The Building Blocks of Personal Finance

Managing your money effectively isn’t about being rich or having a finance degree, it’s about understanding a few core principles and putting them into action consistently. Personal finance is the foundation for achieving financial stability, reducing stress and reaching your life goals. 

Whether you’re just starting your financial journey or want to get back to basics, let’s walk through the essential building blocks of personal finance: budgeting, saving, investing, credit management, debt control and insurance.

1. Budgeting: The Blueprint of Your Finances

Let’s start with budgeting. Think of a budget as your financial blueprint. It shows you exactly how much money is coming in and where it’s going out. Without a budget, it’s easy to overspend or lose track of your financial priorities. A popular method to get started is the 50/30/20 rule: 

• 50% of income goes to needs (rent, groceries, bills)
• 0% to wants (entertainment, dining out, shopping)
• 20% to savings and debt repayment

Whether you prefer a spreadsheet, an app or just pen and paper, the key is to track your spending regularly and adjust when needed. Budgeting gives you the clarity and control to make informed financial decisions.

At Heritage, you can utilize your Heritage Digital Banking app to help you track your spending and your savings by following these simple steps: 

• Sign into your Heritage Digital Banking app.
• At the bottom right, click “More.” 
• Under the Financial Planning drop menu, click “Financial Wellness and Goals.” 
• Under this section, you can easily see your spending under the section “Spending.” 
• At the top, you should see “Savings Goals” to the left of “Spending.” To check your savings and savings goals, click “Savings Goals.”

2. Saving: Your Safety Net

Once you have a handle on your budget, the next step is saving. Saving provides financial security and helps you prepare for both the expected and the unexpected.

At the top of your savings list should be an emergency fund—money set aside specifically for unplanned expenses like car repairs, medical bills, or job loss. Ideally, aim to save three to six months’ worth of living expenses in an easily accessible savings account. Saving three to six to nine months of living expenses is often referred to as the “3-6-9 rule.” Learn more about the 3-6-9 rules and guidelines for emergency savings here.

Beyond that, you can start setting aside money for short-term goals like vacations or holiday spending, and long-term ones like a home down payment or starting a business. Automating your savings can make this process effortless and ensure consistency.

At Heritage, we offer automatic transfer tools in our Digital Banking App to help you automate savings. For example, if one of your savings goals is to save enough money for a vacation. You can automate bi-weekly savings amounts into a club account set aside for your vacation.  Follow these steps to help you set up automations in your Heritage Digital Banking App:

• Log into your Heritage Digital Banking App.
• On the bottom menu, select “Transfers."
• Here you will see the option for “Scheduled Transfers.”

We also have savings programs such as our Spare Change Program, which automates saving spare change into your savings account to help you reach your savings goals. Learn more about our savings accounts and programs here.

3. Investing: Growing Your Wealth

Once your emergency fund is in place and you’re regularly setting aside money, it’s time to explore investing. Investing will help you gain financial wealth and prepare for retirement. The key to investing is understanding your goals, your risk tolerance and being consistent — even small amounts invested regularly can grow significantly over time.

When people think about investing, the stock market is often the first thing that comes to mind. Remember there are different options for investing including real estate, share certificates and precious metals. Learn more about other investment alternatives here. 

Retirement accounts like a 401(k) or IRA are great vehicles for investment, especially if your employer offers a match. Learn more about preparing for retirement here.

4. Credit Score: Your Financial Reputation

Alongside saving and investing, your credit score plays a crucial role in your financial health. Your credit score is essentially your financial reputation. It impacts your ability to rent an apartment, qualify for loans and get better interest rates. The main factors influencing your score include: 

• Payment history
• Credit utilization (how much of your credit you’re using)
• Length of credit history
• Types of credit accounts
• Recent inquiries

To maintain a strong score, always pay bills on time, keep credit card balances low and avoid opening too many new accounts at once. Learn about the five c’s of credit here. Learn more on how to build credit here.

5. Debt Management: Keeping It Under Control

Another key piece of personal finance is debt management. Not all debt is bad—some, like student loans or mortgages, can be considered investments in your future. But high-interest debt, especially from credit cards or payday loans, can quickly become a burden. The goal is to manage debt wisely and avoid letting it spiral out of control. 

Strategies like the snowball method, where you pay off the smallest debts first, or the avalanche method, where you tackle the highest-interest debts first, can help you stay motivated and save money in the long run. Whichever approach you choose, make it a priority to pay more than the minimum balance when possible.

6. Insurance: Protecting What Matters

One often-overlooked component of personal finance is insurance. While it might not feel as immediate or exciting as investing or saving, having the right insurance coverage is essential to protecting your progress. Health insurance can prevent a medical emergency from turning into financial ruin. Auto, home and renters insurance protect your possessions and liabilities. And if you have dependents, life insurance can provide them with financial security if something happens to you. It’s worth taking the time to understand your coverage needs and shop around for the best rates and policies.

At Heritage, we offer several insurance resources to our members including TruStage Accidental Death and Dismemberment coverage¹, discounted Auto Insurance² and Travelers Auto Insurance³. Learn more here.

In the end, personal finance is personal. What works for one person might not work for another, but the building blocks remain the same. Remember, it’s not about being perfect — it’s about being intentional.

The views and opinions expressed in this blog are those of the writers, and do not necessarily reflect the views or positions of Heritage Federal Credit Union.

Insured by NCUA. Membership restrictions apply. Subject to credit approval.

1 Cost is between $1 and $1.50 per month for every $10,000 of individual TruStage AD&D Insurance. TruStage™ Accidental Death and Dismemberment Insurance is issued by CMFG Life Insurance Company. The insurance offered is not a deposit, and is not federally insured, sold, or guaranteed by any financial institution. Product and features may vary and not be available in all states. Corporate Headquarters 5910 Mineral Point Road, Madison, WI 53705. Base Policy Form Numbers: ADD-2018-POL, ADD-2018-POL(OR), 2018-ADD-POLRDR-CI, 2018-ADD-POLRDR-CNR, E10-ADD-2012, E10a-ADD-2012-LSCU, E10a-014-2012, E10a-014-2012(OR), E10a-015-2012, F10a-015-2012-1(WA).
© TruStage

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2 TruStage® Auto Insurance program is offered by TruStage Insurance Agency, LLC and issued by leading insurance companies. Discounts are not available in all states and discounts vary by state. The insurance offered is not a deposit and is not federally insured. This coverage is not sold or guaranteed by your credit union.
AHE, AHL-1339476.1

3 Insurance is underwritten by The Travelers Indemnity Company or one of its property casualty affiliates, One Tower Square, Hartford, CT 06183. In CA: Insurance is underwritten by Travelers Commercial Insurance Company, One Tower Square, Hartford, CT 06183, Certificate of Authority #6519, or Travelers Property Casualty Insurance Company, One Tower Square, Hartford, CT 06183, Certificate of Authority #6521, State of Domicile: Connecticut. In FL: Homeowners insurance is not currently offered for new business. In TX: Auto insurance is offered by Travelers Texas MGA, Inc. and underwritten by Consumers County Mutual Insurance Company (CCM). CCM is not a Travelers company. Coverages, discounts, special program rates or savings, billing options, and other features are subject to availability and individual eligibility. Not all features available in all areas. © 2017 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries.