Wendy Liebowitz on Performing a Financial Checkup

Wendy Liebowitz grew up at financial services firm Fidelity. She began her career as a 19-year-old intern at the firm, working her way up through the ranks, eventually landing the role of vice president branch manager of the firm’s Ft. Lauderdale, Florida, location. 

“I just saw what value working at an investment company had,” Liebowitz said by phone Thursday. “I was personally able to learn the value of a dollar and how investing early helps you build your wealth long term.”

Liebowitz, who is a certified financial planner, shared advice on performing a financial checkup with She Spends. What follows are some of her tips!  

Editor’s note: the following interview has been edited and condensed for clarity.

So what’s the first thing someone should be focused on financially? 
You want to make sure you have an emergency account set up. It could be your checking account, a savings account or money market account. If you have any unexpected expenses come up, you want to be able to pay them without using a credit card. You also want to be able to support yourself if you have to leave your job unexpectedly. We would encourage you to have six months of savings.

Okay, so once you have an emergency fund, what do you do next? 
You want to identify what sources of debt you have and rank them from the highest interest rate to the lowest interest rate. You want to pay off your highest interest rate debt first. You don’t want your debt to compound.

And then you invest, right? 
After you’ve saved enough for your emergency fund and paid off debt, invest any excess. If you have an employer that provides a 401(k) plan or if they’re in the nonprofit world, you want to contribute, especially if you give you a matching contribution to your account. That’s free money. You want to contribute whatever amount they will match. If you have dollars above and beyond that, you can contribute more to your employer-sponsored plan, or you may consider an IRA. Your income will dictate whether it should be a Roth or traditional IRA.

Can you offer some budgeting advice? 
We recommend a 50-15-5 rule. Fifty percent of your budget should go to your essential expenses. This would include your rent, mortgage, utilities or transportation costs. It can vary based on where you live. Fifteen percent of your pre-tax paycheck should go to retirement savings. That could be a combination of the contributions from you and your employer. Five percent of your take-home paycheck should go to building up that emergency account. 

Whatever is leftover in your bank account, that’s your play money. You can use it on discretion.

If someone has trouble with their budget, track expenses for one to three months. Just so they can write down to see where they’re spending their money. 

Do you have any other advice for our readers? 
If they’re newly married or not married at all, it’s a good time to review their legal aspect of things. You want to add beneficiaries to your bank accounts. It may be called “transfer on death” on your bank’s website. 

They also should make sure that they have power of attorney for financial matters, which include healthcare. If you’re single and become ill, have someone listed who can make financial decisions for you. Designate who is able to act on your behalf. It’s something that should be discussed to protect yourself and make sure your wishes are held up.

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