Spring Cleaning Your Financial Closet

by Stacy Francis, CFP®, CDFA

Spring is a time of renewal, which means there’s no better time than now to dust off your personal budget, dig the change out from under your sofa, and clean the cobwebs off your savings plan.

So how do you get started?

Begin by reviewing your income and expenses for the past several months. It is best if you use a software such as Mint.com. Mint pulls all your financial accounts into one place. You can set a budget and track your goals.

Make sure to review all cash, checks and credit card transactions. This will also help you identify a majority of your spending. Keep in mind that credit card expenditures do count. They are expenses that you will have to pay – ideally, in full, when the bill arrives.

The hardest part is tracking your cash outlays for your daily coffee and lunch at work. Mint.com will only show your ATM withdrawals. You will need to track how you spend that cash.

Once you have your income and expenses down, you’ll actually be able to see where you are spending your money. You may be surprised to find out you are spending more than you realized. Once your budget is in Mint.com, you can’t hide the fact that you spend $20 a week on Starbucks' coffees.

Armed with knowledge about what you’re spending your income on, you can begin to make lifestyle choices that help reduce your spending on a regular basis.

The difference between your income and your expenses (assuming the first number is bigger) should be looked at as your “opportunity money.” This money can be used for additional investments and savings and help speed your way down the path to financial prosperity.

Once you're done cleaning your financial closet, you may be ready for a spring makeover of your finances.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Spring Cleanout of Your Investment Portfolio

by Stacy Francis, CFP®, CDFA

I love this time of the year! Trees painted in that fresh, new green, baby birds chirping in the trees, and a sense of excitement in the air. I spent last Saturday preparing my closet for spring and summer: warm, heavy jackets making room for light summer coats, sweaters yielding for shorts and dresses, and boots replaced by cute sandals and heels. Of course, I also had the opportunity to donate the old items that no longer fit (size or fashion wise) to a lovely charity, and to pick up a few new ones – you know, the kind that gives your entire closet a facelift and makes every outfit feel brand new.

For those who haven’t yet gotten around to it, this is the time to clean out your investment portfolio as well. Schedule an appointment with your financial planner to discuss the following:

1. Is all or a portion of your capital invested in a fund, industry, market or company you no longer believe in? If so, it may be time to toss! The same applies if a fund has gone through a shift in management or style that you feel is for the worse. You can access this information in annual reports – or through google!

2. Monitor the Morningstar ratings for your funds, albeit not religiously. The score (one through five) will tell you how well a fund is doing compared to similar funds and relevant indexes – not how good of an investment it is overall. This is why it is crucial to do your own research as well. A two star-rated fund in an upcoming industry may be a better option than a four-rated one invested in a troubled sector. And with this in mind . . .

3. Have any new industries, companies, funds or markets sparked your interest lately? Have you done your research and feel fairly certain they’ll do well in the future? You may want to send some of your dollars in that direction!

4. Do you need to be more conservative, or could this be an opportunity for you to speculate a little? Your investment strategy should change not only with age (typically, the older you get, the more conservative it should be), but also with new market circumstances. If you are young and have plenty of time still, you may want to take advantage of this opportunity to pick up stocks and mutual funds invested in stocks for less.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Spring Cleanout of Your Finances

by Stacy Francis, CFP®, CDFA

My husband, son and I are getting ready to move to a larger apartment. I did a much belated, and much needed, spring cleanout of my closet this weekend to start getting ready. It got me thinking that while most of us do some sort of spring cleanout – our closets, our houses, our garages, even those office drawers stuffed with papers that haven’t seen daylight for years - very few of us go to work on our finances. This is too bad, because just as spring cleanouts make us look at our clothes in a new light, they can help us reach our financial goals. Here’s what you do.

Start with your investment habits. Are they in line with your expectations for retirement and overall life plan? Would you feel better about yourself if you set more aside, or be happier if you lived more in the now and bought yourself some nice things? Has your life situation – and thus your investment needs -- changed?

Then look to your income. Are you happy with your current income? If not, how could you change that? Would a couple of extension classes up your value on the job market, or could you take on a few more clients? Or are you in a place right now where you want more time for your family or for yourself, and thus wish to cut down on your hours? If so, how do you make it happen?

Finally, take an in-depth (be brave!) look at your spending habits. Are they in line with your goals for the future? Do you leave room for error in your budget, or for disasters such as hospitalization of someone in your family? Could you cut some corners? If so, where?

Our life situations change constantly, and consequently, so do our financial needs. By taking the pulse on your finances once per year, you greatly improve your chances of staying on track and getting what you want out of life.

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.