Saving for a Car 101 for Parents of Teens
I’m happy that summer is here, but sad that I’m getting old! I have a class 2018 kid in my family and he’s starting drivers ed in a few weeks. His parents came to me asking for help on teaching their son how to start saving for a car and learning the responsibility that comes with it. There’s a lot to teach, but I narrowed it to what I believe is the most important points.
50/50 — It’s time for your teen to start working and learning how to save for a big purchase item — a car! Help your teen out by offering chores/jobs around the neighborhood they can do to earn money. Once they earn their first pay, tell them to save half of what they earn for the car and the other half is up to them to decide. This gives them the freedom to self-manage their earning.
Match — Let your teen know that you will match what they have saved (up to a certain amount). This will ease your teen’s stress from feeling the pressure to hurry and earn as much as they can, while neglecting school.
Rules and responsibility — Before taking them to buy the car, layout the rules and responsibility of having a car e.g. no going out on school nights, they are in charge of paying for their own gas, insurance, maintenance or they have to pay half and you will pay half, etc. The rules and responsibility will vary from family to family.
Car shopping — As parents, you want the best for your child. So, that usually entails of the newest and best things (within affordable price range), but when it comes to a teen’s first car…used car is the best way to go. Getting them a spanking new BMW or Mercedes is just asking for trouble. I know I made a few mistakes when I got my first car (thankfully it was a hand-me-down car). Find a car that’s within the budget and make sure you have a little extra cushion for the title fee and insurance.
Insurance — Prior to buying insurance, explain what the insurance covers, how it works, and how much it usually costs per year/ 6 months/ month.
Giving teens a heads up about the cost of a car, insurance, maintenance and gas before getting them a car, will help them learn how to save up for big purchases and appreciate the feeling of hard earned money.
