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.
Financial Knowledge is Power. Be Empowered and Find the Advice You Deserve.
Know that Savvy Ladies® is here for you! Should you like to seek advice on a personal financial question, please visit our Free Financial Helpline and get matched with a pro bono financial professional, click here.
STACY’S $AVVY ADVICE
Spring Cleaning Your Financial Closet
by Stacy Francis, CFP®, CDFA
Spring is a time of renewal, which means there’s no better time than now to dust off your personal budget, dig the change out from under your sofa, and clean the cobwebs off your savings plan.
So how do you get started?
Begin by reviewing your income and expenses for the past several months. You can set a budget and track your goals.
Review all cash, checks, and credit card transactions. This will also help you identify the majority of your spending. Keep in mind that credit card expenditures do count. You will have to pay expenses—ideally, in full—when the bill arrives.
The hardest part is tracking your cash outlays for your daily coffee and lunch at work. You can also track your ATM withdrawals; it is helpful to know how you spend your cash.
Once you have your income and expenses down, you can see where you are spending your money. You may be surprised to find out you are spending more than you realized. Once you budget you can’t hide the fact that you spend $20 a week on Starbucks’ coffees.
Armed with knowledge about what you’re spending your income on, you can begin to make lifestyle choices that help reduce your spending on a regular basis.
The difference between your income and your expenses (assuming the first number is bigger) should be considered your “opportunity money.” This money can be used for additional investments and savings and can help speed your path to financial prosperity.
Once you’re done cleaning your financial closet, you may be ready for a spring makeover of your finances.
The Benefits and Risks of Owning a Home
by Stacy Francis, CFP®, CDFA
With all of the excitement in real estate lately, you might be wondering if you should take the plunge and buy a home. Homeownership has many advantages – both financial and personal. But there are many things to consider before you jump in and make your purchase. Here we take a look at some of the benefits and expenses of owning your own home.
Firstly, the differences between renting and homeownership are:
Tax savings There are possible tax savings to be derived because you can deduct mortgage interest and property taxes from your federal income tax and many states’ income tax if you itemize your deductions.
A more stable monthly housing expense Depending on the type of loan you choose, you may be able to budget your finances more definitely. If you choose a fixed rate, your monthly housing loan or mortgage expense can remain the same for the life of your mortgage.
Equity Equity is the difference between the fair market value (appraised value) of the home and the outstanding mortgage balance. It is possible to build equity in your home over the life of your loan. This will allow you to plan for future goals like your child’s education or your retirement. But be careful, there are advantages and disadvantages to using the equity.
While there are advantages such as tax savings and equity, owning a home can cost a lot. Homeownership may not be right for everyone. You may not be in a situation in life where you are able to make the big commitment that is associated with owning a home.
So what are the risks of homeownership?
Monthly housing expenses can increase If you’re not careful, your monthly mortgage payment may be larger than your rent. While these higher monthly payments may be offset by a tax benefit at the end of the year, it is still a lot of money to let go at the time. It is recommended that you talk to a tax professional to understand your particular situation.
You become your own landlord This may sound like a good thing, and it certainly has its advantages, but being your own landlord means more responsibilities. If an appliance breaks, you will have to pay for its repair or replacement. You are also responsible for the maintenance and upkeep of your home and your property.
You must sell your house to move Owning a home is a big deal. If you decide to move one day, it isn’t as easy as packing up and leaving. Depending on the local real estate market, you might not be able to sell your home quickly.
Property values can depreciate Like with most products, the minute you purchase it, its value could depreciate. You can lose value in your home for a number of reasons, such as a recession, the condition of your home not being kept up, or a drop in a neighborhood’s home values. If your home loses value and you have to sell it for less than you owe, you will be required to repay the full mortgage.
Overall, homeownership is a good investment for most people, but there are risks. If you understand the benefits and risks of homeownership, you can make the best decision about when to buy a home.
Be Your Own Knight in Shining Armor
by Stacy Francis, CFP®, CDFA
Are you still looking for your knight in shining armor? Or have you already found him? Either way you have your work cut out for you when it comes to finances!
$ More than 50 percent of all marriages fail.
$ After a divorce, the average woman sees her standard of living drop by as much as 30 percent.
$ The average age of widowhood is 56 years old.
$ The average woman lives to 80. (The average man, to age 74.)
$ The poverty rate for elderly women is twice that of elderly men.
Savvy Ladies’ Tip: Read Prince Charming Isn’t Coming: How Women Get Smart About Money by Barbara Stanny.
Give the Little Guy a Chance
by Stacy Francis, CFP®, CDFA
As in any crowd, the noisy guys get most of the attention. In the money world, large capitalization (cap) stocks are always on investors’ minds because they’re so darn big.
But a bunch of little stocks, known as the small caps, have been working away diligently in the background. In today’s investment climate, small caps can have something to offer and should be part of any diversified portfolio. Many of these smaller companies have put peddle to the metal and cut costs, boosted earnings, and benefited from lower interest rates
The addition of small cap stocks to a portfolio can help increase return over the long-term. However, you should probably keep the small-cap portion of your holdings to 10 percent to 15 percent of your overall portfolio. Over the past eight decades or so, small stocks have been roughly 60 percent more volatile on average than large stocks, according to data compiled by Ibbotson Associates. On the other hand, over very long periods of time, small-fry stocks tend to outperform the big boys by an annualized one-and-a-half to two percentage points. As with anything in investing, don’t get too greedy at the expense of taking on too much risk.
Can’t Do It All? Your Top 5 Financial Priorities
by Stacy Francis, CFP®, CDF
“I can’t sleep at night,” complained a savvy lady over breakfast last week. Seeing the dark circles under her eyes, I didn’t doubt it was true. A venti caramel macchiato later, she explained that at age thirty-six, she had only recently started to look into personal finance. Now she felt so bombarded with should-haves that she had no idea where to start.
She has a good point. Even during slow, quiet periods of our lives, it can be difficult to keep up with everything financial. And when things turn crazy, like they do from time to time, it can be near impossible. Fortunately, there’s relief. See below for a list of your top five financial priorities – in order.
- Pay your bills – preferably on time. Make sure they don’t exceed your income, and if they do, make it your very first priority to cut your spending and/or boost your income. When your accounts payables and accounts receivables match, and you are no longer struggling to make ends meet, take a breather and give yourself a pat on the shoulder.
- Create a financial cushion for yourself. Even as little as a few hundred bucks can have a dramatic impact on your shut-eye. Even better, you will save a bundle on late fees, financing charges, bounced check fees, etc.
- Start saving for retirement. Even if the amount you can spare is so tiny, you can’t see how on Earth it’s supposed to make a difference. Not only do the dollars you set aside first matter the most, as they have the longest time to grow, but you get yourself into the habit of saving, which is, as MasterCard likes to put it, priceless.
- Pay off your worst kinds of debt, such as high-interest balances and debt where the lender can change the loan terms easily.
- Look into long-term disability insurance. This may not be the rosiest of topics, but life can be dangerous and you need to make sure that even if you do lose your ability to work, you’ll have food on the table.
Now, take a break. Really, you have taken the five most important steps toward financial success.
Is there such thing as a kid-friendly bank account?
by Stacy Francis, CFP®, CDFA
Have you ever given a dollar to your child and seen the expression of awe on their face? Imagine how that expression can change in a few years when they have their own bank account that has increased because of interest.
The problem? The high fees on low-balance bank accounts mean kids are likely to end up losing money. An ordinary savings account usually requires a balance over $200 to avoid those annoying monthly fees of around $3. This means that a child may pay $36 a year in fees and only earn 50¢ in interest.
The solution? Fortunately, many banks offer a no-fee, no minimum option for minors; however, they do not always advertise that fact–YOU have to ask. If you are lucky, you may find that some banks offer bonuses for kiddie savers like higher rates and prizes for deposits. Compare terms at local banks to find the best deal.
Keep in mind.. What matters most is the experience kids get when they go to the bank to hand over cash and they learn to feel good about saving money. This may be the best financial lesson you can give them.
Big Money VS Little Money
by Stacy Francis, CFP®, CDFA
There is always that friend that makes a little bit more than you or maybe you’re the one who makes more. Regardless, once in a while that feeling of awkwardness arises when it comes time to paying the check or deciding where to go for the night. Wealth differences can drive a wedge between even the closest friendships, where even a sociable lunch can feel weird. However, there are many ways to sustain your friendship without the feeling of guilt or resentment. If You Make Less
- Be Honest– If you cannot afford it then just say so. Remember, you did not become friends with the opening line: “how much are you making?” Simply say: “Sorry, not tonight.”
- Give A Little- If you cannot afford to split the check, say so beforehand and offer to pay for something else—the tip or the wine. If you get invited somewhere and he’s paying, contribute in other ways by making reservations.
If You Make More
- Sometimes, Suggest Burgers- You don’t always have to choose the expensive places to eat– try out a cheap place but make sure you don’t make your friend feel sorry for his or herself. Make it known that quality time is the principal.
Treat With a Purpose or Just For Fun-Treating too much can make your friends feel inferior, so give an excuse—a late birthday gift or a thank-you favor. One of the perks of being wealthy is the ability to be generous, so make sure you treat it lightly, like it’s no big deal.
Savvy Ladies
Finding the Money for a Baby
by Stacy Francis, CFP®, CDFA
A new mom the second time around, of course I run into many other new moms. Despite the lack of sleep, they’re all so radiant and happy. However, when they learn that I am a financial planner, a different emotion often surfaces – the feeling of being completely overwhelmed with new responsibilities. For most of us, it takes years and years to find the perfect father for our future child. We also tend to factor in safety and the quality of schools when shopping for our first home. Yet most of us fail to prepare for the financial impact of the new family member. Below are a few things you can do.
- Get the appropriate medical coverage. Make sure pregnancy checkups, birth, and hospitalization are covered. Of course, when your baby arrives, you need to add him or her to your policy.
- Acquire disability insurance before you try for a baby. Just in case, something should happen, you are covered.
- Find the right work-life balance. If your partner’s paycheck is big enough to support all three of you, you may want to take some time off to bond with your newborn. If you have flexible schedules, you may be able to take turns caring for him or her.
- Sort out childcare. This is an area where a bit of research can make all the difference. Between nannies, pre-schools, co-ops and other options, both quality and price tags vary widely. Don’t forget to take the dependent care credit on your tax return too!
- Cash in on your tax breaks. With the Child and Dependent Care Credit, you can save a bundle.
5 Things You Should Know Before You Buy a Stock or Fund
by Stacy Francis, CFP®, CDFA
A friend of mine is an aspiring author, and eventually wants to leave her corporate job. Over bouillabaisse and freshly baked baguettes the other night, she announced that she just sold her first short story, to an Ezine. All smiles, she explained what an important step this is for her writing career since, as she put it, now she’s googlable. This very versatile new verb got me thinking about the many, many ways the Internet helps investors. Just imagine the amount of information now at our fingertips; information to which, as little as fifteen or so years ago, investors had very limited access. Below are a few googlables to consider before you buy a stock or fund.
1. Essence. What does the company (or companies, in case of a fund) do? My general advice is that if you don’t understand the business, you shouldn’t bet your money on it. To stomach the ups and downs in the markets (especially today), you have to feel good about your investment.
2. Sales. Are whatever products and/or services the company produces actually selling? If they are gathering dust in a warehouse, chances are your money will, too.
3. Cost control. A $10,000,000 golf retreat for the executive staff is hardly effective use of your capital. Put it to work elsewhere.
4. Debt. People aren’t the only ones who suffer when overwhelmed with debt. Find the leverage ratio (calculated as total assets divided by shareholder equity) for the company (or companies) you’re considering. If it is higher than 5, reconsider.
5. Bad news. Nothing spreads faster than bad news. If there’s anything fishy going on, chances are somewhere on the World Wide Web, someone picked up on it.
