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You work hard for your money. It can be used to help you build a strong financial foundation that lasts the rest of your life, or it can be squandered with poor financial decisions today. No one enjoys worrying about money, and we all make financial missteps here and there, but some decisions are worse than others when it comes to the future. Here are 8 of the worst things you can do with money that will have a lasting impact.

1. Failing to Plan for Retirement

Don’t think of retirement as an abstract concept. If you’re living in San Diego, retirement planning is crucial. You’re going to get older, and you know you want to stop working at some point in your life. The sooner you begin putting aside money toward retirement, the more your nest egg can grow with interest and smart investments. Saving today means a more comfortable retirement in your future.

2. Buying a Brand-New Car

New cars are fun, but buying a brand-new car comes at a steep premium compared to buying last year’s used model. When you buy new, your car will lose about 60 percent of its total value during the first 5 years, on average. The average new car priced at $29,800 will lose about $2,500 in value as soon as you drive off the lot. After 1 year, it’ll be worth just $24,000. Save yourself thousands and let someone else take this huge hit. You can buy the previous model with low mileage for a huge discount, lower payments, and less interest.

3. Buying a Home You Can’t Afford

You’ve probably heard the phrase “house poor,” which refers to someone who has a home that takes up a large share of his or her income. Don’t give in to the temptation to max out your budget or spend as much as the bank is willing to lend when buying a home. After all, your home probably won’t seem so great when you barely have enough left after the mortgage to buy groceries and pay bills, let alone save money or travel.

4. Not Buying Enough Insurance Coverage

Saving is important, but it’s also essential to invest your money wisely. One of the most commonly overlooked areas is insurance. Too many people carry only the California minimum liability insurance, which pays just $5,000 for property damage, $15,000 for bodily injury per person, and $30,000 in bodily injury per accident. A minor accident can cause thousands in property damage, even if you hit a car that isn’t very expensive. A serious accident can cost $100,000 or more. Review your insurance policies to make sure you have enough coverage to protect yourself in an accident, or you could end up on the hook for the rest.

5. Relying on Credit Cards

Studies have found that people who pay by credit card tend to spend 12 to 18 percent more than when they pay in cash. While credit cards can be great for financing a major purchase or earning rewards, they require discipline. When the entire balance isn’t paid off in full every month, the interest will quickly eat up any rewards you’ve earned. Carrying a balance can also add hundreds or thousands to the total cost of your purchases.

6. Not Saving for an Emergency

You never know when an emergency will strike. A bad storm could damage your roof and you need to come up with the deductible for your homeowner’s insurance. Your child may fall off his or her bike and break a leg. Your car might break down and require thousands in repair bills. Building up an emergency fund is one of the most important things you can do with your money to protect yourself in the future and avoid the need for last-minute and expensive financing.

7. Failing to Invest Your Money

Saving at least 10 percent of your take-home pay is recommended, but it won’t earn much sitting in a regular savings account. It’s important to invest your money as early as possible to maximize your return. To demonstrate the importance of early investment, imagine investing $3,000 every year for 10 years. After 10 years, your $30,000 investment has grown to $47,000, assuming an annual growth rate of 8 percent. If you stop investing more money, your investment will have grown to $472,000 in 30 more years, assuming the same return rate.

8. Ignoring Debt

While some debt is necessary and important, most debt is simply a burden. According to the AARP, the average person spends $600,000 over a lifetime just in interest. If you have debt, take steps to address it. Never pay just the minimum due on credit cards. Use the avalanche method to pay down your debt by listing all debts in order from highest to lowest interest rate. Make the minimum payments on all but the debt with the highest interest rate, which should be paid as much as you can spare each month before it’s paid off. Continue this strategy to pay down each debt.

If you need help planning your finances, make sure to speak with a trusted financial advisor. Jan Gleisner is highly experienced in financial planning and can help you determine the best course of action for using your money wisely well into retirement. Call 858-337-2385 to schedule an appointment.