

And today, the financial diet, or TFD for short, is a multimedia business with more than 10 employees and multiple revenue streams.

But unlike many of her competitors in the space, Chelsea Fagan has some pretty firm rules.

She doesn't promote crypto, and she's not obsessed with growing the company, or even growing her audience.

Her goal, to build a sustainable and manageable business.

All right, so basically, you've written that you, quote, destroyed your financial life between the ages of 18 and 22.

So just for a little background, so I lived until the age of about 11 in Charlotte, North Carolina.

My family was definitely low income at that time.

We lived in a pretty low income community.

And I've often made the observation, looking back, that being low-income in a low-income community, you actually, in many ways, don't really feel your socioeconomic status very much.

But we moved around that age to Annapolis, Maryland, which is an extremely affluent community.

I went to school and socialized with a lot of people who were very, very wealthy.

It was very common for kids at my high school to get new BMWs for their 16th birthday or take lavish trips to Europe in the summer and all that kind of stuff.

We were more middle income by that time, definitely still not wealthy by any means, but we were definitely in a better financial situation by my high school years than we were when I was a kid.

But because I was comparing myself and surrounded by such high levels of wealth, I mean, I also, I worked at a yacht club, you know, often serving in very expensive restaurants.

Like Because I was in that kind of context of wealth, I actually felt much poorer than when I actually was much poorer.

But I had a huge amount of kind of insecurity and shame around money.

And typically people who grow up with those kind of money issues, it usually goes 1 of 2 ways.

They either become big spenders and are very compulsive with money, which was my case, or you become kind of a hoarder with money and very obsessive and often overly frugal.

But I was a very compulsive spender, especially on things that felt like they conferred status, you know, clothing, restaurants, travel, image kind of based things.

And stuff that felt very specifically tied to that ideal of what a wealthy person was.

By the way, not unusual for a 18 to 22 year old.

But unfortunately, my senior year of high school was still pre-crash of 2008.

So they had, like Bank of America and other banks had booths set up in our high school to get you a credit

And so I got a Hello Kitty branded Visa credit card.

And then threw it in the garbage and never opened my mail.

Obviously decimated my credit score, went to collections.

I was constantly overdrafted, having to use check cashing services because I owed so much money to my bank, constantly, constantly sort of running from my own financial mess, for sure.

Oh, yeah, I was always working full time, often more than 1 job.

So you had all this debt and I think even like unpaid traffic tickets and-

And it's important to say this because there's a lot of shame around it, right?

Especially when we're young, we hide these things because it feels like it's embarrassing.

But I think it's extremely common, especially for young people, to experience this because we don't learn financial habits when we're kids.

And so oftentimes, many of us find ourselves in that position.

I mean, I got arrested because of my financial problems because it led to me driving on a suspended license and all that stuff.

For a long time I didn't talk about any of these things even after I had sort of cleaned up my situation because of that embarrassment that you're talking about.

But I think especially as it pertains to money, so many people are raised in such an extreme level of taboo with regards to money.

Whether they have it or they don't, a lot of people are raised not to talk about it and for people for whom it was a source of stress all the more so.

But I think for me anyway, it's almost sort of felt like a superpower to be so candid about money.

Because you really feel like when you're able to own that stuff and to sort of be unashamed, nothing scares you kind of.

So you find yourself with this debt, but also you're working and you start to do some writing around this time when you're in your, I think, early 20s.

It was also the era of the internet where people were heavily encouraged to write about their personal lives.

I wrote some rather embarrassing things, honestly.

I wrote a book at that time that was, you know, kind of similarly positioned.

But yeah, I certainly wasn't writing about money.

At the time, you were doing a lot of writing for Thought catalog, which is an online publication geared towards millennials.

It sounds like it was a pretty good opportunity to just kind of get your feet wet, even if, as you say, it was stuff you're not super proud of.

And I think once I was able to write things that I felt more strongly about, what it definitely gave me was, I mean, I easily write 5, 000 words a day because I'm just like so used to cranking out Content.

And it definitely, I mean, I started out as a writer there and by the end I was the creative director for all of the branded content, so I was in charge of like all of the content that we were doing in partnership with brands to kind of pay the bills.

So it did give me a really, really clear view into how to make money on media, which obviously proved useful later.

I mean, I think it's instructive because a lot of, especially young people who are starting out, they don't know how to break into journalism or media or content creation, and there are outlets.

I think, I mean, I just cold pitched an article and it got picked up right away.

And the first article I wrote went viral and I had several.

Now Accepting Boyfriend Applications and it was a list of criteria.

It was very snarky, I would say almost kind of mean and I still to this day get some disgruntled men writing to me about it.

Our first date was the day it was published, so talk about kismet, but accepted that application.

I wouldn't say it was difficult, but I will say, I mean, I'm pretty candid about the fact I was writing for some pretty established outlets in the first year of writing.

And for a long time, I wasn't paid for anything.

I wrote for free for quite some time, many, many, many articles.

So in that sense, it was just a bit of a slog because I was going to school at the time in France and I had a full-time job.

So You eventually become, as you say, the head of branded content at Thought Catalog.

And I should mention while you're there, you put out a couple of books.

And I guess at a certain point, you start a Tumblr blog, and you really start to kind of think and write more about personal finance.

How did you start to kind of write about it and think about it?

Yeah, so when I sold my first book, I got an advance of $22, 000, which at the time was lottery amounts of money.

It was life changing for me at that time.

And it was the first time, not only that I had that kind of money, but all at once.

And so the first thing I wanted to do was pay off my debts because I basically couldn't use my phone anymore because of all the collection calls I was getting.

And by the time I was 25, I was living in New York.

I was making a very low salary at that time.

But I was still combined with my now husband's income.

I was able to pay my bills and I felt like I had the ingredients to be an adult financially, but I was only just sort of like making the bare minimum.

So I started a Tumblr at the time, a personal blog, to hold myself accountable to kind of improving my relationship with money.

And when you say hold yourself accountable, it was you essentially were putting all of your sort of spending habits out in public in order to make sure that you didn't do something irresponsible?

And also to kind of create a support system around it and talk to other people about it and feel less, you know, anxious.

This was a Tumblr blog that was called The Financial Diet.

How did over time that blog become a blog about personal finance that anybody could relate to?

So on like the third day of operating TFD as just a personal project, my co-founder Lauren who was working at an ad agency as a designer at the time, emailed me and said, hey, I love your work.

I'd love to redesign it as kind of material for my portfolio.

And so she redesigned the whole thing for free as kind of a project.

And then a few months later, John and Hank Green, who are authors, YouTubers, they have a very, very large YouTube video production company, mostly in the educational space.

They reached out to us because they have a kind of like a – it's like a foundation essentially that gives grants out to things on the internet that they like and want to see more of.

So they sent us $5, 000, which again at the time was like, oh my gosh.

And also, I mean, you know, it wasn't just the money.

They shared us and they were kind of institutionally supporting us in that way.

So we kind of took that as, okay, let's give this a try full time.

We used that money to kind of set up the company legally and structurally.

And we were both still, I was freelancing quite a bit through that first year and she was also freelancing and doing some catering jobs and whatnot to just kind of make the bills.

But it was a pretty quick and precipitous transition.

I mean, looking back, I don't know what I was thinking.

I was like on my work computer in the office, like spending all day working on my personal blog.

And I was like, okay, clearly this is what you want to be doing.

We're going to take a quick break, but when we come back, how Chelsea Fagan turned a blog into a business.

You're listening to How I Built This Lab.

And while we take a little break, I wanted to let you know about an episode of How I Built This we released a couple of weeks ago.

It's about how Sal Khan, the creator of Khan Academy, is using AI to make education more accessible.

We've all heard about the rise of generative AI technology and the popularity of things like ChatGPT.

Well, at Khan Academy, Sal Khan is working on ways to build this technology into a new tool to help students learn more effectively by providing a personal learning experience.

Of course, like all technology, this has its risks, but Sal believes that generative AI could reshape the classroom for good and help us close the massive learning gap left by the pandemic by supporting students and teachers alike.

You can find this episode by following How I Built This and scrolling back a little bit to the episode titled, When AI is Your Personal Tutor with Sal Khan of Khan Academy, or by searching Khan Academy, that's K-H-A-N Academy, wherever you listen to podcasts.

Hey, welcome back to How I Built This Lab.

I'm Guy Raz, and my guest is Chelsea Fagan, founder and CEO of The Financial Diet.

So you at this point with this grant from John Hank Green, it's clear The Financial Diet will no longer just be a written blog, but it's going to be a video blog as well.

I met up with him in New York for dinner.

He basically was like, have you ever thought about turning this into videos?

I was not really even a watcher of YouTube at the time.

And he goes, well, we have this production company.

If you come on, we'll give you the resources, teach you how to make videos, teach you the back end of YouTube, all of that.

Send someone out to New York to film you guys, this, that, and the other.

So for the first 2 years of having a YouTube channel, we were a co-production with Complexly, which is their YouTube production company.

And then a few years into it, we went totally independent and took it all back in house.

And to their credit, I mean, Hank is just, very few people on the internet are as like decent a human being as he is, but they were very generous about making sure that we got all the IP and all of our rights and I'll keep 100% of our money and all of that.

So it was, we couldn't have landed on better people in that regard.

So as you kind of pivot towards video and obviously continuing to write, did you and Lauren start to map out what you wanted or what you imagined the financial diet could be?

I think – so I worked at Thought Catalog with our third partner.

We have a third partner and she worked in the branded content department.

So she was very responsible for getting clients and building out ad campaigns, which is how we make the majority of our money.

She had left and was working at a nonprofit.

This is maybe a year into our existence, maybe a little less.

I said, we're really looking to build this out into a proper business.

Do you want to join in, help us out?" So she started for that first year or so nights and weekends.

She got like a monthly stipend plus commission on everything she brought in and of course some ownership in the company.

But she really was the 1 who came on and sort of mapped out the business end of it.

And so you've got this essentially a personal finance media company that you're kind of building, but sounds like You're not quite thinking of it as a media company, at least initially.

I don't think I was, but I also, like I said, I mean, I had enough experience in the monetization aspect of it that from day 1 I had a pretty keen understanding of how to turn content into money.

I think really the infrastructure of a business is what came later.

So let's kind of break some of that down.

First of all, in terms of your audience, right, who was coming to the site?

Do you have a sense of who your audience is?

We're a very demographically narrow company, very niche.

Well, I mean, listen, it is only in the world of personal finance are women considered a niche.

I mean, we are the majority of the population.

But we are – our audience is almost exclusively women, which especially when we started was very unusual in the personal finance space.

Yes, but with the largest section of that by far being like 25 to 34 in that sort of like, you know, young adult, really getting your ass together kind of phase of life.

They're also generally professional in some capacity, generally have at least a bachelor's, a huge amount of them have postgraduate degrees, tend to be clustered in urban markets.

And I mean, it's important to state that even a woman who is educated, has money, works full time, et cetera, on average, women are still not the financial decision makers.

They make day-to-day decisions in the household generally, but they're not the long-term financial planners of heterosexual couplings.

So the type of woman who is really interested in like building out her own investment portfolio or managing her own retirement or buying a house and kind of leading that process.

Even amongst women who demographically fit the bill, it's a pretty self-selecting group.

I'm curious how you educated yourself around personal finance.

I was a foreign correspondent early in my career.

I had no background in finance or entrepreneurship.

It was only in the last 10 years that I started to learn about it and then start a show.

And now, you know, thousands of interviews later, I have a pretty good grasp and understanding of how it works, but it took time for me to understand it.

How did you teach yourself about personal finance?

I do take pains to say that I'm not a financial expert.

So we contract out to a lot of them, and we have great relationships with a lot of actual subject matter experts that we work with quite frequently.

But I mean, I look at the model that John and Hank have with a lot of their content where they're really, they're communicators, they're educators, their job is to translate these ideas and not to be themselves scientists or what have you.

And so I really sort of look at myself the same way in my relationship to personal finance.

And so I think in some ways that relieves me of the responsibility of like I'm not out here giving people individual advice, And especially when it gets to the more esoteric stuff, we pass that off to real experts.

And I think what I want to stress to our audience more than anything is that this isn't hard.

Anyone who's trying to make finance, personal finance, sound complicated or like there's a lot of math in it or things like that, they're probably just trying to get money out of you.

Because there's really not that much to know, honestly.

I mean, there's really not, you know, there's only so many ways you can say it.

You mentioned that you have a niche audience and I want to sort of mine that for a moment because the quote unquote niche audience that you have, women 24 to 35 is probably the most valuable audience from an advertiser's perspective on earth, right?

Media companies want women between the ages of 24 and 35 to be listening or watching their programs.

It's an incredibly valuable audience, but you make the point that you don't need to make a program with mass appeal because you can actually have a successful business by appealing to this very specific audience.

And I think something that I learned early on working in media is that if you're dealing in scale, you're in a race to the bottom.

I mean, the era of the Facebook click content farm, that kind of stuff, most of those companies are gone.

But Even the ones that survive, I mean, they rely on what's called programmatic advertisements.

So things like the automatic ads that play before a YouTube video or the banner ads that you see on websites, things like that.

What counts there is just maximizing eyeballs.

So you got to do clickbait and you got to publish scandalous stuff or really sloppy stuff or comment on trending topics you have no business speaking on.

And For us, the value of an ad that we do per person, even setting aside the demographic value which is high, is so much higher because there is a level of quality.

If our advertiser is in that space, you have the most direct relationship with that consumer.

You know, we want to maximize the value of each piece of our content and each person in our community.

And that's never, ever going to happen by casting as wide a net as possible.

1 of the things that I really like about this era of content creators is that when I started out in media, you couldn't do that, right?

You had to go through a major media company to have a platform.

And that, of course, has changed dramatically to the point where you've got, you know, people who have hugely significant, quote unquote, media companies, through YouTube channels.

And 1 of the things I've noticed that you've done is you kind of walk your your viewers and your readers through how you can do that how it's possible to do it.

You actually wrote an article in 2017 called How TFD Actually Makes Money, which I thought was really interesting.

It might be probably a little bit outdated today, but basically you broke down how your business is sustainable.

Can you kind of give us a sense of how, of what your revenue streams are and how it works.

Yeah, so the largest segment of our business by sort of product or platform are our events.

So that's classes, workshops, conferences, things like that.

And within that, there are about half that are ticketed.

So we're selling direct to the consumer or the other half is in partnership with a sponsor, corporate sponsor, and usually those are free to the audience.

So just in terms of scale, that's the biggest part of what we do.

Second to that, pretty close second is YouTube, obviously a big, big part of

And that's the pre-roll ads that run before your video?

Well, that and almost every video we do has a sponsor brought to you by.

You are or the person who's doing the video will say, thanks to our sponsor or whatever, Squarespace for whatever, whatever, whatever.

We have our pre-roll ads on and we have the corporate sponsor.

Our audience, we have the best audience, I have to say.

They're very kind about, you know, you got to make your money somehow, ladies, you know.

Our grand partnerships are also distributed throughout our newsletter, which is where we publish articles and social media and all of that.

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ICYMI... HIBT Lab! The Financial Diet: Chelsea Fagan