Teach Your Teen to Budget for Car Expenses
By Mollie Jones
Getting a driver’s license is an important milestone in any teenager’s life. Before that day comes, be sure to teach your teen smart money habits with our car budgeting tips.
Determine income
To budget for car expenses, your teen should figure out how much he is earning on a monthly basis. Include all sources of income like money earned from a part-time job, babysitting and allowance.
Define expenses
Have your teen write down all his monthly expenses like lunch money, clothing and entertainment. To budget for a car, figure out for which auto expenses your teen will be responsible for, like monthly car payments and gas. If you haven’t yet chosen a specific car to save up for, use the Internet to research average car prices to use as a guideline.
Calculate the monthly budget
Have your teen add up all the expenses to see if he’s earning enough to pay for all his expenses plus a car. If his income exceeds the car budget and other planned expenses, all he needs to do is stick to the budget. If the expenses are higher than income, he will need to prioritize what he wants to spend money on. Teach your teen to keep receipts from all transactions and subtract those amounts from their monthly budget amount to stay within the budget during the month.
Set up a checking or savings account
Many banks offer savings accounts specifically for teens. Look for a high-yield account that helps your teen earn more on what they save by accruing interest. Teach your teen to deposit enough money from paychecks and other income into the account to make sure that required bills are paid before using extra money for entertainment.
Teaching your teen to set up and work with a car budget is just one aspect of taking responsibility for car ownership. You and your teen can save on teen auto insurance by shopping around and comparing quotes. Many insurance companies offer affordable insurance for young drivers who maintain good grades in school, follow safe driving practices, share a policy with their parents, or have certain safety features installed in their car, like anti-lock brakes.
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