While it is true that number of teen drivers have decreased since the Great Recession, there are still plenty of 16-year olds eager to become newly minted drivers. If you have a teen in your home who is ready to get behind the wheel, it is going to have an impact on the overall family budget, but that is not necessarily a bad thing. Giving your teen the opportunity to drive is a great way to teach them lessons in responsibility and money management. Here are several things you need to consider when budgeting for a teen drive.
Define the Ground Rules and Consequences- Driving is a huge responsibility and no teen should take it lightly. Make your rules and expectations crystal clear and lay out what the consequences will be for breaking them. Consider drafting a contact for your teen to sigh that lays out the behavior you expect.
Share the Expenses- Teens who really want to drive should also be willing to work for it. Take into account all the costs of driving including insurance, buying gas, vehicle maintenance and paying for damage or repairs not covered by the cost of insurance. Decide together what your teen can realistically afford to pay for and hold them to it. If they miss a payment or fall behind, revoke their driving privileges until they pay up.
Look for Insurance Discounts- Adding a teen to your insurance will likely be costly, but there are ways to soften the blow. Many insurance companies will offer discounts for teen drivers who have completed formal driver’s ed training. Some will also offer good student discounts as much as 15%. Discounts and amounts will vary by state, so be sure to shop around and compare before you commit.
Cap the Mileage- Consider putting a mileage cap on how much your teen is allowed to drive each month. It will help cut down on fuel costs, vehicle wear and tear and also help them make decisions about when it is worth it to drive and when it makes more sense to find a ride, walk or take public transportation.
Take Advantage of Free Labor- If your teen wants to drive buy isn’t working a paying job, let them earn driving privileges by doing work around the house. Things like yard work, cleaning the garage and of course, washing the car, are all good ways to keep your teen busy and show them that driving isn’t just given; they have to work for it. Plus, it will buy you some free time and save you from paying someone else to do the job.