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
Tony Robbins for Your Money
by Stacy Francis, CFP®, CDFA
One of my friends has grown to be such a Tony Robbins fan, she now quotes him daily. I went over to her house last night, to watch one of his videos and find out for myself what the fuss was all about.
I liked it. Even more so, I liked that even though the video dealt with life and overall goals, the technique can be narrowed down and applied to personal finance as well. Here’s how:
- Write down all the things on which you spend money. This includes every dime – no exceptions for the pack of gum you pick up at the gas station and the one-off birthday gift to your daughter’s friend.
- Write down your financial goals. When it comes down to it, what matters the most to you? Do you wish to achieve financial independence, send your child to a top-notch college, or simply be able to spend a little more at Bloomingdales?
- Brainstorm ways in which you can make the different situations where you spend money all part of your grand plan. When you deny yourself a mid-afternoon smoothie from Jamba Juice, rather than sulking, think of it as scoring yourself another tenth of a new pair of heels. Or, alternatively, don’t feel bad when you pick up that gorgeous cashmere scarf at Neiman Marcus. Instead think about how this is what you’ve been working so hard for.
In essence, it is all about dividing your spending into clusters, and aligning these clusters so that they all point in the same direction: toward the fulfillment of your dreams!
The Financial Impact of another Child
by Stacy Francis, CFP®, CDFA
My nutritionist had a baby a month or so ago. She told me over the phone that she was relieved beyond words that her insurance company had covered most of it, because the bill for her birth and subsequent hospitalization added up to a whopping $80,000. You just wait, I told her.
Because the thing is, while children are wonderful, and the greatest joys of many people’s lives, they are also huge financial responsibilities. Bringing one into your life requires a great deal of planning, especially if you – like most mothers – want nothing but the very best for your youngster. Here are just a few things to consider:
- Childcare. If you and your spouse both work full time, someone needs to care for your treasure while you’re at the office. From nannies and Montessori schools to public daycare and occasional baby sitters, making sure your baby is always safe and in good company can cost you. Lots.
- Your work life. You may want to cut back on your hours to spend time with your baby – even stay at home for a couple of years. The higher your current salary, the more you will feel this drop in income.
- College. While your child may score an amazing scholarship, chances are also, you may need to foot a good portion of the bill. With tuition many times in excess of $20,000 per year, be prepared and make sure you leave room in your budget to start saving early.
Of course, many more factors can (and will!) apply to your specific situation. By thinking ahead you can give your child a wonderful life, without sacrificing your own.
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.
Ten Percent Off at Macy’s – How Your Credit Score Affects Your Finances
by Stacy Francis, CFP®, CDFA
I spent the afternoon shopping with a friend, and received no less than six credit card offers from well-meaning sales reps. Back home, three more waited for me in my mailbox. Frankly, it is no wonder that a large number of Americans have so many credit cards, you could use them for a round of Texas Hold ‘em. The problem is, not only do these cards tempt you to overspend – every time you apply for a new card, your credit score goes down. This can affect your finances in many more ways than you would think. Below are just a few.
- The lower your credit score, the more expensive it is to finance anything – from your dream home to that sweet new car. When you have a low credit score, banks and similar institutions consider you a high-risk individual, so if you want a mortgage, be prepared to pay for it.
- A low credit score can make it expensive at best, impossible at worst, for you to get a loan, should disaster strike.
- Many landlords will only lease their apartments or houses to people in good to excellent credit standing.
- You may need to put down a deposit – lock your money up without earning any interest – even for things as ordinary as, say, cell phone service.
- Your credit score may cost you that job you want — most notably any type of position where you work with money, be it in a bank or another type of financial institution.
I love discounts. Who doesn’t? But if you care about your financial future, it is better to shop on sale than to open three dozen store credit cards.
The Commuting Issue
by Stacy Francis, CFP®, CDFA
This morning, I was stuck in my apartment elevator for 30 minutes. I spent this time, of course, thinking about commuting and happy that my commute is normally only 10 minutes and involves no cars, buses, trains or subways. I moved my apartment next to my office so that I could spend maximum time with my family and friends. I am one of the lucky few who enjoys the trip to and from work.
However, commuting is just one of those things almost all Americans deal with . . . yet few take an in-depth look at the true effects of commuting on their lives. Because not only can commuting be a hassle, a nuisance and a time consuming endeavor — it can be expensive as well. Breaking it down into commuting cost and salary, you may find that your current situation is far from ideal.
Commuting costs are things like gas, car insurance and maintenance, train or subway passes or tickets – whatever applies in your specific situation. You may need to add another car to your household solely to handle the commute. Add to this the time you spend getting to and from work, and you should have a rough estimate of how much your time on the road costs you.
Then consider your salary. How much is left after you have paid taxes and commuting expenses? Could you get a similar job closer to home and save money? And if that is not an option, could you move closer to work and save money that way?
It is important to keep in mind, though, that these aren’t the only factors to consider. Where you choose to live and work is about much more than just money. When adding to the pot your children’s school and spouse’s commute, plus personal factors such as the fact that you happen to love your job and the community you live in, things get even complicated.
Feng Shui and Money
by Stacy Francis, CFP®, CDFA
A friend of mine had a Feng Shui expert look over her house this weekend. She invited me to come over and watch. Tons can be done to attract wealth into your life, she told me. While I found the in-depth Feng Shui so complex and complicated it’s bound to make you paranoid (or simply give up), the basic message — that when you clean up the clutter in your life, you leave room for new, good things to come to you, makes a lot of sense. So, without going into too much detail, below are a few simple things you can do to draw wealth, success, and prosperity into your life.
The main areas that affect your financial situation are the north (career) and the southeast (wealth and prosperity), along with your kitchen, which is a symbol of money and abundance in every home.
In the north and southeast corners, one of the simplest and most potent things you can do is to add water (if actual water is not an option for you, you can use a photo or a painting featuring water). This is commonly done either by installing a waterfall, or by setting up a fish tank (or bowl, which may be easier to take care of).
When it comes to your kitchen, the stove is a virtually an abundance magnet, so make sure you don’t leave pots and pans sitting around on it while you are not cooking, as they could block wealth from entering your life. It is also a good idea to keep a bowl of change in the southeast corner of the kitchen, or a well-stocked bowl of fresh fruit.
How Much Shopping Is Too Much?
by Stacy Francis, CFP®, CDFA
Flipping through the latest In Style last night, I realized how easy it is to feel that the price tags for the things magazine editors like to tell us we absolutely must have are out of line with our earnings. The consensus among those in the know seems to be that burning more than 10% of your after-tax income on luxuries is insane. But the number may be lower – or higher – for you, depending on your circumstances.
The first things you need to consider are your financial priorities. Are you anxious to achieve financial independence and leave your job as soon as you can? If so, chances are, 10% is too much for you. If, on the other hand, you are the material girl Madonna once sang about, perhaps having a to-die-for closet and that home everyone adores means more to you than an early retirement. Perhaps you even love what you do and can’t wait to get to work in the mornings. If this sounds like you, you can probably afford to splurge a little extra.
The second factor you need to consider is your income versus spending ratio. Are you able to stick to a retirement savings plan, stashing away enough cash to feel good about your senior years? Or are you constantly struggling to make ends meet? In debt, even? This will impact your ultimate shopping budget, too.
Finally, you need to give some thought to those who depend on you. If you are single and make a nice living, you can probably afford to spend a decent amount of money on yourself. If, on the other hand, you are a single mom, or your spouse makes less than you, or you are going through a career change, chances are, a bit of good old-fashioned frugality could take you a long way.
Achieve financial independence
by Stacy Francis, CFP®, CDFA
My brother and I had a long talk about financial independence last night, over the most delicious Crème Brûlée. I realized how much the two have in common! Both the dessert and the concept are things everybody craves – yet very few have a clue of how to make them happen. Still, the theory behind financial independence couldn’t be easier to grasp. Put simply, you are financially independent when your investment income meets or exceeds your expenses, so that you do not have to work for a living. For example, if your annual expenses add up to $25,000, and the average yield from your portfolio is 10% per year, then you need at least $250,000 worth of securities in order to be financially independent.
Sounds fab, but how do I make it happen? Well, starting off, it’s all about the difference between what you make and what you spend. This difference you can invest, and each dollar set aside takes you one step closer to the life you want.
If you find that the gap between your income and your spending is too small, there are two ways to mend it. The first one is to make more money. Can you ask your boss for more responsibilities? Switch to a different company — one that pays more? Expand your business or take on a few additional clients?
The second way is to spend less money. Keep a spending journal until you feel you know where your money goes. Then sit down and cut all the things you don’t truly need, and that are keeping you away from that independence you desire. Be ruthless – and you will be thankful later.
Another important thing to keep in mind is that the cheaper you can live, the less capital you need in order to be financially independent. A $300 monthly car payment translates to $3,600 per year, or $36,000 extra that you need to save up before you can quit your job. When you become clear over what matters the most to you, you can line up your life and your finances accordingly.
The right time to retire
by Stacy Francis, CFP®, CDFA
When should I retire? a woman called me up to ask today. I found it charming; quaint, even, to make such a complex question sound so simple. If only it were so simple that I could just have spouted out age 65 or 55. Would not it be wonderful if you just KNEW what date you could and should retire?
Looking at it from a finance point of view, you can retire when the combination of the retirement benefits you will receive and the average yield from your invested capital is at least as high as your expenses. Keep in mind here, that your expenses may change when you retire. You may wish to travel the world, or spend a year touring the States in an RV. You may want to move to be closer to your children, or simply to a warmer climate. Your expenses may go up, or down, and you need to take all that into consideration before you act. You may also wish to leave money behind for your loved ones, in which case you may need to work a little longer to set the money aside. You may be in good health, or poor.
But apart from the money stuff (which, by the way, qualified professionals will gladly help you with), the most important thing you’ve got to ask yourself is: do you want to retire? Do you enjoy your job? Would your life be more rewarding if you retired, or less? What are you looking to get out of the upcoming couple of years? Would you miss your coworkers awfully if you left your job, or do you look forward to mid-week lunches with your husband?
Whatever your reasons for retiring or not retiring are, there is a financial side, and an emotional side. And only you can balance that equation.
