Stacy’s Savvy Financial Advice

Stay Savvy with our founder Stacy Francis’ latest articles on financial planning, budgeting, debt management, investing, divorce, retirement planning, and more.

Stacy Francis founded Savvy Ladies® in 2003 with the mission to educate women about their finances and empower them to make proactive choices. Inspired by her grandmother who stayed in an abusive relationship due to financial reasons, Stacy has been determined to never let another woman become powerless by financial instability.

Get the resources, knowledge, and tools you need to make smart and informed decisions about your money and your life.

In addition to being the Founder and Board Chair of Savvy Ladies®, Stacy is the President, CEO of Francis Financial, Inc., a boutique wealth management and financial planning firm. A nationally recognized financial expert, she holds a CFP® from the New York University Center for Finance, Law, and Taxation, and is a Certified Divorce Financial Analyst® (CDFA®), a Divorce Financial Strategist™ as well as a Certified Estate & Trust Specialist (CES™).

Stacy has appeared on CNBC, NBC, PBS, CNN, Good Morning America, and many other TV & Financial News outlets. Stacy too is ofter sought out for her advice and can be found quoted in over 100 publications such as Investment News, The New York Times, The Wall Street Journal, USA Today.  She shares her wisdom and expert financial advice here for you to learn and get savvy about your finances.

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STACY’S $AVVY ADVICE

Money Considerations for Women

by Stacy Francis, CFP®, CDFA

The gentleman next to me during the opening dinner at a recent conference couldn’t get over the fact that I named my organization Savvy Ladies. Why, he wanted to know, did I find it necessary to focus solely on women? This, of course, is an excellent question. While men, too, benefit greatly from financial education, the following factors make it even more pressing for women to plan ahead and set financial goals:

  1. In average, women make less money than men. This isn’t always true – we have come a long way – but the many women living on mediocre wages need to take this into consideration when outlining their path to financial freedom. 
  2. Women tend to live longer than men. While the life expectancy for an American man is 75.4 years, the average American woman can expect to live 80.5 years. While a long life is usually desirable, it also makes things a bit trickier for women: not only do they often make less money, but they need to set aside a larger chunk of cash in order to obtain the same standard of living as retirees.
  3. Many women take breaks from their careers to raise children. While for some, this is limited to six weeks of maternity leave, others find it rewarding to remain at home for several years, looking after their little ones. An average woman spends 11 ½ years out of the workforce, versus 16 months for men (Women’s Institute for a Secure Retirement). Whatever route you opt for, make sure you make the appropriate adjustments to your retirement plan.

Long-Term Care Insurance: When to Get It and When Not To

by Stacy Francis, CFP®, CDFA

I met with a new client yesterday. While this is not unusual, the reason he had come to see me was: he was in his thirties, healthy, athletic – and extremely anxious about the fact that he didn’t have long-term care insurance. While some would call this paranoid, for those who have yet to explore this type of insurance, here’s what you should know.

Long-term care insurance covers you if you need to spend an extended period of time in a nursing home or an assisted facility – or if you need long-term care at home. While this is also true for the government-sponsored program Medicaid, there’s one important difference: Medicaid only covers individuals with minimal net worth. The Medicare program covers stays in nursing homes or assisted facilities in certain cases, but only for very short periods of time. What this comes down to is that if you have a decent amount of money but no longer are able to take care of yourself, you will be very happy that you purchased long-term care insurance.

So should everyone get a policy? Well, the drawback is that long-term care insurance can be very expensive – a policy can easily cost you $2,500 per year. Because of this, unless some scary disease runs in your family, it is generally best to wait until you are close to your late fourties or nearing fifty before you take out a policy. You don’t want to make payments on a policy for years and years – only to be forced to drop it due to financial difficulties a year or two before you need it.

Tax Breaks for Your Investment Losses

by Stacy Francis, CFP®, CDFA

My girlfriend called me up last night. “So,” she told me, “I was seconds away from selling these bonds I have so that at least I’d get a tax write-off, when I realized that’s not how it works with bonds. If I hold them until maturity, I will get my money back, won’t I?” I was so proud of her! She remembered! A major difference between stocks and bonds is just that – bonds have a maturity date, while stocks don’t. This is part of the reason bonds are considered “safer” investments. 

If my friend had owned stocks, her thinking would have been very strategic. Many investors sell stocks that are down just before the end of the year, and use the capital loss to lower their tax bills. This is a great idea for stocks, but does not work as well with bonds. 

In the case of mutual funds, things get a tad bit more complicated – or complex, perhaps. The fund managers buy and sell securities now and then, and unless you keep a very close eye on the fund, you will be notified via mail whether you are entitled to a tax write-off or owe the IRS money. Since the fund managers may have bought securities several years ago and sold them during the past year, it is possible that you will have a taxable capital gain even when your fund is down. Conversely, it is also possible that you will be able to do a tax write-off even though your fund is up.

Ex-Couples: How Alimony Works

by Stacy Francis, CFP®, CDFA

“It is easy to preach financial independence,” a new Savvy Ladies member remarked at a recent seminar, “but I have already spent ten years as a housewife. My husband and I are miserable together, but there’s no way I would survive without his financial support.”

Unfortunately, her situation is far from uncommon. But the good news is: she can get divorced and still maintain a fair standard of living while she gets back on her feet and starts a career of her own. How? The answer is alimony.

While not a given right, US law mentions that parties in a divorce should be able to live “according to the means to which they have become accustomed.” Meaning, if during the past ten years you made zero dollars while your spouse made $300,000 per year, chances are pretty good that you’ll be able to maintain a decent lifestyle on your own.

The length during which an ex-spouse receives alimony depends on many things, from age (younger individuals are generally considered as having better chances to move on with their lives) to how long the marriage lasted. So while nothing is guaranteed, there is still hope!

5 Vital Questions for New Parents

by Stacy Francis, CFP®, CDFA

Shopping for my new baby earlier today, I met two very anxious soon-to-be mothers. Talking to them made me realize how much easier it is to be pregnant the second time around. Not only am I more relaxed about everything, but I also know what needs to be done, both around the house and financial planning-wise. For those of you still on your first child (or planning to have one in the future), below are five crucial things to ask yourself during those first, tired months to make sure you are on track. 

  1. Have you updated your will to include your newborn? Many new parents have neither wills, nor have never seen the need for them in the past. With a little one to care for, this all changes.
  2. Have you set up a college savings plan? I am aware that college is eighteen years away. But as I have mentioned before, due to the concept time value of money, no dollar is going to make more of a difference than the ones set aside early in your child’s life.
  3. Have you acquired life insurance? True, it is unlikely that you and your spouse will die in the near future, but accidents do happen and you will sleep better at night knowing that your baby would be provided for in your absence.
  4. What about disability insurance? The thought of becoming disabled is no more pleasant than the one of dying, but since it will be many years before your son or daughter will be able to support him or herself, you need to be prepared for everything.
  5. Have you factored in the increase in your cost of living? There are cheaper and more expensive ways to raise kids. From helpful grandparents to nannies, hard-working parents to stay-at-home moms, the cost can vary widely, but according to statistics, the average cost for raising a child in the US is $250,000.

Donating to Non-Profits: Good Karma and Even Better Tax Breaks

by Stacy Francis, CFP®, CDFA

Tax season is here! A great time for anyone expecting a refund, and a not-so-great time for those who now have to come up with a chunk of cash for the IRS, on top of all their other bills and financial responsibilities. For the financially savvy, tax season is a fantastic opportunity to be clever and score some free money – or at least a smaller tax bill.

One fabulous way to reduce your tax bill is to donate to non-profits. For those of you who usually e-file, note that this rule includes far more organizations than the ones your tax program suggests after you have entered your data. There are literally thousands of non-profits from which to choose – ranging from religious institutions to organizations dedicated to curing diseases to those committed to financial empowerment for women like Savvy Ladies. And the tax break remains the same: if you donate $1,000, you will lower your tax basis with that amount, thus paying up to $350 less in federal taxes, depending on your current tax bracket.

And it gets better. Not only do you get a tax break, but you can help these organizations make the world a better place and improve your own life by generating goodwill and good karma.

No wonder so many US charities blossom!

I Was Planning to Retire in 2009 – Now What?

by Stacy Francis, CFP®, CDFA

For years, I would run into the same neighbor every time I went down to the corner shop – an incredibly dedicated and brilliant science teacher called Matt. For years, that is, until he realized his dream of retiring and buying a ranch in Utah last fall, leaving his wife behind for a couple of years until the time would come for her, too, to stop working. So you can imagine my surprise when I ran into him once more – last week! When my mouth fell open, he explained that he was substitute teaching for a couple of months. The value of his nest egg was so much lower now, complementing his investment income had become a necessity.

This may seem tragic, but the truth is that many people on the verge of retirement now find themselves with significantly smaller nest eggs. And unfortunately, there is no magic way to undo the damage. Instead, most near-retired people are faced with some harsh choices: a leaner lifestyle or a few more years in the workforce. Of course, the best solution for you may be a combination of the two, like working part-time for a while and settling for a less extravagant lifestyle, at least until the storm is over. The most important is that you do not:

  1. Cease to add to your nest egg because the value has fallen off. You will need that money – now more than ever.
  2. Shift your investment strategy away from your ideal asset allocation, in favor of all income-generating securities. Yields on the latter are pretty much insignificant at this time, while the downside for mutual funds invested in stocks is significantly smaller now than it was, say, a year ago. If anything, you should be doing the opposite!

Not the End of the World – The Cyclical Nature of the Economy

by Stacy Francis, CFP®, CDFA

During a recent charity dinner, I ended up at the same table as a successful financial newsletter writer. He is semi-retired now, in his seventies, but the many years he spent studying the financial markets and the economy have provided him with invaluable insight and a thorough understanding of the two. The problem with humankind, he told me, is that we don’t live long enough. This is why every time we have a boom, we delusion ourselves to believe that it is going to last forever, and every time we have a recession, we are sure it is the end of the world.

The truth is that the economy follows a cyclical pattern. After boom follows downturn, recession, then growth, and eventually we have a boom again. Of course, we all know, in theory, that this is how things work. But in order to truly believe it, we have to experience it over and over again– and by the time we are finally convinced, we die. If humans lived for 150 years, he argued, we would have much less drastic ups and downs in the economy, because people would know in their hearts that this is true.

Does anyone remember the early nineties? There was this doomsday-vibe in the air, and everyone was terrified. Media, of course, added to the fear by telling us that this was a recession like the world had never seen before, and there was no way of telling what would happen. Well, what do you know? We had an amazing boom that brought prosperity to many. And about the message from the media . . . it sounds a lot like . . . today. 

Money New Year’s Resolution

by Stacy Francis, CFP®, CDFA

This time of the year, inevitably, conversations gravitate toward the topic of New Year’s resolutions. While the vast majority tend to be not only generic (stop smoking, anyone? Join a gym?), but also difficult to follow (everyone has an aunt or an uncle who pledges to stop smoking every New Year’s), others can be fantastic in terms of motivation, and help us bring positive changes into our lives. One of the best areas to do this is your personal finances.

My dear friend never gets tired of reminding me about her idol Becky Bloomwood of Sophie Kinsella’s Shopaholic series, and her motto “take care of your money – and your money will take care of you.” And she is right! So take a moment to think about what you can do to improve your financial situation this year. Whether it is to open an IRA, shop around more before you buy your flight tickets, or save up for a down payment for a home, there will be no better time than now to put your goal into action.

My money New Year’s resolution is to use more discount coupons, restaurant.com and frequent guest cards when I dine out. What’s yours?

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