Helping Kids Prepare Financially for Driving and Car Ownership

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

One of the biggest parenting – and child – milestones is when your child becomes old enough to start driving on their own. Driving and car ownership are big responsibilities in many ways. Along with the responsibility to drive safely on the road, kids need to be taught the financial costs of driving and car ownership as well. Here are some tips on how you can prepare your kids for the financial impact of owning and driving a vehicle.

Calculate the Costs with Them

It’s important to teach your children a good deal ahead of when they get their license that driving and vehicle ownership costs money. When they become old enough to get their learners permit, sit down with them and start having discussions about what kind of car they want to drive, the costs of purchasing the car, purchasing gas, the cost of car maintenance and repair and the cost of insurance.

Since you’re spend-tracking (you are spend-tracking, right?), go over your own transportation costs with them so they can get a real-life idea that driving and car ownership costs money.

Don’t Pay for Everything

This is just my personal opinion, but I’m a huge believer in having kids pay for at least part of their transportation costs, even while they’re still under eighteen. Kids tend to hold more respect for that which they’ve worked hard to pay for.

Whether it’s a car, a college education or whatever, there can be a lack of understanding with kids regarding the work that it took to be able to pay for those things. When you give some or all of the responsibility for paying for car costs to your child, you help them to appreciate the privilege of driving, to learn real-life lessons about how the world works and you help them prepare for the transition to independent adult.

Set Rules for Driving Preparedness

It’s helpful when kids and parents have a mutual understanding of how vehicle ownership and driving responsibilities will work in your home. For instance, if your child wants to have their own car, show them how to set some money aside for a car maintenance/repair fund. Make sure they have enough money saved for an insurance deductible in case of an accident.

If your child will drive a family car, set clear rules about when they can use the car, when they can’t, and who will pay for what portion of gas, insurance, etc. It’s important too to have a clear discussion about what the consequences will be if the house driving rules are broken, who will pay the fine if your child gets a ticket and so on. When your child knows clearly how the rules work beforehand, there will be less pushback when a consequence needs to be administered or when they’re handed the bill for the increased insurance premiums due to getting a speeding ticket.

Other Driving and Vehicle Ownership Suggestions

There are other responsibilities that go along with driving besides the financial ones. For instance, one of our house rules is that we don’t push our kids to get their license right at the legal age of sixteen, instead allowing them to determine when they’re emotionally ready for the responsibility. It’s important to teach your children these rules as well:

  • Never talk, text or browse on your phone will driving. Pull over in a safe place if you have to make a call or text
  • Obey all traffic and driving laws at all times (this will be easier for kids if they see their parents doing the same)
  • The better you take care of your car, the less it will cost you
  • Make sure to insist that those who ride in your car wear seat belts at all times and stay calm while on the road so that they don’t distract you as you drive
  • Always be attentive, cautious and defensive when you drive, watching out for other drivers who may be distracted or aggressive
  • Avoid confrontations with other drivers by being polite on the road and heading to the nearest police station if there’s trouble
  • For tips on what to do if your vehicle breaks down on the road, check out this AAA Auto Checklist.

Driving and car ownership are big responsibilities, both financially and otherwise. The more you can teach your kids ahead of time on how to be prepared for those responsibilities, the better they’ll be able to handle all of the tenets of driving.

How about you all? What other suggestions do you have for teaching your kids about driving responsibilities?

Share your experiences by commenting below!

***Photo courtesy

You Don’t Know What You Don’t Know – A First-Hand Account of the State of Personal Finance Education

Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!

The following is a guest post by Eva Baker of, who is (in my opinion) a very wise high-school student for getting started early learning about personal finance. I’m very excited to have her guest posting on my site today. I hope you’ll join me in welcoming her as well!

Personal finance is in a shambles in America.  On the news and in daily conversation, you hear people talking about credit card debt, student loan debt, and how difficult it is to save any money in this economy.  Over the last few years, many of my friends have have had a parent lose their job, I know families that have lost their homes to foreclosure, and teens are having a more and more difficult time finding a good part time job.

One might think that these terrible circumstances would lead to an urgent move on the part of parents and schools to teach their children, particularly high school students, more about personal finance.  But, you would be very wrong.  Few states even offer personal finance classes and even fewer require such a class for graduation.

In 2011 Charles Schwab released a study called, “TEENS & MONEY SURVEY FINDINGS: Insights Into Money Attitudes, Behaviors, and Expectations of 16- To 18- Year-Olds.”  What the study shows is very interesting and is at times, quite entertaining.  It reveals that 93% of teens say that their family has been directly affected by the recession and that 75% of them have had a conversation about their family’s financial situation in the past year.  73% of those teens believe that it is important to have emergency savings in case a family falls on hard times.  What was most poignant about the study to me is that fully 86% of teens say that they are interested in learning about money management in a class instead of making financial mistakes in the real world.  Unfortunately for them, only 14 states currently offer such a class (if you’re interested in reading up on which states offer personal finance and economics education classes, click here and go to page 8). 

The entertaining part of the study?  Well, most teens think that we are going to earn an average salary of $150,000 a year.  (Of course I am, duh…)  We also consider ourselves to be ‘financially savvy’, but hardly any of us teens even know what a 401(k)/Roth IRA is, how income taxes work, or whether or not using a check cashing service is a good idea.  Those things are kinda funny, and at the same time, not so much.  A check cashing service?  Now that isn’t funny at all.  And don’t even get me started on paycheck advance places.  Someone should tell teens to stay far, far away.

In an article for US News and World Report titled, “Why Most High Schoolers Don’t Know How to Manage Their Money,” we find out why many teens don’t have the answers to their questions.  Apparently there is ‘discomfort among teachers and parents’ and neither group feels qualified to teach teens the basics of personal finance.  The article quotes a person named Morrison of the Council for Economic Education saying, “To say it’s a parent’s responsibility seems unfair—unfair to the parents and unfair to the kids. You can’t ask people to be responsible for teaching something if they haven’t received the education themselves.”   Really?  To be honest that just makes me mad.  So, if my teachers don’t feel comfortable and neither do my parents – just where am I supposed to learn anything about managing money?  (I have all sorts of snarky things to say here but my mom told me I have to be nice.)

I completely disagree with that kind of thinking.  I believe it is the responsibility of parents and teachers to help us as teens understand the basics of managing our money.  You don’t have to be an expert, have a finance degree, or go through a year of specialized training in order to teach those basics.  Thankfully, this gap in education is not going unnoticed.  The Council for Economic Education reports that fourteen states now require students to take a personal finance class in order to graduate.  According to CEE in the News, local groups such as the Chattanooga Area Chamber of Commerce are also doing their part to help educate students.  They recently sponsored a “Reality Check” event which is an exercise in real life budgeting and money management.  Even though students may not understand everything in the class, they did walk away with a greater appreciation for the cost of living and how education affects earning ability.

Some of my earliest memories about money involve managing that money.  My parents made up three envelopes for me, and I had to choose each week how much of my allowance would go into each envelope.  My choices were savings, spending, and giving.  It really doesn’t get much more simple than that.  Early training has helped me appreciate that money is a tool and I am the one responsible for making purposeful decisions about what I earn or am given.

If you are a parent or educator, I urge you to get involved now with your students so that they can learn these basic principles.  If you have or are struggling yourself, be transparent with your kids and allow them to learn with you so that they don’t make the same financial mistakes you might have made.  If you are a teen, talk to your parents.  Don’t be afraid to tell them that you have questions and want to be educated on all issues of handling your money well.

Teens may not know what we don’t know, but we deserve a fighting chance.

Aside from that, I’ll leave you with the following cartoon I found while writing this post. It was a good reminder for me of the importance of open communication between parents and teens.

***Cartoon displayed with special permission from

How about you all? Did you learn about personal finance in school or from your parents? Or, did you have to teach yourself through trial and error? 

How do you think the personal finance education system in US public schools could be improved? What roadblocks do you see to prevent its implementation?

Share your experiences by commenting below!

About Eva:

Eva Baker is a high school student passionate about preparing for her financial future and helping other teenagers prepare as well. When she isn’t rock climbing at the gym or pinning ideas for her non-existent wedding, she documents her financial journey over at Find her on Facebook and Pinterest as well!