Budgeting for an Additional Driver: Tips on your teen moving to the driver's seat!
Driving is considered a pivotal moment in a teen's life. The freedom of being able to go anywhere with anyone at any time is liberating! However, having this freedom can bring significant responsibilities to the new driver and anxiety to parents who have to hand over the keys. Check out some tips below on how to prepare for your teen driver.
What's your plan?
We all know cars can be costly. Outlining the expenses and determining if you are sharing those expenses could establish an excellent foundation. Showing your teen how much they currently spend and how much owning a car can impact their spending can help them move towards a more responsible start to owning a vehicle—even before getting their driver's license!
Opening a Separate Account
Opening separate savings or checking accounts can help control and regulate the funds to purchase and maintain car expenses for your teen. To help with your teen's financial needs, Waldo State Bank offers joint savings or checking accounts, debit cards, and Scholastic Add-On CDs. Even before driving age, Waldo State Bank also offers the Wally's Wealthy Savers Club to help with kick starting your child's savings foundation. With these options, you and your teen can keep track of financial activity, and will teach them the value of a dollar towards owning a car.
Saving on Insurance
Is your teen a high performing student? If so, this could help with lowering the cost of insurance premiums. Some insurance carriers provide a good-student discount. A good-student discount can consider your teen's average grade and where they rank in their class. In turn, they offer discounts on your insurance premium based on their performance in school.
Placing multiple cars on one insurance policy instead of having their own could also lower insurance premiums.
Ultimately, the best way to save on insurance premiums is to practice safe driving. Some insurance carriers offer safe-driving discounts depending on their current driving record.
Contact your insurance provider to help you determine if you qualify for any insurance discounts.
It's essential to establish how the cost will vary between you, as parents, and your teenager. Do they have a job before getting their driver's license? Great! Then they can save up and buy the car themselves, or you can share the responsibility with them. If they don't have a job, how can you trade their current responsibilities by paying for the car and additional expenses?
Gas and overall maintenance can be costly as well. If your teen is driving around town, they should cover the cost of gas and the vehicle's general care. Oil changes or mechanical issues that come with car ownership needs to be taken into consideration as well.
Establishing boundaries of expenses can help them manage the cost. They understand that you will be there to support them in their car ownership journey, but they ultimately have the responsibility.
So how will you budget for your teen driver? Contact one of our financial experts today to help you and your family merge onto the road to financial success!