Be Savvy With Your Tax Refund

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by Stacy Francis, CFP®, CDFA

One of the only positive aspects to tax season is your refund. A new pair of shoes, dress or a vacation are all tempting choices for us to spend our tax return money. While a small splurge is a must, these extra dollars also give you a chance to improve your finances for the long haul.

There are five important areas you can invest the money returned from Uncle Sam that will help you get ahead much more than buying that cute pair of shoes.

1. Pay off all your credit card debt-

  • Paying just the monthly minimum on your credit cards is not a smart move. By doing such, you are not using credit wisely.

  • Over time the amount you owe will keep accumulating, bringing the original purchases you made to be more than triple the initial cost.

  • You do not build any equity by using credit cards.

  • Paying off your debt will strengthen your credit rating, which then leads to a lower interest rate.

2. Open an emergency fund-

  • You should have at least 3-6 months of your living expenses saved in an emergency fund for unexpected emergencies.

  • A Capital One and Ally savings accounts have interest rates upwards of 1%.

  • You receive 24-hour access to your funds and it takes about five minutes to open an account.

3. Open an IRA-

  • The greatest advantage of opening an IRA is to invest in your retirement. IRAs offer significant tax advantages as well.

  • IRAs are free to open.

  • You can invest $5,500 for 2015 before April 15th, 2016. If you are over age 50, you can sock away up to $6,500.

4. Invest in yourself-

  • Your biggest asset is not your bank account balance, it is actually your earning capacity.

  • Spend your money on continuing education classes that will increase your marketability, promotion chances and employment value.

  • You could also start your own business to bring in extra income over time.

5. Pay down your mortgage-

  • More than half of your monthly mortgage goes towards paying off your interest payments.

  • It provides a return on investment more reliable than anything the stock market can offer.

  • If you pay more than your monthly payments, it goes directly to your principle. Hence, you can shave a lot of time off your mortgage.

Consider these five ways to spend your tax refund and you will have greater financial security now and beyond.

Comment

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.

Tax Preparation & Filing Made Simple

by Stacy Francis, CFP®, CDFA

Tax season is here! Time to panic over lost receipts, missing information on cost bases for stocks, and 1099s that won’t ever show up; or, time to spend an afternoon with your CPA; or, click a few buttons on your computer keyboard? It all depends on how organized you’ve been and how well you’ve prepared throughout the year, not just in April. Below are a few tips for how to reduce your tax-related paperwork, now and in the future.

Meet with a CPA This is by far the easiest way to take the tax filing burden off your shoulders. CPAs file people’s taxes for a living, so you can trust that they know all the tricks and traps. Save yourself time and hassle by asking friends, colleagues or family for a referral.

E-File If you do not wish to use an accountant, you can find a variety of simple and user-friendly e-filing programs online. Many of them are free, as long as your income is below certain limits. Save yourself some wrestling with your printer and a trip to the post office by filing online. The Manila Folder Throughout the year, you will need to save documents such as receipts and transaction reports from your investment accounts. Whenever you receive one of these documents, stick it in a labeled manila folder. If you’re paperless, create a folder on your computer for the same purpose.

Take Advantage of IRA Accounts Saving in IRA accounts will save you heaps of paperwork, as this eliminates the need to track cost basis and sales price for each security, and include these in your tax report. Once the money is in your traditional IRA or 401(k), it is off your tax record until you start to make withdrawals, at retirement. In case of a Roth IRA, you never have to worry about it again!

Take the Standard Deduction True, many people save a lot of money by itemizing . . . but it does require both time and effort. If your objective is to keep things simple, take the standard deduction. However, it is usually worth it to itemize. It could save you a lot of money.

Filing your taxes is never fun – unless, of course, you are expecting a huge refund! Use these tricks to simplify your tax filing process and minimize the time you need to spend in your home office, shuffling paperwork.

Comment

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.

Life Insurance: Can You Afford to Wait?

by Maureen M. Kesler

With adulthood comes a number of exciting changes. Perhaps you have decided to buy a home, get married, or have children. These decisions require careful consideration, as they can irrevocably change your life. One decision that’s easy to delay or overlook is the decision to purchase life insurance. What you may not realize, however, is that delaying the purchase of life insurance can be a costly mistake for you and your loved ones. Waiting just a few years can have a negative impact in several key areas. Whole life offers financial protection and cash value accumulation. In its simplest form, whole life insurance protects the people who depend on you for financial support. Aside from providing money to your beneficiaries to replace your income, should you unexpectedly die, whole life insurance also offers guaranteed* cash value accumulation on a tax-deferred basis, as long as the policy remains in force. If available, cash value can be borrowed against to fund a child’s education, supplement your retirement income as the life insurance needs decrease, or meet an emergency cash need. Remember though, that policy loans accrue interest at the current variable loan interest rate and reduce the total cash value and total death benefit by the amount of the outstanding loan plus interest.

The effects of waiting. Since a portion of the premiums paid accumulates cash value each year, over the long term this accumulation can be considerable (especially since taxes on the growth are deferred). So the sooner you start paying policy premiums, the faster your cash value may grow.

A whole life policy is also eligible to receive dividends, if and when they are declared by the insurance issuer. Unlike cash values, dividends are not guaranteed. As a policyholder, you have several options for dividends usage: you can take dividend distributions in cash, for example, or you can use them to purchase additional paid-up life insurance. Paid-up insurance is also eligible for dividends, has cash value, and requires no additional premiums. So waiting to purchase insurance could cost you the opportunity to increase the cash value of your policy and the benefit paid to your beneficiaries.

Perhaps you’re healthy now and you’ve decided to delay the purchase of life insurance for a few years. However, in these few years you may suffer unexpected health problems that could put your insurability in jeopardy. In a worst case scenario, if you were to unexpectedly die, the cost of waiting would be the lack of a death benefit for your loved ones.

*Guarantees are backed by the claims-paying ability of the issuer.

Remember, purchasing life insurance is a major decision. So it’s important to take the time to gather the necessary information and choose the coverage that best suits your needs. While the decision is ultimately yours, keep in mind that postponing your decision can prove to be costly.


This educational third-party article is provided as a courtesy by Maureen M. Kesler, Agent, New York Life Insurance Company.

Tax Preparation & Filing Made Simple

by Stacy Francis, CFP®, CDFA

Tax season is here! Time to panic over lost receipts, missing information on cost bases for stocks, and 1099s that won’t ever show up; or, time to spend an afternoon with your CPA; or, click a few buttons on your computer keyboard? It all depends on how organized you’ve been and how well you've prepared throughout the year, not just in April. Below are a few tips for how to reduce your tax-related paperwork, now and in the future.

Meet with a CPA This is by far the easiest way to take the tax filing burden off your shoulders. CPAs file people’s taxes for a living, so you can trust that they know all the tricks and traps. Save yourself time and hassle by asking friends, colleagues or family for a referral.

E-File If you do not wish to use an accountant, you can find a variety of simple and user-friendly e-filing programs online. Many of them are free, as long as your income is below certain limits. Save yourself some wrestling with your printer and a trip to the post office by filing online.

The Manila Folder Throughout the year, you will need to save documents such as receipts and transaction reports from your investment accounts. Whenever you receive one of these documents, stick it in a labeled manila folder. If you're paperless, create a folder on your computer for the same purpose.

Take Advantage of IRA Accounts Saving in IRA accounts will save you heaps of paperwork, as this eliminates the need to track cost basis and sales price for each security, and include these in your tax report. Once the money is in your traditional IRA or 401(k), it is off your tax record until you start to make withdrawals, at retirement. In case of a Roth IRA, you never have to worry about it again!

Take the Standard Deduction True, many people save a lot of money by itemizing . . . but it does require both time and effort. If your objective is to keep things simple, take the standard deduction. However, it is usually worth it to itemize. It could save you a lot of money.

Filing your taxes is never fun – unless, of course, you are expecting a huge refund! Use these tricks to simplify your tax filing process and minimize the time you need to spend in your home office, shuffling paperwork.

Comment

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.

4 Ways Healthcare Reform Will Affect Your FSA

by Manisha Thakor  

'Tis the season... for open enrollment.

Open enrollment is the annual window where you can sign up for valuable employee benefits such as a Flexible Spending Account ("FSA"). If you work for an employer offering this benefit, trust me.  You want to keep reading.  As a self-employed person not eligible for this benefit right now - I'm here to tell you an FSA is nothing to sneeze at.  Back when I was in corporate America I didn't appreciate FSAs enough - and want to make sure you don't make that same mistake.

FSAs are a great way to plump up YOUR bottom line by enabling you to pay for necessary out-of-pocket medical expenses with pre-tax dollars. As a result, when you sign up for an FSA, you can save up to 40 percent on expenditures that you are going to make anyway. This year, healthcare reform has brought about some changes to FSAs.  To help current and prospective FSA users prepare for open enrollment, I've teamed up with Wage Works on a "Save Smart, Spend Healthy Campaign" to spread the word about what you need to know to make the best choices for you and your family. 

Here are four key differences from last year that you should know about when planning how much to contribute to your FSA account:

1. OTC Medicines Are Still Covered... But You Will Need A Prescription. When there is change, there is often confusion. A number of news stories have inaccurately reported that the IRS is no longer allowing over-the-counter (OTC) medications to be paid for with FSA funds. Thankfully, this is incorrect. The truth is that starting January 1, 2011 OTC medications (excluding insulin) will require a doctor's prescription in order to be paid for with FSA funds. Note: the key word here is "medicines." Other non-medicinal OTC items such as band-aids, crutches and diagnostic kits can still be paid for with FSA dollars prescription-free. The easiest way to prepare for the new rule around OTC medications is simply to have a frank dialogue with your doctor at your next annual exam and get the necessary paperwork (specifically, a prescription) in advance for things like allergy medicine or pain relief capsules.

2. Contribution Caps Are Coming... So Plan Today For Elective Procedures. Starting in 2013, annual contributions to FSA accounts will be capped at $2,500. (Right now contribution caps are set by individual employers, and tend to average around $5,000). If you've been contemplating an elective procedure for you or a qualified family member - such as LASIK or braces - 2011 and 2012 are the last two years in which to set aside and use extra funds in your FSA. Remember, a payment made with FSA dollars is akin to getting a discount of up to 40 percent off since you are paying with pre-tax dollars. So it's really worth it to make an estimate of your FSA eligible expenses for the coming year and sign up to contribute that amount into your account.

3. Adult Children Get A Helping Hand... Under Certain Circumstances. Thanks to healthcare reform your adult children can stay on your healthcare policy up to age 26 - as long as they are not offered coverage by their employer. Now is a great time to check in with your entire family and see who might need coverage and/or whether any of your adult children qualify as dependents. Note: some firms will allow mid-year FSA contributions to reflect the addition of adult children so check with your HR department about their policies on qualifying events.

4. "Free" Preventative Care... Means Some Costs Will Go Away. Last but not least, routine screening for blood pressure, diabetes and cholesterol may no longer require a co-pay. Other cancer screenings like mammograms and colonoscopies as well a pre-natal care visits, vaccinations, and routine infant and childcare checkups may also be provided as part of your baseline insurance - thus requiring no additional out-of-pocket cost. If you had previously used your FSA to pay for these expenses, you can pare back here.

Ultimately, spending a little bit of time understanding how healthcare reform may change the amount you choose to contribute to your FSA for 2011 is an investment that you won't regret.


[Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor or on Facebook at /MThakor.

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Manisha Thakor

From Manisha's linkedin profile page:

Manisha Thakor is the Director of Wealth Strategies for Women at Buckingham Strategic Wealth and The BAM Alliance. 

Manisha and her colleagues provide both evidence-based wealth advisory services for high-net-worth households and core asset management solutions for women and families nationwide with $80,000 or more in investible assets. 

An ardent financial literacy advocate for women, Manisha is the co-author of two critically acclaimed personal finance books: ON MY OWN TWO FEET: a modern girl’s guide to personal finance and GET FINANCIALLY NAKED: how to talk money with your honey. She is on Faculty at The Omega Institute and serves as a Financial Fellow at Wellesley College. Manisha is also a member of The Wall Street Journal’s Wealth Experts Panel, a member of the 2015 CNBC Financial Advisor’s Council, and wearing her financial educator’s hat serves as a part of TIAA-CREF’s Women’s Initiative. 

Manisha's financial advice has been featured in a wide range of national media outlets including CNN, PBS, NPR, The Today Show, Rachel Ray, The New York Times, The Boston Globe, The LA Times, Real Simple, Women’s Day, Glamour, Essence, and MORE magazine.

Prior to joining the Buckingham team, Manisha spent over twenty years working in financial services. On the institutional side she worked as an analyst, portfolio manager and client relations executive at SG Warburg, Atalanta/Sosnoff Capital, Fayez Sarofim & Co., and Sands Capital Management. After this she moved to the retail side and ran her own independent registered investment advisory firm, MoneyZen Wealth Management. 

Manisha earned her MBA from Harvard Business School in 1997, her BA from Wellesley College in 1992 and is a CFA charterholder. She lives in Portland, OR where she delights in the amazing Third Wave coffee scene and stunning natural beauty of the Pacific NorthWest. Manisha’s website is MoneyZen.com.

On the 12 Days of Christmas

by Susan Hirshman

As I was driving the other day, the song … On the twelve days of Christmas my true love gave to me….came on the radio.  It made me think – who really is our true love and what is it really that we want.

Who really is our true love?  Well, I am not Dr. Phil but we must first start with ourselves. And what is it that we really want? From a financial perspective most people tell me it’s “ peace of mind.”

So I took a little literary license and came up with a new song for the holidays.

On the 12 days of Christmas I gave to me the best gift of all…peace of mind….

Here are twelve things you should think about and examine

Day 1 – Review your life insurance coverage.  Is it working as projected?  Is the pricing up to date? Is the coverage in line with your needs?

Day 2 – Examine (or create) your retirement goals.  Are the assumptions realistic?  Is it a priority?  Are you on track?

Day 3 – Look at your emergency savings.  Do you have any? Is it liquid? What do you want it to cover?

Day 4 – Review your disability coverage.  Do you have any?  Do you know what your policy covers, for example is it your own occupation or any occupation?

Day 5 – Go thru your estate plan (or lack thereof.) Are the guardians you named for your children still the right choice?  Is the executor the right choice?  Has your life circumstances changed and those changes are not reflected in your will?

Day 6 – Appraise your need for long-term care insurance.  What is your family’s health and longevity history?  Do you have family members that would be willing and able to take care of you in the manner that you choose?

Day 7  - Assess your diet. Studies have found that discrimination based on weight in the work place is more prevalent for women than men, especially white women in professional occupations.

Day 8:  Study your portfolio performance.  Are you an emotional investor? Do you end up buying high and selling low?  How long do you usually hold on to a mutual fund?

Day 9: Take a break from TV.  Reduce your TV watching by less than 8 hours a year and you can gain financial success. Snookie won’t be able to help you but by taking a few hours to get financially educated (read Does this Make My Assets Look Fat? A woman’s guide to finding financial empowerment and success), then take around 5 hours to get organized and develop a plan, and then take an hour 2x a year to review your plan.

Day 10 – Re-evaluate your umbrella policy.  Do you have one?  Is it sufficient? When was the last time you revisited it? Experts report that only 10%of people have the proper umbrella policy.

Day 11: Make sure you are familiar with all your finances. Do you know what would happen to you financially if you were to get divorced? 25% of couples married for twenty years get divorced.  Furthermore, the “grey divorce” (people over 65) is the fasting growing group of people to get divorced

Day 12:  Go over your credit cards.  Understand your interest rates, payment options.  Make sure you are not paying more than you have to.

I Lost My Job – What About Health Insurance?

by Stacy Francis, CFP®, CDFA

I received an email from a Savvy Lady today; a heartbreaking tale of how she had been laid off, and was now trying to figure out how to survive – and feed her two small children, as she is a single mom. One of the expenses she worried about was medical. I think any parent can relate to this: with children around, unless you have the proper insurance coverage, medical expenses tend to run the gamut. For those of you in the process of losing your jobs, here’s how to keep this aspect of your finances under control. First of all, if you are still employed, make the most out of your insurance plan while you have it. Get all your routine checkups out of the way. If you use medications, take out as much as your insurance provider will allow. If you have been putting off procedures, now’s the time to have them done.

Once you do lose your job, know that you have options. Under COBRA rules, in most cases, your company must allow you to keep your insurance coverage for six months, as long as you pay the full premium. While this is great news indeed, there is one drawback. The full premium can be quite a bit higher than the monthly payment you are used to, depending on your insurance plan and how much your employer has been contributing. Do your research – shop around, and request other quotes. You may be able to find a cheaper deal on your own.

Comment

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.

The Scoop on IRAs and Tax Losses

by Stacy Francis, CFP®, CDFA

My friend who is a stockbroker wrote heaps of sell tickets for his clients back in December of last year. This may seem controversial, considering that finance gurus always advise us to sell high and buy low and it has been a long, long time since stocks traded as low as they did at the time. However, selling stocks in a down market has one huge advantage: you can deduct the losses from your taxable income. Especially thinly traded, volatile stocks that have performed poorly throughout the year tend to be hammered to the ground in December, only to rebound in January as investors with a long-term, bullish perspective pick them back up again.

Taking advantage of these losses in your regular, taxable accounts is a no-brainer. But at times, it can pay off to take tax losses in your retirement accounts as well.

Before you read any further, take note that you can never deduct losses in traditional IRAs or 401(k)s. The reason for this is simple: you already made a deduction when you put the money in the account!

However, if you have a Roth or traditional nondeductible IRA, you may be able save a few tax dollars, as long as your cost basis is higher than your current account value. Unfortunately, this type of transaction has several drawbacks.

First of all, in order to deduct a loss, you need to liquidate the entire account. When you want to build it back up again, all the usual limits and restrictions will apply to you. Furthermore, losses in these accounts cannot be deducted directly from your taxable income – they can only be used as parts of an itemized deduction. Therefore, they are much less beneficial for this purpose than losses in regular, taxable accounts.

To sum up, taking a tax loss in your Roth or traditional nondeductible IRA may make sense if you have accrued only a tiny balance and you itemize. If you have a large amount of money saved up, you don’t itemize, or your account is either a 401(k) or a traditional IRA, don’t bother.

Comment

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.

Your Financial Fitness Checkup

by Stacy Francis, CFP®, CDFA

Leaving the organic produce store yesterday, a flier on the revolving glass door caught my eye. It was entitled “HEALTH CHECKUP: Do You Have the Supplement Basics Covered?” and listed five types of supplements - multivitamins, enzymes, probiotics, fatty acids, and green vegetables - as the foundations for good health. Not only is it nice to know that I take all the necessary measures to ensure my physical well-being, this also translates very well to financial health.

Do you have the personal finance basics covered?

  • Do you make more than you spend? Are you able to pay all your bills in full, on time, or do you need to make more and/or spend less?

  • Do you have an emergency fund? Do you have enough money to cover six months worth of expenses, and is this money easily accessible?

  • Are you in the black? Do you pay off your credit cards in full every month? If not, draft a plan to get rid of those balances!

  • Have you thought about retirement? Do you have a 401(k), Roth IRA or similar, and do you contribute to it regularly?

  • Have you protected yourself against disaster? Do you have the insurance coverage you need, including medical, disability and homeowner’s insurance?

Yes on all? Congratulations! Chances are you’re in great financial health.

Comment

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.

Nanny Tax 101

by Stacy Francis, CFP®, CDFA

I do not make it a habit to eavesdrop, but the girls at the table next to me at the smoothie bar this morning were so loud and animated, there was no way around it. They were all international students, pushing the benefits of babysitting to the newest girl in the gang. It’s the perfect extra job, they said, because you don’t need a work permit.

Most moms will know this isn’t true. But since this isn’t the first time I have encountered this misperception, allow me to shed some light on employees in your home and taxes.

If you drop your child off at a sitter’s house on your way to work, and pick him or her up on your way home, the babysitter is not your employee. However, if your nanny works in your home and under your direction, she is considered an employee - regardless how many hours per week, month or year she does so. This means you both have to pay taxes. In order to do this, your nanny needs a work permit.

Now that we’ve gotten that part straightened out, let’s put this into numbers. If you pay your employee $1,400 per year or more, you need to withhold 7.65% percent from his or her paycheck, and then match this (a total of 15.3%). Minors under 18 and relatives such as parents and spouses are exempt from this rule.

If your employer has a childcare spending plan, you may be able to save some on your taxes and put money away pre-tax, to use for childcare. Even if you do not have access to such a plan, you may still qualify for a dependent care tax credit of 20-35% of the first $3,000 you spend ($6,000 if you have more than one child).

So while it may come as a surprise that such transactions are subject to taxation, you get a break, too. Not too shabby, is it?

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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.

6 Smart Money Moves in Your Thirties

by Stacy Francis, CFP®, CDFA

A couple of weeks ago, I attended my friend’s thirtieth birthday party. A week later, she called my office to schedule an appointment. While I was delighted to accommodate her, I couldn’t help but scratch my head a little. She never asked me about money before. What was going on? 

It turns out that like so many people entering their thirties, she suddenly felt overwhelmed with financial responsibilities. Would she ever be able to pay off her student debt? What about buying a home? And retirement, it had dawned upon her, wasn’t as far off as it had seemed before. Nor was the whole baby thing.

It is true that your thirties bring a ton of financial responsibilities - but it is also a decade of wonderful opportunities! Below are six smart money moves and stepping stones toward a prosperous future.

  1. Learn to prioritize and keep your expenses down. While a few people pick this up in their twenties, many people never do – and they rarely enjoy a better-than-average standard of living.
  2. Pay off your credit cards. Not only will you save a bundle on financing charges, but as your FICO score improves, you can obtain better rates for mortgages and many other things.
  3. Build an emergency fund. Most experts recommend that you keep enough money to cover six months worth of living expenses in an easily accessible account. This is especially true today.
  4. If you haven’t done so already, start saving for retirement. You are best off stashing this cash in an account that scores you tax benefits, such as a 401(k) or a Roth IRA.
  5. Watch your debt. Get into the habit of spending less than you earn, making room for savings. Stay clear of high-interest and toxic debt.
  6. Review your insurance coverage. Chances are you have some sort of medical insurance already. Other types to look into include long-term disability and homeowner’s insurance (if you are planning to buy a home).

You don’t have to deal with them all at once. Just keep them in mind, and work on them whenever possible.

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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.

Term or Whole Life Insurance – Which Is Right for You?

by Stacy Francis, CFP®, CDFA

I had breakfast with a new client this morning, at a cozy new bakery around the corner from my office. While the fruit and croissants couldn’t have been better, our conversation was anything but. My new client was- like so many people these days – in a bit of a tough spot financially, so last week he attempted to cash out on the whole life insurance policy he purchased three years ago. He had put almost $9,000 into it, surely, he would be able to withdraw something?

Before sharing his account of this transaction, allow me to explain the difference between term and whole life insurance. Put simply, a term insurance policy is acquired for a certain period of time, often with an option to renew. If the insured person dies before the end of the term, the beneficiary is paid the face value of the policy. A whole life insurance policy is usually for life, and it has both insurance and cash value components.

Now, back to my new client’s case.

The woman who sold him the policy informed him that if he wished to make a cash withdrawal, he would have to wait several years. Even then, he wouldn’t get much.

This type of scenario is far from uncommon. Most whole life insurance policies you need to hold for at least twelve to fifteen years if they are to generate decent returns – some of them never do. Other drawbacks with these types of insurance policies include hidden fees, high commissions (100% of the first year’s premium is not unusual), and that overall, they tend to be lousy investments. There are so many better ways to save for retirement!

So unless you have a very high net worth and intend to use the whole life insurance policy for estate planning purposes or a disabled child or parent, opt for term insurance. It is simpler, less expensive, and you are much better off investing your money elsewhere.

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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.

I Lost My Job – What About Health Insurance?

by Stacy Francis, CFP®, CDFA

I received an email from a Savvy Ladies member today; a heartbreaking tale of how she had been laid off, and was now trying to figure out how to survive – and feed her two small children, as she is a single mom. One of the expenses she worried about was medical. I think any parent can relate to this: with children around, unless you have the proper insurance coverage, medical expenses tend to run the gamut. For those of you in the process of losing your jobs, here’s how to keep this aspect of your finances under control.

First of all, if you are still employed, make the most out of your insurance plan while you have it. Get all your routine checkups out of the way. If you use medications, take out as much as your insurance provider will allow. If you have been putting off procedures, now’s the time to have them done.

Once you do lose your job, know that you have options. Under COBRA rules, in most cases, your company must allow you to keep your insurance coverage for eighteen months, as long as you pay the full premium. While this is great news indeed, there is one drawback. The full premium can be quite a bit higher than the monthly payment you are used to, depending on your insurance plan and how much your employer has been contributing. Do your research – shop around, and request other quotes. You may be able to find a cheaper deal on your own, especially if you are eligible for a state run insurance program.

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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.