When your children become adults, you must take every chance to help them understand the importance of money and finances since the lessons they learn will be vital as they enter adulthood. Although you’ll have plenty of opportunities to do this, one of the most effective occasions to introduce them to money management comes when they display an interest in purchasing their first car.
This is a fantastic opportunity to teach your kids about the many unexpected and anticipated costs of car ownership and allowu to educate them on budgeting and making the right choices regarding their future. Let’s discuss this incredible learning opportunity and how to benefit from it.
Discussion of the Costs Initial
When your teenager first approaches you and mentions they’d like to drive, you’ve got an opportunity to talk to them about all the costs involved in purchasing a vehicle. It’s a chance to let them know that the price they get from the advertisement or commercial isn’t the complete story. They must be aware that additional fees and taxes are to be added to the total cost, but they also can change the total price and monthly installments by focusing on the down payment.
Inform them that although it is essential to plan their budget to afford monthly payments after they sign on the dotted line, they should first save for the down payment, which is typically 10%-20 percent of the cost. If they make a larger upfront payment and their monthly payments decrease. As teenagers, they might not have enough money in their savings accounts and may decide to pay closer to 10 percent or even less if they need to. The lessons you have learned regarding down payments will remain crucial if your teenager can ever buy an apartment.
It is also a great moment to talk about taking on debt and the need to repay it in time to ensure that they don’t be impacted by negative consequences in the future, such as the damage to their credit. It is also important to emphasize that it is essential to make payments on time, and the concept of paying is more than feasible to deal with the high cost of interest associated with the loans. In addition, inform them that they have other options like purchasing a second-hand car. It may not have all the glitz and glamour of a brand new vehicle, but the initial costs may be lower if cash is tight.
Budgeting for Additional Costs
It’s common to be too excited about getting the latest vehicle that we do not think about the monthly installments due. But, it is essential to educate your children about how important it is to plan to know the amount they can spend. If you’re still not sure already, this is the ideal moment to demonstrate to your kids how to put together the budget. Although they may not be making much money, ask them to note the money they earn from their job or allowances and record every expense they regularly incur (dinners out, visits to the arcade, etc.)
With all that data at hand, they will know the amount they have remaining to cover the car loan. But, let them know that there are additional costs they’ll have to consider, such as fuel and insurance. Make them aware that there’s no other way to avoid this. If they are driving, they will require insurance, and they have to factor the expense into their monthly bills.
The cost of car insurance for teenagers is more costly because of their age and lack of experience driving the car, so as a parent, you could consider placing them under insurance. However, they shouldn’t be able to get off of the burden as they are responsible for paying their fair share each month. If finances are tight, This is an ideal time to instruct the kids to cut back on unnecessary expenditures so that they can afford the items they require. If that means not buying the latest video game to pay for their insurance, this is something they’ll need to master.
Responsibilities of Teachers
This is also an excellent opportunity to teach your children about responsibility and how not being responsible for what they do can lead to unexpected costs they’d like to avoid. In particular, you need to remind them of the importance of driving safely and staying clear of distractions when on the roads. Instruct them that not only could using a mobile phone while driving result in fatal accidents, and if they get arrested, it can cause tickets and costly fines they may not have considered in their spending budget.
Your child should also be taught the importance of regular car maintenance to ensure they take the necessary steps to avoid costly repairs later. It is important to note that some expenses cannot be avoided, for example, regular oil changes or rotating tires. But, by taking the time to address these issues today, you can save yourself more costly expenses in the future, all the way to having to replace your vehicle entirely because of extensive damage.
Also, you can instruct your children how important it is to acquire the abilities needed to repair automobile issues by themselves, so they don’t need to pay for others to do the same task. There are numerous car maintenance tasks that teens can complete at their paces, such as replacing the battery, ignition plugs, windshield washers, and changing their oil. Along with the possibility of saving cash, your teenager may also become excited about working on these kinds of projects. And this enthusiasm may lead to a possible job in the future.
As you will see, there’s plenty to be learned when it’s the time for your teen to buy their first vehicle. Learn the above lessons, and you’ll raise the right responsible and intelligent driver.
