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
Renting vs. owning your home
by Stacy Francis, CFP®, CDFA
My cousin had his house appraised today, and he was not happy. Of course, he’s far from the only one feeling this way. With the US real estate markets free falling like rocks dumped from skyscrapers, an increasing number of people are growing wary. Very wary.
For years, everyone I’d meet would urge me to buy, buy, buy. Few investments were performing better, and what could possibly beat an investment that you can live in and enjoy while it makes you money?
Today, it’s a different picture altogether. In San Diego county, for example, the median house price dropped from right below $500,000 to the current $390,000 (more than 20%), in only a year. We are all familiar with the market in Detroit (my husband and I just purchased two houses there for a total of $30,000), and overall it is not hard to see why people are nervous. Still, while a nightmare for many, this market presents excellent opportunities for those who have been waiting to buy. But apart from timing and prices, what factors should be considered when faced with this decision?
First of all, there is the issue of fixed vs. variable expenses. While many landlords insist on one-year leases, some will go month to month as well. This is a good option if your income situation is shaky, or if you may be relocating shortly. If, on the other hand, you have a steady income and are set on staying where you are, it might be more beneficial to invest in a house rather than dumping a considerable amount of money into rent each month. After all, the real estate markets are going to turn around sooner or later, and when they do, your investment will start to pay off.
It is also worth mentioning that houses are some of the most marginable investments out there. If you are a knowledgeable investor and tend to score high returns on your investments, it might work to your advantage to buy a house, get a mortgage, and invest the money. As long as the yield from your chosen investment is higher than the 5-6-7% you pay for the mortgage, you can walk away with the difference — and a sunny smile.
Leave a legacy for loved ones
by Stacy Francis, CFP®, CDFA
When should I start saving for my children? a thirty-something mother of two asked me today. Right now, I suggested. She looked puzzled. Wasn’t it a little early? They are, after all, only two and four. I told her that if she is serious about their financial futures, the first couple of years are key.
Why?
The answer is, of course, time. $100 in a savings account is – as long as you invest it sensibly – going to be worth a lot more in 20 years. For adults, this can be the time left until retirement. For an infant, 20 years is the time left until college. Then they have 40 or so more years during which the money can accumulate. Take a look at the numbers below, and it won’t be hard to see why $100 in a child’s account is worth many times $100 in a thirty or forty-something’s account.
Assuming a 10% average yield per year,
$100 in 20 years=$673
$100 in 40 years=$4,526
$100 in 60 years=$30,448
The problem is, when we’re young, retirement is as distant a concept as, say, cancer, or politics. And it should be. But if you implement the following strategy, and teach your children about finances early on, chances are by the time they’re thirty, their gratefulness will see no end.
During your child’s twelve or so first years, save half of everything he or she receives. Whenever a well-meaning aunt, grandparent, or friend gives your child $20, let him or her have $10 to spend, and set the other $10 aside in an investment account. By the time your child becomes a teenager, you can cut the savings back to 10%. But throughout high school and college and entry level job years, keep preaching the importance of saving 10% of everything they earn or receive. Not only do many people find themselves millionaires in their early thirties this way, but your children will be in much better financial shape than their peers once life really starts to get expensive.
Live a More Joyful and Prosperous Life
by Stacy Francis, CFP®, CDFA
I read in the paper today that only about 20% of Americans enjoy their jobs, and even fewer feel they are getting paid what they deserve. As though this weren’t bad enough, a large portion of our precious free time tends to get eaten up by admin tasks. Clearly, joy and prosperity are two things most of us crave, but few of us feel we have enough of. By implementing the strategies below, you can free up time and energy – while making your money work for you.
1. Do not fear internet banking. It provides a convenient, fast, time and energy saving way to do something few people enjoy but all of us have to do – keeping track of where our money goes and paying our bills. By entering payment information once, you can have your bills paid automatically for as long as you like. You can also submit wires this way, and save yourself a trip to the bank
2. If money management is not one of your greatest passions, hire someone to do this for you. Today, many financial advisors do much more than sell you mutual funds. They can give you a fresh perspective on your finances and goals, and help you get to where you want to be.
3. Set up an automatic monthly transfer from your checking account to your investment account, then leave the rest to your money manager. This way you’ll keep building capital and securing your future, without wasting a minute thinking about it.
4. Once you’ve gotten all these things out of the way, look into your heart and think about what truly matters to you. Those are the things you should be spending your time on. Leave the humdrum tasks to the people who are good at them, and you’ll find that you’ll have more prosperity and more joy!
Ease money record-keeping burdens
by Stacy Francis, CFP®, CDFA
My assistant burst into my office this morning, wild-eyed. Had I seen the $200 she had in the pocket of her trench coat three days ago? Nope. She decided to dig through her purse – oversize albeit exploding with receipts – yet another time. True, struggling to keep track of your money can be frustrating at best, nerve wrecking at worst. Fortunately, technology is your friend and it is here to help you.
Most banks today offer free online banking, where you can not only view your account balance and transaction history, but also pay bills and keep track of billing and payment history. Add to this the fact that as good as every place where you can spend money in the US (and other Western countries) accepts debit and credit cards such as Visa, MasterCard, and American Express. Every transition you make with these cards can be viewed conveniently (and free of charge) online, which takes me to my first suggestion: limit your use of cash as much as you can.
If your life is complex, divide it into segments, and give each segment its own credit card. Use one card for your business expenses, one for your personal expenses, and one for everything pertaining to your children. This way, you can view each aspect of your finances as a separate entity – no paperwork required.
If you’re stressing out about money record-keeping, keep this in mind first and foremost: we live in the age of technology. The practice of balancing checkbooks has become as obsolete as typewriters, and you no longer need to keep every receipt people throw at you. The banks have worked hard at making you life paperless. Enjoy!
Generate a steady stream of retirement income
by Stacy Francis, CFP®, CDFA
I feel like we all need to have extra strong antacids to deal with the chaotic behavior of the market. With the US stock markets as steady as, say, a blind man on stilts, stability and safety are the topics on everyone’s minds. How do I put my money to work without losing sleep?
For most of us, the first things that come to mind are bonds and certificates of deposits – even interest-paying bank accounts. The problem is, all financial instruments are priced according to the Finance 101 factors supply and demand. Meaning, when everyone and their brother are bidding on top of each other for, say, blue chip bonds, the returns slide and slide . . . until they are so small, inflation will eat every dollar you make. Right now, the situation isn’t all that different from the beginning of the post-depression era. Now, history doesn’t always repeat itself, but the point is, income stuff is great if it’s priced right, but currently it is set up for failure, with no room for error whatsoever.
What to do?
The secret – not as much of a secret, perhaps, as investors in the know have practiced it for ages – is to be a contrarian. We all know on some level that the key to successful investing is to buy low and sell high, yet very few of us do. All financial markets are cyclical. Sooner or later, stocks are going to climb again, and when they do, people dump their income generators. This is when you want to buy them – when you can get a good yield for a low price. For now, place some stink bids for the funds and stocks people can’t wait to get rid of. And when everyone else want to buy your stocks, let them, and buy into the income-generating securities they are dumping. Sure, it takes quite a bit of courage and discipline. But if you want to live your retirement in style, it is so worth it. Buy when the price is low and sell when the price is high is the surest way to ultimate financial success.
Monitoring your spending
by Stacy Francis, CFP®, CDFA
I heard on the radio today that the average Starbucks customer spends close to $6 per visit, 18 times per month. That adds up to a whopping $1,296 per year, which he or she otherwise could have invested. Now, this is not a Starbucks rant (I’m a huge fan), but rather an attempt to make you aware that the small expenses really do add up. In the metropolitan areas of the States, it is not unusual that lunch runs $10+ per person, not including tax and gratuity. Five lunches per week at those rates come down to $50+ per week, or more than $2,600 per year.
If you are serious about your financial future – especially if you strive for financial independence — then your small expenses provide an excellent starting point. If your goal is to save another $3,000 per year, chances are you can do this quite easily by bringing your own lunch or making your own morning coffee. Or you can compromise and cut back rather than exclude (this is usually the best way to go anyway, as abstinence typically causes nothing but cravings). When you take charge of your finances and your future, you can align your life accordingly, and find that you have all kinds of room in your budget that you never would have thought of.
So keep a spreadsheet, or a notebook, or a list in your iPhone – whatever works for you, and write down every purchase you make over the next month, no matter how small. Exclude nothing, not even parking, gas, and other things you hardly consider spending. You’ll be surprised at all the corners you can cut!
Maximize your cash flow
by Stacy Francis, CFP®, CDFA
A client came into my office today, worried about how in the world she’s supposed to set money aside for retirement, when she is living paycheck to paycheck. A highly relevant question, I’d say. Because let’s face it. No matter how savvy an investor you are, or how genius your financial planner is, if you don’t have money to invest, none of that is going to matter. And while a lucky few receive huge sums of money at an early age, for the grand majority of us, this money is going to come from employment and/or business endeavors. So what are the best ways to maximize your earnings?
Well, the first, obvious one, is to chose a lucrative career. You are more likely to make the big bucks as a doctor than as a nurse, and as a lawyer than a paralegal. But for those of us who have already chosen a profession and completed the education, there are plenty of ways to make the best out of it, such as
1. Being a fierce negotiator. If you can make yourself indispensable to the company you work for, you will find yourself in an ideal situation for negotiations. Be tough – although not ruthless or rude – and you just might find yourself with a bigger paycheck.
2. Playing the field. Even if your boss is not willing to raise your salary, chances are another company will value your skills more. Keep your eyes and ears open, and a better opportunity may fall into your lap.
3. Having a side business – or going out on your own altogether. Only you can determine when the time is right for this, but if you play your cards right, you may be able to multiply your income.
4. Scoring some investment income. It is no secret that many people made a killing in real estate a couple of years ago. Other people make it big time from trading art. For creative and hungry investors, there will always be interesting opportunities out there.
Get creative. The more money you make, the more money you can invest, and the brighter your future will look.
Save Money on Taxes
by Stacy Francis, CFP®, CDFA
Tax refunds are finally here! While I didn’t receive one myself (people in my business rarely do), many of my clients did, and many chose wisely – they decided to invest at least part of the money. In order to help you score a refund (or if you get a refund, to help you get more next year), here are a few things you may not know you can deduct.
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College tuition expenses. As long as you’ve kept the receipts from your payments and the school is bona fide, you can save quite a lot this way
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Charitable donations. This deduction is not just available for the organizations that pop up toward the end of your filing when using FreeTaxUSA, but it applies to a wide range of causes and organizations. Find one that makes your heart beat a little faster, and save yourself money while saving the whales.
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Car mileage and expenses. The many of you who commute to your place of employment can feel a little better about all that money you burned at the pump.
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Out-of-pocket medical expenses. Had to go to the emergency room, and had a fallout with your insurance company about eligibility? You are not alone, and now you can get some of your money back – hopefully easing the pain a little.
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In certain situations, you can deduct numerous expenses related to job hunting. So if you are sending our resumes and interviewing, don’t toss your receipts!
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Childcare is, thankfully, many times tax deductible.
While this list is far from complete, it should provide you with a nice starting point for paying less taxes.
