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
Shopping Triggers and How to Curb Them: Sense of Entitlement
by Stacy Francis, CFP®, CDFA
Watching TV last night got me thinking about how our entire society is built around this shopping trigger. TV and radio ads, magazines and catalogues all scream to us: you deserve this, you’re worth it, treat yourself! This is because savvy advertisers know that creating a sense of entitlement is one of the most potent ways to get consumers to cough up the dough.
It is so easy, when exposed to those ads, to start thinking that “hey, that’s right, I did pass that exam/meet that deadline/suffer through that nasty flu/put up with the in-laws staying at my house for a full week, I do deserve a little something.” The problem is, none of those things did anything to change your budget, so when you treat yourself, you have to either find another place to cut, or get (further) into debt.
The best way to curb this is to tell yourself, whenever overcome with this sense of entitlement, that if there is anything you deserve, it is to have your finances in order. If you need to repeat it over and over again, fine – let it be your personal affirmation. After all, what outfit/cosmetic product/trip/new high tech gizmo could possibly make you feel better than true financial security?
Check out the other articles in our series on Shopping Triggers.
The Prenup
by Stacy Francis, CFP®, CDFA
Over lattes today, my best friend reported that her friend was finally leaving the husband we all tried to tell her she never should have married in the first place. I am sure that you have a few girlfriends who you love in spite of their husband. Why do nice girls sometimes choose jerk husbands? Ok, I am digressing. This is a topic for another blog…
The friend was devastated by the divorce, my best friend told me, and her only consolidation was that she had made him sign a prenup.
We have all heard this story in one version or another. From A-list celebs to politicians and neighbors, divorces are far more common than we’d like to think they are. Conclusion: while drafting one isn’t exactly like a honeymoon trip to Maui, doing so may save you years and years of agony down the road. But what should be included in a prenup?
Put simple, the prenup should be a summary of how your assets (savings accounts, securities, houses, cars, investment properties along with anything else of monetary value) are to be allocated in case of a divorce. In the absence of a prenup, state laws will make these decisions for you. Though you may consider these laws favorable at the time of the engagement, they are ever changing, and therefore most people are better off settling things on their own. Not because lawmakers aren’t doing a good job – it’s just extremely difficult to generalize when each case is so truly unique.
Living Together=Spending Together?
by Stacy Francis, CFP®, CDFA
My always-single girlfriend surprised me the other day at lunch, by informing me that she is moving in with her boyfriend. As this is a first for her, she had a million questions. Should she keep her apartment in case things don’t work out? Who decides whose stuff goes where? And then, an unbelievably important yet rarely asked one: what about money?
She was unsure if she should even bring the topic of money up. Money is still certainly a taboo topic but one of the most important to address if you want your relationship to be successful in the long run.
True, moving in with your partner is less of a financial commitment than walking down the aisle. But there are still tons of things that can make the relationship turn sour if left unattended. Here are my key pieces of advice.
- Communicate. Set an evening aside especially to talk about money, and take lots of notes. True, it’s about as much of a turn-on as cleaning the bathroom, but believe me, it will make all the difference in keeping the romance intact later.
- Share a bed, not a credit card. Work out who pays for what, in writing, then keep the rest separate. Have your own bank accounts, credit cards, investments, etc.
- Track major purchases. The fact that your partner lives with you does not make him your spouse, so there is no merger and protection of assets. Keep notes — and receipts — whenever you buy something expensive.
Shopping Triggers and How to Curb Them: Bargain Hunting
by Stacy Francis, CFP®, CDFA
The more I blog about shopping triggers, the more they seem to pop up all around me. Here’s another one I have encountered three different times – just today.
I saw that Gristedes has grapes on sale, so you can save over $2 per pound. Our new grocery store Whole Foods promises that you can save on beef tenderloin. A furniture store advertises savings of over 50% when you buy their lounge chairs and side tables.
What is wrong with this picture? Well, for starters, if you spend $5 on grapes, you have spent $5, not saved $2. Just as with stocks and funds, yesterday’s price is irrelevant. Neither your budget nor your cash flow cares that the lounge chair you bought for $200 would have been $400, had you bought it a week earlier.
The problem is, this logic lures many less informed consumers into spending large amounts of money. And so advertisers keep at it, making us think this makes perfect sense. But similar to credit card spending, you first need to consider your financial situation and your budget. If you cannot afford a $200 lounge chair, the fact that it is reduced from $400 does not make buying it any less of a problem. Keep this in mind, and you will have conquered yet another shopping trigger!
Check out the other articles in our series on Shopping Triggers.
Strengthen Your Investment Portfolio
by Stacy Francis, CFP®, CDFA
Even in a market like today’s, many people are making nice returns from their investments. Though the masses are mainly nervous, the latest issue of one of the newsletters I subscribe to featured interviews with six self-made investment millionaires. While their choices varied widely in terms of securities and industries, they had three important techniques in common – three techniques you, too, can use to strengthen your investment portfolio.
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Think international. With the US markets anything but rosy, it is tempting to give up and simply dump your money in a bank account. But if you widen your horizons, you will find that not all countries are headed into a recession. At least not right now.
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Think creative. Don’t dump all your capital into the financial version of Top 40 music. Instead, keep your ears and eyes open and for new ideas – or new twists to old ideas – that you believe in.
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Invest in what you know. Do you have a Ph. D. in molecular biology? That gives you an edge over most people if you choose to invest in for instance biotech. Perhaps you have strong reasons to believe that a certain product under development is going to work. Whatever your field is, knowledge is money and when you know more than the masses, you have better chances than they do to make money. Of course, you always have the option to hire an expert who can help you gain this advantage. What is it they say? In love and money, everything’s fair?
How Many Investments Are Too Many? Is More Better?
by Stacy Francis, CFP®, CDFA
Another question I get all the time is, how many investments should I go for? 2, 5 or 1,000? With a virtually unlimited number of securities available, and a limited budget (for most of us, anyway), how do you get the most out of your money? When it comes to investment positions, what’s the magic number?
Of this, the wise ones dispute. Of course, to a certain extent it should depend on the number of promising investments out there. At times, thirty different stocks, funds, or bonds can look promising, while at other times it can be as little as three or four. You may have a very specific idea of what kinds of industries and companies you’d like to trust with your cash, or you may want to diversify lots and lots to dilute risk and feel safe.
Another factor you need to consider is of course budget. If your total investment capital is, say, $5,000, a diversified mutual fund or ETF (Exchange Traded Fund) might be the better option. With only $5,000 it will be difficult to get exposure to the broad market. If, on the other hand, you have several million bucks to invest, you can create your own mutual fund by purchasing many different stocks and bonds. Fifty positions of $20K each may be the answer, or twenty positions of $50K. Or fifteen positions of various sizes depending on what securities you like the most.
It is true that if you own every fund out there, you will own all the winners. The problem is, you will own all the losers too. The key is to look at the fundamentals, identify your reasons and — together with your advisor — find the one, or two, or ten, or twenty, investments that work the best for you.
The Passion Test: Living Your Dream
by Stacy Francis, CFP®, CDFA
I spent last night with yet another inspirational book, and figured I should share the concept. In The Passion Test: The Effortless Path to Discovering Your Destiny, Janet and Chris Attwood make living your dream as accessible as, say, credit line increases from American Express. And it works for money too!
It all starts with intention. In the first portion of the book, the authors urge you to identify all the things that are important to you; all the hopes and dreams you have for the future, and all the things you would like to do with your life. Make a list of your overall life goals, or your financial goals!
Once you have all these settled, the next step is to rank them. Take the first thing you wrote down, and compare it to the second one. Which one is more important? Keep at these comparisons until you have found the one thing that matters the most to you. Then, go to work on identifying number two. Once you have found your five greatest passions, scribble them on little cards, and keep these cards everywhere. Ideally, you should look at them several times per day.
After that, it is all about what the authors refer to as intention, attention, and “no tension.” If you start to prioritize – really prioritize — these goals, things will start to happen. One of the authors’ firmest beliefs is that those things you focus on grow stronger in your life.
But as life is ever-changing, they recommend that you reevaluate your goals every six months or so, to take into consideration changes in priorities and circumstances. Another reason I love the idea of revisiting your goals is that you can see how much progress you have made. And what could possibly be more inspiring that that? So are you living your passion?
Investing in Real Estate
by Stacy Francis, CFP®, CDFA
A client just called me up to ask what my take was on the real estate market. She half-wanted to get into what mass media refers to as “flipping houses,” but was concerned that this may be the end of the real estate boom.
The truth is, of course, that the real estate boom ended quite a while back, in most places. What we are seeing now is a bit of a correction, along with the effects of a slowing economy. When two families in a neighborhood are trying to sell their homes, and a third one forecloses, the next buyer expects to pay less, throwing the area into a downward spiral of more worries and more foreclosures.
The good news is that if you are in good to excellent financial shape, and you are in no hurry to sell the houses you buy, this is not a bad time at all to get in. Historically, and with a few geographical exceptions, real estate prices have never kept dropping for very long. If you have the patience to keep placing bids well below market prices and hope someone gets desperate and accepts, you can score yourself some fantastic deals. And if you can wait long enough, chances are you will be able to sell the houses for significantly more. With these lower prices, I would actually say it is less risky to get into real estate now than, say, a year ago.
Keep in mind that while the above applies to most areas in the US, local exceptions apply, so make sure to take the pulse on your neighborhood before you hop to it.
Understanding the Business You’re Investing in – or Hiring Someone Who Does
by Stacy Francis, CFP®, CDFA
Flipping channels last night, I came across one of those corporate ads that are so vague and nondescript it had even me scratching my forehead, wondering what the company in question really did. Because the thing is, while some businesses are easy to understand (manufacturing comes to mind), in today’s world of service and high tech and diversity, many are so complex it is almost impossible to evaluate them. GM, for instance, has traditionally been a car manufacturer. But these days, they make more money off the financing side of their business than the car side. And how do you deal with software companies or biotech?
My point is not to try to explain every business out there, but rather to remind you that if you don’t understand the business you are investing in, you will have an extremely difficult time making rational choices, and even harder trying to sleep well at night. If you are a biotech guru and know all about Elan’s latest product, you may know whether it’s worth your money or not. Alternatively, if you are Bill Gates’s brother, you may know what works and doesn’t work in software. But if you want to venture into industries you do not grasp fully, you can lower your risk substantially by hiring someone to analyze it for you.
We all know it’s a bad idea for blind people to drive cars. Throwing your hard-earned money around you randomly can be just as perilous.