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
Does Your Head Hurt? How To Choose a Mutual Fund?
by Stacy Francis, CFP®, CDFA
There are so many different kinds of mutual funds, does your head hurt? How do you pick one that’s going to make you a ton of money? There are now funds that specialize in so many different parts of the world and so many industry sectors. What do you do? The answer is not to invest in the latest “hot” mutual fund profiled in the likes of Smart Money, Money or Kiplinger’s. You need to look at less flashy funds.
If you don’t yet own any funds, ignore the specialized ones at first. You need a foundation to build on. Start with a solid, well established equity or balanced fund to deliver growth while limiting the up and down volatility. Be sure to check out its fees as well as manager track record and tenure.
Savvy Ladies’ Tip: Check out the latest board game called Mutual Mania. Mutual Mania combines the entertainment of a board game with mutual fund education. If you enjoy Monopoly, you will love this game and you will gain so much more from playing it.
You can purchase Mutual Mania on Amazon and a portion of your purchase will help support Savvy Ladies.
Asset Allocation Made Sexy. Where Should You Put Your Money?
by Stacy Francis, CFP®, CDFA
Achieving a secure financial future has less to do with picking the right stock or mutual fund and more to do with the method in which you divide or diversify your investments. Studies show that asset allocation will account for about 90% of your return. The selection of individual securities and market timing will account for the remaining 10% or so.
As you know an investor’s group of investments, frequently called an investment portfolio, can be divided in numerous ways among stocks, bonds and cash management options. But what should you invest in? To answer this question you will first need to determine your investment profile. What investment profile you chose is based on three main factors – your investment goals, your appetite for risk, and your time horizon.
Your Investment Goals Goals are specific things (e.g., buy a house) that people want to do with their money. Your selection of investments should relate closely to your financial goals; each goal will define the amount and liquidity of the money needed as well as the number of years available for the investment to grow. Liquidity refers to how quickly an asset can be converted into cash. Your house is not a liquid asset because it could take months to sell it. However, your savings account is extremely liquid and can provide cash fast with no penalties.
Your Risk Tolerance Risk tolerance is a person’s emotional and financial capacity to ride out the ups and downs of the investment market without panicking when the value of investments goes down. As you can imagine, risk tolerances vary widely. If thoughts about your mutual funds latest negative returns are keeping you up at night, this is a big clue that you should select saving and investment options with lower risk. On the other hand, it’s important to realize that not taking enough risk has its own set of risks. Conservative investments may not grow as quickly and could stop you from reaching your long-term goals such as retiring early.
Your Time Horizon Time is money. Time is one of the most important resources for investors. A youngish investors with a long time horizon may choose investments that have wide price swings, knowing that time is available for fluctuations to average out. Families investing for a specific mid-life goal (e.g., funding a child’s education or purchasing a home) may choose a more moderate course which has opportunity for growth, but guarantees more safety for the principal. Individuals nearing retirement and those with the need to depend on investment income to cover daily expenses, may wish to select investments that lock in gains and provide a guaranteed income stream.
So You Think You Are a Stock Picker?
by Stacy Francis, CFP®, CDFA
Here’s something that happens all the time to me: somebody will mention they’re thinking of buying a certain “hot” stock. The next question is if I think that’s a good idea? I always give them the same answer – I don’t know.
Whether or not you should purchase a stock depends on quite a few factors. Is it the only stock somebody will own? Or only one of ten stocks? How diversified is their portfolio? How much money do they have invested? What are their life goals? No matter how good the market is some years, often the majority of stocks can go down. Let’s take the late 1990s.
The S&P 500 was up quite a bit if you remember, but this was because of a handful of good performers. Over 400 stocks were actually down. More recently, we all painfully remember 2008. Enough said about that.
The great advantage of a mutual fund is that it can invest in a lot of stocks. Some will go down. But the mutual fund can hold so many more stocks than you could possibly own yourself that it makes sense to leave the stock picking to the professionals.
Savvy Ladies’ Tip: Get savvy about mutual funds and be sure to read “Find The Right Mutual Funds” by Morningstar.
Financial Fitness for Newlyweds
by Stacy Francis, CFP®, CDFA
Let’s see, you’ve got the wedding chapel and the caterer booked, the dress selected, the cake designed, the wedding invitations mailed, vows written, finances talked about – oops, didn’t do the last one yet?
Money conflicts are a leading cause of marital strife and divorce. A frank discussion of finances before you say “I do” will go a long way in helping you stay “I do forever.” And harmony and understanding probably won’t happen by themselves. So couples should set aside some time to discuss their philosophies and goals about money — how much you want, how you want to use it, and how to make it part of your happy marriage.
While many of you would love to have the problem of too much money, most newlyweds will feel like there’s never enough money. That’s why it’s so important to understand your partner’s approach to money and to manage it well.
SPENDER/SAVER Which of you likes to spend money and which likes to save it? Often in a couple, one person has a more liberal approach to money and the other has a more conservative approach. It is important to understand that neither of you is “right.” Instead, you will need to come to a spending agreement that works for you both. You might agree on some spending strategies that include maintaining a joint household checking account for household bills, but keep separate accounts for spending as you wish. This will surely involve some compromises as well as give and take.
WHO DOES WHAT? Set up a weekly family meeting. My husband and I sit down for 30 minutes every Saturday morning (early before Sebastian and Samantha wake up) and discuss the upcoming events of the week as well as other concerns. Be sure to also talk about finances, marital roles, and existing obligations to friends and family members. Who is going to be paying the bills? Who is going to monitor the investments? These are just a few of the questions you need to agree upon. What you decide about rights and duties in your marriage is not important; whether or not you agree is. Make sure you talk about your life goals together to make sure you both are on the same financial page. Do you want to have kids, travel, purchase a home, or retire rich at age 40? You will have a much higher likelihood of achieving your dreams if you are both working together to achieve the prosperous life you deserve.
Contrary to common opinion, talking over one’s financial circumstances, and perhaps financial differences, usually doesn’t doom the wedding. Talking about your future finances will actually deepen, not divide, your relationship.
Mars and Venus – Women, Men and Money
by Stacy Francis, CFP®, CDFA
Mars may not be so far from Venus when it comes to money. According to a recent Redbook-SmartMoney Survey, most couples aren’t wasting time arguing over finances and they have few clashes over cash.
One of the most revealing survey questions asked, “Is money a source of fights in your relationship?” Only 7 percent of respondents said that money is the biggest cause of conflicts, while 62 percent money is “rarely or never” the cause of a clash.
More evidence of financial harmony on the home front: Most men and women (58 and 68 percent, respectively) said that both spouses have an equal say in financial decision-making. And just because one person may earn more than the other, they don’t necessarily feel that they should have more say when it comes to spending the family’s money.
Couples do seem to be honest with each other when it comes to their financial fears. This is a new cultural shift that is revolutionizing the marriages of the 21st Century. With women, men and money – we really do seem to be getting somewhere.
Savvy Ladies’ Tip: What’s the best way to keep such monetary disputes to a minimum? Know where your money’s going. To cut down on conflicts about spending carefully track your purchases.
Uncover what’s really behind those spats. Fights over your last manicure or his new tech gadget can sometimes be symptomatic of a bigger problem in a relationship. A good heart-to-heart can help reveal the real root of the fights.
Get your priorities straight. Taking the time to identify your financial goals is the first step towards a healthy financial relationship with your partner.
Does Gender Make a Difference?
by Stacy Francis, CFP®, CDFA
Women owned businesses experience greater success than those led by men, according to The Center for Women’s Leadership at Babson College.
Increasingly women are playing a larger role in the leadership of family-owned businesses. Women are making great strides in the business world, and we are building on our successes at a tremendous pace! Here are some of the highlights of The Center for Women’s Leadership recent study, which compares and contrasts the businesses owned by women versus men.
Highlights of the findings on woman-owned family businesses (WOFB) include:
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The number of WOFBs have increased by 37% in the last five years.
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WOFBs do more with less. Although they are somewhat smaller in size — $26.4 million — compared with the average annual $30.4 million in revenues of their male-owned counterparts, they generate their sales with fewer median employees, employing 26 individuals compared with 50 at male-owned firms. This means that female-owned family businesses are 1.7 times more productive than male-owned family firms.
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WOFBs are more than six times as likely to have a female CEO, with more than half of woman-owned firms led by a female chief executive.
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WOFBs experience greater family loyalty to the business, agreement with its goals, and pride in the business. They have a 40% lower rate of family member attrition.
Ready to start your dream business?
There are many resources to help you along the way including grants, free counseling and advice, and many workshops dedicated to helping women succeed. Check out these websites:
The Small Business Administration
SCORE NYC – Free training and advice on starting your business
A Spring Makeover for Your Finances
by Stacy Francis, CFP®, CDFA
Now that spring has officially sprung you might be making plans to stash those dull winter clothes away and reveal your swanky spring digs. Most of us have perfected this yearly wardrobe ritual, but many of us have a lot to learn about cleaning out our money closet.
Trim those spending splurges Track your expenses for at least one month. Record what you pay right down to the newspaper, bagel and mocha latte you grab on your way to work. If trimming these expenses will save $10 a day, you’ll be saving $300 a month, and be nearly $4,000 ahead by the end of the year.
Spruce up your savings If you don’t have direct deposit already, talk to your HR department and have 5% to 10% of your paycheck deposited directly to your savings account, mutual fund or retirement account. Saving regularly and using a payroll deduction plan makes saving less painful.
Write your goals in stone. Or at least on paper. Put your top five goals in writing. Study after study has shown that writing goals makes it much more likely that you will achieve them. Decide which are most important to you, how much you need to accumulate to meet this goal, and then take immediate action to turn your dreams into reality. If you do not start moving towards your goal now, you never will. This can be as simple as going on the Internet and researching houses, loan consolidation or mutual funds.
Make learning about finances a “girl thing.” Get a group of girls together and have a “Girls Night Out” and go to a Savvy Ladies seminar. Or have a Savvy Ladies seminar come to you at your office or favorite girls gathering place. In no time you will be dishing about where you are stashing your extra cash at the water cooler or offering your latest budgeting tips while sipping that oh-so-cool Cosmo at Light.
Follow these easy steps for a makeover of your money closet.
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.