Whether you’re replacing your current car or are buying one for the first time, you’ll need to make several decisions. The first is whether to buy a new or used car. New cars have warranties, so the manufacturer covers virtually all repairs. However, a new car’s value depreciates 20 to 30 percent almost as soon as you drive the car off the dealer’s lot. Consequently, your car loan might already be more than the car is worth before there are even 50 miles on its odometer! Used cars have depreciated already, so your loan is probably less and closer to the current value of the car.

Don’t forget that you’ll need to pay for maintenance (whether the car is used or new), and depending on the age and condition of the car, the maintenance might be costly. Consider buying a “new used car,” which is a car that is only a few years old, has been well maintained, and has low mileage. Often the initial warranty on a car extends to a new owner.

If you decide to get a new car, you have another decision: to buy or lease. Table M5.3 outlines some of the considerations in buying or leasing a new car. Many people lease cars because they can get a more expensive car for less up-front cash. However, if you finance a car with a loan, at the end of the loan, you still own your car. If you continue to drive that car, you then have the money you used to spend on the loan payments to put to other uses.

Taking care of yourself now and in the future constitutes another area of financial planning. Buying insurance and making investments are two ways you can accomplish these goals.

When something goes wrong, you need help to cover the costs so you can recover quickly. Fortunately, insurance is available for a variety of risks so you don’t have to bear the burden of covering these costs alone:

1. Health insurance. Health insurance is a must. No matter how healthy you are today, a serious illness or an injury, plus any rehabilitation expenses, can be astronomically expensive. If your employer offers health insurance ­coverage, take it. You might have to contribute some of the cost yourself, but it’s well worth it. If you’re self-employed, unemployed, or not covered by your employer, investigate what affordable options you have for coverage. A good place to begin is HealthCare.gov. Some colleges offer subsidized group health care plans, even to part-time students. If you are self-employed, you may qualify for a group plan through associations and organizations you have joined. In addition, the Affordable Care Act allows people under the age of 26 to remain covered on their parents’ health insurance plans.

2. Disability insurance. Disability insurance pays you benefits should you become disabled and are no longer able to earn a living. Many employers offer disability insurance coverage along with their health insurance coverage. If yours does not, determine how you would meet your expenses if you should become disabled.

3. Car insurance. Most states require car insurance. There are three types of car insurance coverage: liability, collision, and comprehensive. Liability insurance covers damage and injuries you have caused to someone else. You should always have liability coverage. Collision insurance covers damage to your vehicle if you collide with a moving or stationary object. Comprehensive insurance covers damage to your car from theft, fire, or other non–collision-related accidents. If you’re insuring an older car, it might not be worth carrying the cost of collision and comprehensive coverage in addition to liability coverage.

4. Homeowner’s and renter’s insurance. These types of insurance protect your home and the contents inside. Homeowner’s insurance also comes with liability coverage to protect you if someone is injured while on your property. If you have a mortgage on your home, the bank usually requires insurance. Many landlords require their tenants to provide proof that they have renter’s insurance. If your landlord does not, you should still consider it because it is affordable and will protect your assets in the event of fire or theft.

5. Life insurance. Life insurance helps replace income lost due to your death to those who are dependent on you, such as a spouse, children, parents, or other family members. When you purchase a life insurance policy, you name the person(s) who receive your life insurance benefits as your beneficiaries. Some types of life insurance policies can act as long-term savings plans, whereas other types are strictly for protection. You might not need life insurance if you’re single, with no one depending on you or your income, or if you’re married and have no children and your spouse is capable of working.

Consulting an insurance professional will help you determine your needs for many types of insurance. It pays to shop around and compare rates. Often, you can receive discounts if you carry several types of insurance (such as home owner’s and automobile) with the same company. Moreover, you should review and compare your rates every few years to make sure the rates you are paying are still competitive and your coverage is adequate.

Investing your money is not without risk, although there are strategies you can pursue to help reduce these risks. Learning as much as you can about the various investment opportunities that are available to you is a useful part of your financial planning. Many types of investments exist. As you begin to build up your savings, you might choose to invest your savings in CDs or money market accounts. As your knowledge of and comfort level with investments increase and your amount of discretionary income builds, you might consider ­investing in mutual funds, stocks, or bonds.

The rule of 72 is an easy way to figure out how long it will take to double your money at a given interest rate. All you have to do is divide the investment’s interest rate into 72. For example, if you want to know how long it will take to double your money at 6 percent interest, divide 6 into 72 and get 12 years. The rule of 72 works well as long as the interest rate is less than 20 percent. You can also use the rule of 72 to determine the interest rate needed to double your money in a certain amount of time. If you wanted to double your money in three years, you would divide 3 into 72. Now you know you would need an interest rate of about 24 percent.

At this point in your life, retirement probably seems a very long way off. You are not able to rely on Social Security to fully meet your financial needs after you retire. Therefore, it is important that you take responsibility for planning to meet your financial needs during retirement. It’s best to accumulate savings for retirement by starting early and investing regularly, but other mechanisms are available to help. If you work, your employer may have a retirement plan you can join. If you’re self-employed or your employer does not offer retirement benefits, you can set up your own retirement program. Funds specifically designated for retirement, such as individual retirement accounts (IRAs), Roth IRAs, and 401(k) programs, offer tax advantages to encourage you to save for retirement.