Wednesday, August 30, 2017

Teens and Cars

Cars are a big deal for teens.  I have 4 sons.  Nothing beats the thrill of driving by a gaggle of girls after school and honking your horn to give a friendly wave.  We have some pretty stiff rules for all of our boys when it comes to the coming-of-age tradition of getting their driver's license and their first car.

Here is a snapshot of our house rules for teens and cars:

When Obtaining a license:
                                                      1.  Have a job
                                                      2.  Have a $1000 emergency fund
                                                      3.  Pay for one year of insurance

 When Purchasing a car:
                                                      1.  We cover up to $2000
                                                      2.  The car goes in their name alone 
                                                      3.  The teen pays for insurance, repairs, 
                                                           and upkeep


At age 16 we consider much of our financial obligation to our children to be completed.  We still pay for food, shelter, and medical expenses.  But, at this age we begin to transfer monetary responsibility to them.


Before taking their driving test, they must have a part-time job.  There is no sense getting a license if you can't afford car insurance.  Our oldest took a job a little more than a mile from our home.  In good weather, he hoofed it back and forth to work.  If the weather was inclement, we took him.  We were willing to provide him transportation until he got his license, but he preferred to listen to music and think while he walked twenty minutes to and from work.  Our second son got a job about 3 miles from home.  We took him to and from his part-time job until he had saved an emergency fund and car insurance money.  Although it did make for a pretty busy life, especially when both boys started working, it was worth it to us to offer them transportation while they got up on their financial feet.


 This brings us to my second point.  Our children are required to have a $1000 emergency fund before getting their license.  We want the habit of having money set aside for a "rainy day" to be thoroughly ingrained in them before they leave our home.  Additionally, I can't imagine a time in their life when they will be able to more quickly and easily save up that $1000 than when they are still living under my roof and not paying room and board. 


They must have enough money to pay for one year of insurance up front.  If you pay monthly, the insurance company tacks on a "convenience fee".  We try avoid all fees and teach our children to do the same.  My grown sons use Dave Ramsey's free budgeting app, Everydollar, to track their monthly expenses and save enough money monthly to cover their insurance bill in full when it arrives once a year.

When one of our sons gets his license, we charge him the difference between our current insurance policy and the amount it goes up when we add their name to the policy.  One small note:  If the child gets his or her license in the middle of our insurance cycle, then their portion of the insurance is prorated.  For instance, our second son got his license in May.  Our yearly insurance bill is due in August.  So, the insurance prorated the amount.  He paid us for his portion of the insurance for May through July.  Then, in August, he was responsible for his portion of the entire yearly bill when it arrived in August.

We do not provide a separate car for our sons to use.  We have two cars.  We don't need any more.  If they want exclusive use of a vehicle, then they can purchase one.

 But, wait!  There's more!  


As extra incentive to save money, we agreed to get them to and from work, free of charge, from age 16 until they got their license.  Our sons both worked an average of 15-20 hours a week during high school.  It took them 4 - 6 months to save up their $1000 emergency fund and enough for one year of car insurance.  Additionally, in our state a teen under the age of 18 must complete 50 hours of practice driving before obtaining a license.   They purchased cars at age 19 and 18, respectively. 


Just as there are requirements for getting a drivers license, there are requirements for getting a car.  We like to call our special incentive program the:  "Mom and Dad 401k Car Fund".  We modeled it after Dave Ramsey's car plan for his kids.  Just like some employers match a percentage of your 401K contributions, we match what they save toward a car - up to a certain amount.  We match the first $1000 that they save. Then, we match it again for the second $1000. Then, we stop.  Basically, if they find a set of wheels for $4000, then we have paid for half.  If they want to spend more money, then they are more than welcome to ante up with more of their own dough.  Our first son found a car for under $4000.  Our second son spent more.  It goes without saying that all vehicles are bought with cash.  No loans.
The title of the car went in their name and their name alone. They were responsible for insurance, gas, maintenance, licensing, etc.  We did find a local company who would bundle their insurance with ours, even though their vehicles were not in our name.  That saved them a little money every year.  Good student discounts saved them even more!  When they are paying their own bills, believe me, they will work hard for that "A" or "B" in order to save money on their insurance!


We did institute one more rule.  This is a fun one!   If we borrow their wheels (even to run to the store) we fill the gas tank for them.  They tend to offer their car to us for errands whenever their indicator dips below one-half a tank. Okay, I'm really a softie at heart.  We don't help them much monetarily and our cars are generally parked in the garage, while theirs are on the driveway.  So, it does make it convenient to grab their keys to run a quick errand, rather than move cars around.  But, having said that, it is fun to be a blessing to them when they least expect it.


Do all to the glory of God,



  1. Hope, I am thoroughly enjoying your blog! This post is full of excellent ideas that I will hold onto for our children. Thank you so much for sharing!

  2. Thanks so much! Glad to know that you have found it helpful!