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
I Lost My Job – What About Health Insurance?
by Stacy Francis, CFP®, CDFA
I received an email from a Savvy Ladies member today; a heartbreaking tale of how she had been laid off, and was now trying to figure out how to survive – and feed her two small children, as she is a single mom. One of the expenses she worried about was medical. I think any parent can relate to this: with children around, unless you have the proper insurance coverage, medical expenses tend to run the gamut. For those of you in the process of losing your jobs, here’s how to keep this aspect of your finances under control.
First of all, if you are still employed, make the most out of your insurance plan while you have it. Get all your routine checkups out of the way. If you use medications, take out as much as your insurance provider will allow. If you have been putting off procedures, now’s the time to have them done.
Once you do lose your job, know that you have options. Under COBRA rules, in most cases, your company must allow you to keep your insurance coverage for eighteen months, as long as you pay the full premium. While this is great news indeed, there is one drawback. The full premium can be quite a bit higher than the monthly payment you are used to, depending on your insurance plan and how much your employer has been contributing. Do your research – shop around, and request other quotes. You may be able to find a cheaper deal on your own, especially if you are eligible for a state run insurance program.
Collecting Unemployment
by Stacy Francis, CFP®, CDFA
A friend called me up this morning. I can’t quite believe this, she said, a tremble to her voice, but I was just laid off. Even worse, during the past five months my husband and I have barely been scraping by, so we’ve used up most of our emergency cash. I never thought it would come to this, but do you think I am eligible for unemployment?
This is a complex question, as both eligibility and benefits differ depending on what state you live in. In Pennsylvania, for instance, 58% of unemployed receive benefits, whereas in Arizona, this number is only 29%. That amounts vary by state should come as no surprise, considering that living expenses are so much higher in some places than others. In Mississippi, for instance, where living expenses are comparatively low, unemployed have to make do with an average of $210 per week, whereas in the more expensive state Massachusetts, average unemployment benefits add up to $384, almost twice as much.
Different states also have different cultures when it comes to handing out the money. Some states will do everything in their power to turn applicants down, while others take a more empathetic approach.
Fortunately, my friend lives in Connecticut, a state with both relatively high average weekly benefits ($311) and a high rate of recipients (45%), so her chances are good. But with the highest number of unemployed in 26 years and many offices managing these benefits short staffed, she may have to wait a while for her first check. I told her to file for her benefits immediately.
Limiting Damage if You Have to Raid Your Retirement Savings
by Stacy Francis, CFP®, CDFA
No matter how hard we try to focus on the positives and maintain an optimistic outlook on the future, no doubt things are getting ugly out there. This really dawned on me while reading a report from a recent out-of-state Savvy Ladies meeting. The main topic of discussion was IRAs – and not how to maximize contributions to them, but how to pull money out of them to cover living expenses.
As a general rule, pulling cash out of your IRA should be your very last resort. Not only does it jeopardize your retirement, but it is one of the least tax efficient ways to free up money, as such distributions are taxed according to your current bracket plus a possible 10% penalty tax. You also miss out on immense potential yields, as the money would have grown tax-deferred or tax free in the case of Roth IRAs for many years, had you left it in your IRA.
Still, these are tough times, and tough times call for desperate measures. If you have no other choice but to pull money out of your retirement account, at least keep the following in mind:
- You can loan money from your IRA without any tax consequences, as long as you reinvest the amount in full within 60 days. If you expect that your situation will be resolved shortly, this may be a viable option.
- If you have a 401(k), you can take out a loan against it, without a penalty. Note, though, that if you quit or are involuntarily terminated, you must pay back the balance in full or your transaction will be treated as a distribution.
- Also if you have a 401(k), under certain circumstances, you may be eligible for a hardship distribution.
- You may be able to take a distribution from your IRA without facing the 10% penalty tax (although you will still be charged according to your current bracket) to cover medical expenses adding up to more than 7.5% of your income or to buy your first home.
An Expert’s Guide to Family Budgeting
by Stacy Francis, CFP®, CDFA
“I’m a CEO”, explained the new client with whom I had lunch yesterday, “yet I feel as though I have no control whatsoever over my family’s spending. I never have any money left to invest, store and credit card bills grow larger each month, and my children demand more and more expensive clothes. I’m completely overwhelmed – and exhausted.”
I have heard similar stories many times before, so I was able to ensure her that there’s an easy fix to her problem. She simply needs to manage her household budget the same way she manages her company’s budget! These days, many women possess exceptional organizational skills that make them extremely successful in the corporate world. What many don’t know is that these skills are just as useful at home with their personal finances.
How to Create a Family Budget
If my new client’s situation hits a bit too close to home, follow these four easy tips to get your family budget under control:
- Review spending history. Before you start to make changes, make sure you know where the money is going. To many, seeing their spending habits on paper is a big shock!
- Listen to your employees – in this case your family members. Strategize together on how to save up for expensive items like vacations, and review budgets as well as ideas for how to make them work.
- Make the budget public, leaving as little room as possible for doubt and misunderstandings. The budget should include both goals and ideas for how to make them a reality.
- Review your progress frequently. Gather your family once per month to review the parts of the budget that are working out – and the ones that aren’t. If needed, solicit ideas for troubleshooting. Your spouse and children are much more likely to make an effort to stick to the budget if they were part of creating it!
Download our free budgeting worksheet.
How to Keep Your Kids’ Expenses Down
I met with a group of new mothers last week, who were eager to sort out their budgets now that two had become three. They all had a good understanding of the types of costs involved, but like many new parents, had underestimated the dollar amounts.
The great news is that kids’ expenses is an area where an ounce of attention really can make all the difference – translation: several hundred dollars per month. So whether your child is a newborn, toddler, grade schooler or teenager, below are a few tips on how to keep staples spending under control, so that you’ll have more money for the fun stuff!
- Brown bags. If you are consistent and make your children lunch-to-go every day, they won’t even know fast food is an option. You’ll have more money – and they’ll be healthier.
- Vintage. It’s very fashionable these days! When your children are growing quickly, while there’s no need to deny yourself the occasional splurge, buy the majority of their clothes in vintage stores. When they have outgrown them, resell. You’ll be saving the planet, too!
- Outlets. For many teens, the world centers around labels. Fortunately, you can find many of them at 25-75% off in outlet stores – and sometimes online.
- Tax credits. When shopping for the right child-care program, be sure to make the most out of the tax breaks granted to you by Uncle Sam.
- The fifty-fifty deal. If you have trouble paying for college, consider having your child do the first year or two of core classes at a community college before heading off to university.
- Score free entertainment. For the creative parent, fun free-of-charge activities abound. Libraries are excellent resources, as is the great outdoors!
READ ALSO: Instead of Spending, Teenagers Can Turn to Saving
How to Make Your Family Budget Last
Every January and February, thousands of people swear that this is the year they will start cooking at home instead of hitting up restaurants and drive-thrus. All these people stuff their grocery store carts during January and February. As the year proceeds, sales dwindle as gradually, they revert to TGI Friday’s and Panda Express.
January is often the busiest month for me as well. It is prime time for new clients to look me up, after making the resolution to get their finances under control, once and for all. But as opposed to the grocery store’s customers, most of my clients are able to stick to the goals and budgets they set for themselves. Why? Because we talk about the importance of being realistic.
Rather than setting huge, abstract goals like “I’m never going to eat out again” or “I’m going to retire a millionaire” or “my children will not have to take on any student debt,” we break the aspirations down into small, manageable pieces. If, for instance, your goal is that your children won’t have to take out any student loans, open savings accounts for them and start to contribute $20 per week. If you want to save on dinners, instead of opting never to eat out again, let your children cook twice per week and add the money you save to the family vacation budget.
I usually recommend 4-5 small changes per year, as long as everyone in the family is onboard. Next year, when these changes have become habits, you can implement another 4-5 – and just like that, you are on your way to healthier family finances.
Top 5 Tax Savers
by Stacy Francis, CFP®, CDFA
My friend, who would normally never talk to anyone about money, invited me over for dinner last weekend to discuss her financial situation. Her husband’s salary dropped significantly and they’re struggling to survive on her salary alone. They just crunched some numbers in their efiling software and learned that they owe the IRS almost $8,000. With no savings left except for the money stashed in their IRA accounts, how are they supposed to come up with the money?
Before you pull cash out of your IRAs or take out a loan, I told them, let me take a look at those numbers and see if I can shrink that tax bill. Many people pay more tax than they need to because the tax code is complicated and the thought of studying it in detail makes them queasy.
If you are one of these people, at least make sure you are aware of these top five tax savers.
-
Investment losses. I expect this to be one of the biggest tax savers. If you sold these types of securities, you may be able to deduct the losses from your tax basis. You can offset capital gains against capital losses. If you still have losses left over (as many of us do) you can deduct up to $3,000 off your taxes each year until you have used the total loss.
-
If you have an IRA, take your contributions to the limit. As long as you opened the account before the end of last year, you have until April 15 to add more money – and deduct it from your taxes if your income is low enough that you qualify to deduct your IRA contributions.
-
Itemize. Most people use the standard deduction – to their loss! True, the paperwork involved in itemizing can be substantial. But many times your savings are, too.
-
Skip your AMT. While difficult and best done by an accountant, in some cases you may be able to skip out on this tax (yes, legally) by taking smaller deductions in certain places.
-
Save receipts for those charitable donations. Even my yoga studio has switched over to a donation-based not-for-profit. Keep track of your receipts and you can lower your tax basis.
5 Money Lessons for Teens
by Stacy Francis, CFP®, CDFA, Founder Savvy Ladies
Practical Money Tips for Raising Financially Mindful Children Start at Home.
I read in the newspaper the other day that in a survey, high schoolers answered only 48% of basic personal finance questions correctly. The number was only slightly higher – 65% – for college students. This is scary, as good money management skills are crucial for success – and for peace of mind. It all can start at home, where you, as a parent, can teach your children important financial skills about money.
Five Great Money Lessons that Can Help Your Teens Get Ahead in Life.
Money is not an intuitive skill; it takes practice, time, and education to learn how to be responsible with money. Teaching your child about money is an essential life skill that will benefit both of you in the long run. So, first and foremost, have open and honest conversations about your own money and the family money so your teens understand the value of having money conversations – start the conversation over a meal and make it a monthly habit to ask and talk about money with your child on a regular basis.
- Explain the importance of budgeting. How many teenagers do you know who always run out of money mid-month and beg their parents for more? Teaching your teens to prioritize can make a huge difference as they grow into adults. Understanding saving and spending with their own bank accounts and debit cards is an ideal way for your child to see how the money flows in and out of their account.
- Establishing credit. Regardless of how you feel about credit, the minute your teens are off to college, their mailboxes will brim over with credit card offers. If you teach your teens to handle credit while they’re still at home, the damage is likely to be much smaller. The biggest advantage of a student credit card is the ability to build credit, but your teen needs to be responsible for paying the bill each month, or it can adversely affect future credit if not used responsibly. When looking for the right student credit card, your teen needs your guidance to help understand the fees associated with having a credit card, the monthly payment plan options, and the importance of not spending and charging beyond the monthly means. It’s all a good lesson, but it’s best not to be caught short and have to pay fees each month and get into credit card debt.
- Differentiating wants from needs is, in essence, knowing the definition of fixed vs variable expenses. This is a crucial skill in all aspects of life and no less important when it comes to money.
- Filing tax returns. By becoming familiar with the filing process and learning a few tax smarts, your teens can save a ton of money later on.
- Creating an Emergency Fund. Taking all costs of living into consideration so if a job is not available or job cuts happen, your teen has saved 6-9 months of living expenses to cover the unexpected. Many teens tend to forget about things like insurance, maintenance, and repairs when estimating how much their next car is going to cost them. Taking all variables into consideration when making money decisions – no matter the specific circumstances – may be the most valuable money lesson of all.
Having financial conversations with our children shows that you, as the parents, take money seriously, and you will be setting up your teen with the essential money management skills for a lifetime of financial success.
5 Reasons Why the Recession Rocks!
by Stacy Francis, CFP®, CDFA, Founder Savvy Ladies
The conference I attended last week was a study in pessimism and negativity. I feel that right now, people are paying far too much attention to the negatives and far too little to the many wonderful aspects of the current financial situation. For inspiration, see below!
Five Positive Takeaways When Faced with a Recession
- We save more. For ages now, Americans have been living on plastic, spending far more than we earn, not giving tomorrow that much thought. When faced with fears of financial hardship, we start to set cash aside for emergencies – a first, staggering step toward a sounder financial future.
- We get ourselves out of debt. It may seem controversial: how are we supposed to pay down debt when we make less money? But statistics show that Americans are now shredding debt instead of adding to it – for the first time in ages.
- Investments become cheaper. Stocks, mutual funds invested in stocks, real estate – it seems these days, bargains are everywhere! True, many people have suffered immeasurable losses . . . but always remember that there are two sides to every trade. For every person selling a house at a loss, there’s another person buying it at a discount. If you have the money, this is a fabulous time to invest.
- We learn to prioritize. When money is easy come, easy go, we can have it all. When the supply is cut short, we are forced to set priorities and differentiate real needs from fluff. This will enable us to get more out of our money once we head for the next boom.
- We discover what really makes us happy. It is all so easy. We take a job we never really wanted because we need the money. We get a couple of promotions and raises and adjust our lifestyles accordingly until we are completely dependent upon our income. Meanwhile, our dreams and passions slip further and further away. When we are thrust out of that security blanket and realize that we can survive on much less, we get another chance to give those dreams a go.
What Health Insurance Plan Is Right for You?
by Stacy Francis, CFP®, CDFA
With the birth of my daughter just around the corner, my husband and I spent Sunday afternoon reviewing our family’s insurance coverage. Many times, the addition of a new family member means that a different provider or different type of plan becomes more beneficial overall.
If you are shopping for health insurance on your own or if you are covered through your (or your spouse’s) employer and your open-enrollment period is coming up, below are a few must-knows.
Most health insurance plans fall into one of the following two categories: HMOs or PPOs. When enrolled in an HMO, your co-payments tend to be reasonable, but you must stick to doctors within the network. Many times, you need approval from your primary caregiver in order to be entitled to specialist care or certain procedures.
With a PPO, you have much greater flexibility to choose your providers, but co-payments are typically higher and many PPOs have high deductibles. If you are young and healthy, many times it pays off to select a PPO. If, on the other hand, your children are sick often or you have a chronic condition, chances are you are better off with an HMO.
Whichever type of plan you opt for, there will be a number of different providers available. You can research them online at www.ncqa.org.
Taxes: How Much Should You Withhold?
by Stacy Francis, CFP®, CDFA
With only weeks to go before the arrival of my daughter, I go to a great deal of routine checkups. Fortunately, my doctor’s office is an efficient one, and I rarely have to wait for more than ten minutes. Yesterday, the other mother-to-be in the waiting room was quite chatty. Upon learning that I am a financial planner, she told me all about her savings strategy. She claims zero dependents even though she is the main breadwinner in her marriage and has a son. Consequently, every spring she receives a huge tax refund. She splits the money evenly between vacations and her savings account.
While it can be a major relief to receive a check rather than a bill from the IRS, her strategy has one drawback: in essence, she is granting the IRS an interest-free loan. If she would claim the correct number of dependents, she would keep a larger portion of her paycheck every month, and thus be able to invest the money earlier and start to make returns.
But before you slash your withholdings altogether to reverse the situation, so that you get an interest-free loan from the IRS, note that paying far too little taxes throughout the year can easily result in a $20,000 – or even a $50,000 – tax bill, enough to give the healthiest amongst us a stroke!
So what’s the golden number? Opt for the middle of the road, so that in the spring you get neither a terrifying bill nor a huge refund. That way, you safeguard yourself from financial panic and make the most out of your investment capital.
