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

Create and preserve wealth

by Stacy Francis, CFP®, CDFA

The one question I’m asked the most – three times today, for example – is: how do I create wealth? And once I have it, how do I hold on to it and make sure I never, ever lose it?

Well. Wealth is – in essence – the difference between your income (be it from salary, self-employment, lottery winnings, or a huge inheritance), and your spending. Thus, in order to create wealth, you need to make more money, spend less, and make smart investment choices. The preservation of wealth is achieved through diversification and spreading of risk, and through keeping expenses (especially fixed expenses) at a minimum. 

Sounds simple enough? In theory, yes. But most people find this practice much harder than you might think. All day long, we are bombarded by messages to spend, spend, spend. From TV and radio ads to magazines – even our friends! – people never get tired of telling us about all the things we absolutely must have. The problem is, most purchases we make take us further away from wealth and financial security.

As for making more money, this is an area where you – theoretically – should be in charge. But what if that high-paying promotion means a move to a different state and your children are in school? What if your company goes belly-up just when you need it the most?

As for preservation, the biggest favor you can do yourself is to stay as far away from fixed expenses as you can. When you splurge (and you should, because everyone deserves a boast from time to time), make sure it is one-time purchases, and that you can afford them without committing to some sort of financing plan. If you use a credit card, don’t spend more than what you can pay off at the end of the month.

Finally, of course, you can neither create nor preserve wealth unless you make wise investment decisions. Navigating through the jungle of securities can be a daunting task, and intimidating enough for many people to do nothing at all. The good news is, plenty of competent people are dying to do this for you. Let them!

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.

Align your investments with your values

by Stacy Francis, CFP®, CDFA

Someone asked me the other day whether I support the business models of all the companies I own – directly through stocks or indirectly through mutual funds. The answer is: of course I do!

Your values are important aspects of who you are. Most of us strive to live as we preach, and this is just as important – if not more important – when it comes to investments. By purchasing a company’s equity or bonds, you demonstrate your support and facilitate its operations. So it is no surprise that ethical funds – dedicated to making their investors money without jeopardizing key values and beliefs – abound. No matter what your passions – or pet peeves – are, chances are your financial advisor can help you find a fund that shares them – and that can make you money.

If you want to break it down further and buy stock in companies that share your values and contribute to the world in a way that matters to you, consider hiring a knowledgeable advisor, who can tell you which of the companies within the field you seek can make you money, too. At the end of the day, investment advisors: some are excellent, while some are not so excellent — so be careful whom you trust.

A brilliant example is green energy. With an ever-increasing number of people concerned about global warming, companies exploring and developing geothermal projects have popped up like mushrooms in the fall. When many people believe in the same thing, capital is easily accessible, meaning even not-so-good companies are able to stay in business. To complicate things further, government subsidies are keeping unprofitable businesses afloat. By having someone identify the companies with real experts in their staff and truly promising projects, not only do you greatly enhance your chances of making yourself a killing. Perhaps even more importantly, by supporting the winners you also do the environment a favor, as the more efficiently we use alternative sources of energy, the less fossil fuels we need.

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!

Protect against financial risks

by Stacy Francis, CFP®, CDFA

With the stock market behaving like a roller coaster carnival ride more people are looking for the riskless way to invest. A prospective client came in today to see if I had any ideas for risk-free investments and it got me thinking. I very much wish I did – and so I told her. The truth is, unfortunately, that there are almost as many types of financial risks as there are investments. Between inflation risk, market risk, company specific risk, industry risk, country specific risks (the most commonly referred to is political risk), and a myriad of others, it is not hard to see why many people choose to stay out of the markets altogether. And sure, not all financial risks can be avoided. But by following these three easy steps, you can lower your exposure and get more out of your investments.

1. Determine your spot on the risk-return curve. One of the most fundamental investment truths is that the higher the return you seek, the higher the risk you need to take on. Many bonds from well-established companies offer such small yields, you barely stay ahead of inflation. On the other hand, the chances that you’ll lose your money are minimal. If you, on the other hand, buy bonds in new, or otherwise more risky companies, you can get yields in excess of 20% per year — but the company may go belly up and never pay you at all. Determine how much risk you are willing to take on, and invest accordingly.

2. Diversify. While turbulence exists on all markets and — to some extent — in all types of securities, it is unlikely that all companies in all industries in every country in the world will crumble at the same time. By spreading your capital between a number of markets, types of securities, and industries, you dilute your risk.

3. The best insurance against financial risk always is and always has been knowledge. You can stay up to date with the markets – or make your life easy and hire someone else to do this for you. A financially savvy advisor can smell a fraud, analyze balance sheets and income statements for you, and keep track of happenings in the industries on which you like to bet your money.

So while unfortunately there is no such thing as a risk-free investment, by determining your comfy spot on the risk-return curve, diversifying, and adding a pinch of knowledge to your investments, you can reduce and dilute your risk significantly.

Make Your Money Work As Hard As You Do

by Stacy Francis, CFP®, CDFA

I read in the paper today that the average American now works 46 hours per week. For people who hold managerial positions, are self-employed, or work on commission, the number can be significantly higher. When you spend that much time and effort making money, of course the last thing you want is to see is your hard-earned dollars just sitting in your account, losing value as inflation eats away at them. But how do you go for the sweet returns without risking to lose it all?

Here are just some ideas.

1. Don’t buy overpriced securities. I am not saying all cheap stocks and funds are bargains, but don’t buy into something that has climbed double or triple digits over the past year just because everyone else does. Look at the fundamentals and compare with the price – or have someone do it for you.

2. Do you believe hybrid cars are the future, while Fords are so over? Invest accordingly. Don’t buy companies you believe are “over the hill”, but look instead to the industries you (or your advisor) expect will do well in the future. Then, find the best companies within those industries.

3. Consider buying into perpetual income, meaning situations where you can make money from an initial investment for a long time – best-case scenario forever. Some industries where this has been known to happen are forestry, pipelines, ports, hydropower, and geothermal energy.

No matter the market conditions, if you are a creative investor (or working with a creative advisor), there will always be opportunities to make good money.

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.

  1. 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

  2. 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.

  3. 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.

  4. 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.

  5. 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!

  6. 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.

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