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What Should Teen Drivers Contribute to the Expense of a Vehicle?

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What Should Teen Drivers Contribute to the Expense of a Vehicle?

 

Do you remember the day you received your driver’s license? I remember going down to the Secretary of State’s office on my 16th birthday to get my license. It was the best birthday present ever. Now, my husband and I have a teen who is almost ready to be an independent driver. As a result, we are currently determining what should teen drivers contribute to the expense of a vehicle? If you ask this question to other parents, you’ll find answers just as varied as the parents themselves.

Avoid Burdening Them Too Much

Teenagers should learn that financial responsibility is the flip side of increasing independence. Most of us don’t want spoiled, entitled teens, and asking them to be at least partly responsible for some of a vehicle’s expense that they use is fair. However, I’m of the mindset that we shouldn’t burden teens in high school too much.

When I was 16, I inherited my dad’s fixer-upper El Camino. I was responsible for gas and insurance. That meant I had to have a job to have the vehicle, and I needed the car to have a job. When I had been driving for six months, my mom bought me a used Ford Escort in better shape than the El Camino. I made payments to her for the car and was also responsible for all of the maintenance and upkeep as well as gas, insurance, and registration. With this purchase, I was locked into having a job throughout the rest of high school to afford the car. That affected my grades.

I’ve decided to handle things differently with my kids.

What Should Teen Drivers Contribute to the Expense of a Vehicle?

Ultimately, what you choose is based on your beliefs and values. However, here are some popular options.

Pay All Expenses & Tie Car Usage to Behavior

One option, especially if you don’t want to give your vehicle to, or buy a vehicle for, your teen is to not have the teen pay anything. (This is also a good option if your teen doesn’t have time to work a part-time job.)

Using this approach, the vehicle is yours, and you’re simply allowing the teen to borrow it. However, you clearly state that the teen can lose the right to use the vehicle if he doesn’t maintain his good grades or if he has an attitude or does not keep up on his chores.

Pay for Gas

Some parents have their teens pay for gas only. If your child only works during the summer or does not have a job and does chores at home for money, paying for gas is a good option since she doesn’t earn a lot of money. If she’s financially savvy, she’ll soon learn to drive only when necessary and to combine errands so she doesn’t spend too much on gas.

Pay a Percentage of Their Income

Another option is to have your teen pay a percentage of their income to help pay for the car’s expense. If your child makes $100 a week at his job, maybe he pays 15% of his income, $15 in this case, per week, for the privilege of using the vehicle.

The Child Pays for Unusual Expenses

What Should Teen Drivers Contribute to the Expense of a Vehicle?

Regardless if you have the teen pay for gas or a percentage of their income or nothing at all, many parents have their children pay for unusual expenses.

For instance, if your child gets a speeding ticket, he is responsible for both the ticket and the amount that the insurance increases because of the ticket.

Or, if he has a car accident that is clearly his fault, he pays for the car repairs or at least a portion of the repairs. You may also require him to pay the deductible for the car repairs.

Why They Shouldn’t Be Responsible for Maintenance

Some parents want their children to be responsible for the car’s maintenance and upkeep, but I would argue against that. Car repairs nowadays can be expensive. Some teens will avoid routine maintenance like oil changes and regular tune-ups because they’re too costly. That’s unfortunate because routine maintenance lowers the cost of the car’s upkeep. Plus, many repairs are cheaper if they’re made as soon as the driver recognizes a problem.

That second car my mom bought for me? The Ford Escort? We bought it from a college student who we didn’t realize had not maintained it because he couldn’t afford to. Even though my mom bought the car with only 40,000 miles on it, it lasted me less than a year because the former owner never added oil to the vehicle or maintained it.

When your teen is driving, you want them to be safe, and you also want to maintain the quality of the vehicle. That’s why my husband and I plan to pay for the maintenance and repairs while our kids are in high school.

Save the Money for Them

If you can afford the vehicle and you’re having your child contribute only to learn financial responsibility, you have another option to consider. Some parents in this situation take the money that they require the teen to contribute for use of the car and save that money. They may put it in a Roth IRA for the child, which is only possible if your teen has a job. Or, they secretly put the money in an account that the child can use to buy a car when they move out or to use to fund the expenses they have when they move out.

Saving the money for the child (without telling her) is a good option because you’re teaching financial responsibility, but you’re also helping her in the future with her own money.

Final Thoughts

Having a car or access to a car as a teen is a privilege, not a right. Determining what should teen drivers contribute to the expense of a vehicle is a personal choice. We will most likely have our teen contribute the price of gas, and we’ll cover the rest until he’s older and has a part-time job.

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Buying Your Kid a Car

When I was 15, my dad died.  When it was time for me to get my license and a car, my mom gave me my dad’s El Camino truck.  My dad loved El Caminos; he would buy beat-up ones for cheap, refurbish them, and then sell them for a profit.  The one I inherited was a beat-up one he had bought but wasn’t able to begin to fix up before he died.  I took shop class when I was 16, and during downtime, we could bring in our cars for a car wash.  I’ll never forget my humiliation when I brought in the El Camino, and huge, rusted chunks fell off when we washed the car.  The El Camino wasn’t a good car to drive in the winter, so my mom sold it.  She then bought me a beater Ford Escort, and I paid her a payment every month until I’d paid her back in full.   Should you consider buying your kid a car?  My husband and I firmly believe there are many reasons why parents should not buy their children cars.

1. Kids Need to Learn How to Earn What They Get

One of the reasons you shouldn’t buy your kid a car is because they need to learn how to earn what they get. Part of your job as a parent is to teach your kids responsibility.

Of course, you should provide for their basic needs, such as housing, clothes, food, etc. But giving them everything they want in life is not going to teach them to appreciate what they are given.

You could argue that they will have to pay for the gas and any repairs but not the actual car. Even with those financial responsibilities, it may not be enough to teach your kids that they get what they earn for themselves.

There is a saying that if you “give a man a fish you feed him for a day but if you teach a man to fish you feed him for a lifetime”.  Applying it to this situation means giving your kid a car isn’t the best thing you can do for them.

2.  They Need to Learn Patience

Depending on the type of car your child wants, saving up money for it will take some time.  However, in doing so, she will have learned a valuable lesson.  Hopefully, that patience will continue throughout her life so she doesn’t get into the habit of buying things on credit before she can truly afford them.

As an adult, I’ve had to wait for many things that I wanted until I could afford them.  My husband and I didn’t even buy our first house until we were in our early 40s.

3. Buying Their Own Car Could Help Them Build Credit

Even though it’s preferable that kids save to buy their own car, some argue that a loan could work to their advantage when buying their own car. If they are responsible for making their payments on time, it can help them build their credit for future purchases.

Putting your kid in debt at a young age isn’t necessarily the ideal situation. For one thing, you will probably have to co-sign the loan. But perhaps it’s a better option than buying your kid a car and paying for it yourself.

4.  They Shouldn’t Expect the Best

Many kids now expect that they will have the same standard of living their parents have while they are still quite young.  These kids don’t realize that their parents have been working 10, 20, 30 years to earn the standard of living they currently experience.

When I started out on my own, I struggled, as many of us have.  When I moved out, most of my furniture came from garage sales.  Most of my clothes came from second-hand stores.  Most of my early cars were beaters.

Buying Your Kid a Car

Photo by Steady Hand Co. on Unsplash

One of the things I remember most vividly about reading Michelle Obama’s biography, Becoming, is that Barrack Obama had a car in college that had a hole in the floorboard of the passenger seat.  Michelle Obama wrote about keeping her feet far from the hole and seeing the pavement rushing past.  Clearly, I had a similar experience with my dad’s El Camino, and many of you reading might have also experienced driving a beater car because it was cheap.

5. They May Not Take Care of It

Another one of the reasons you shouldn’t buy your kid a car is because many teens are not good at taking care of their stuff. If yours is one of them, do you really think it’s a good idea to spend thousands on a car for them?

Before shelling out a ton of money on a vehicle, consider whether or not your kid is ready to take responsibility for the car. Talk to them about changing the oil, filters, wiper blades, and other regular maintenance.

If it is clear your kid expects you to pay for repairs and give them gas money, you can certainly say no to the car.

6. Is it the Best Use of Your Money?

Buying your kid a car may not be the best use of your money. This is just one more reason you shouldn’t buy your kid a car.

For instance, you might be able to take the money and invest it for your future retirement. Or, pay down debt instead of buying your kid a car.

7. It May Cause Them to Study Less

If your child is given a car, it may lead him to feel like he is free to come and go as he chooses. This is especially true if you have not given him strict rules on when he should be home at night.

With too much freedom, your teen may spend less time on the things she should be doing, such as studying. This could cause her grades to drop and threaten her ability to get into a good college.

So, what do you think? Should you buy your kid a car?

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Your Teen and Their First Car

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Thinking of getting your teen their first car? Here are something you need to think of first.Growing up, I didn’t really have to worry about the need for my own car once I turned 16. My mom had a vehicle which she used rarely and for the most part allowed me to have it when I wanted it. I however don’t know if I would do the same with my kids.

Though owning a car is a huge responsibility (something I learned at 22 when I finally bought my first car), I don’t know if I want my newly licensed teen driving around in my vehicle either. I’ve always been a responsible driver but managed to get myself in two accidents writing off my mom’s car once (not my fault!). I also don’t like the idea of a car simply being given to a teen because they’ve reached a certain age, but I do like lessons that are learned in the responsibility of co-owning a vehicle of their own.

The car doesn’t, and shouldn’t, be anything fancy or new. It should be something safe, reliable and affordable for the teen and parents. Something that won’t require a bunch of money to maintain but something that you won’t be too heartbroken over if it ends up being written off in a car accident (hopefully not!).

As adults we know you can’t own a car if you don’t have income coming in. Same would go for the teen. They will be responsible for their own gas (in their car or yours) as well as contributing to the maintenance of said vehicle. If they don’t have a way of financially supporting themselves I personally don’t see how it’s fair they have access to a vehicle of their ‘’own’’.

Some teens require a car to actually earn money depending on their job while others may just want a vehicle for leisure, to get to and from school and soccer practice. Whatever the reason behind the wanting of the vehicle, they should help pay for it, if not finance the whole thing.

If they can’t come up with the money to pay for the vehicle in cash themselves, and they need it (maybe they got a job doing pizza delivery starting in two weeks) consider implementing a family issued loan. Someone I know issued a loan to her daughter when she turned 18 so she would be able to drive to and from university which was an hour each way. Mom bought the car for $2,500 and gave her daughter 12 months to pay her back, knowing she had a great summer job lined up. The car was repaid before the end of the summer.

If and when a teen gets a car of their own, is definitely unique to each family but I think there are many advantages to giving them access to a vehicle early into their driving days. There would obviously be many rules in place but I think if obey have the ability to teach many important life lessons.

Did you have a car when you were a teen? Did your parents help you buy it?