Do you remember the day you received your driver’s license? I remember going down to the Secretary of State’s office on my 16th birthday to get my license. It was the best birthday present ever. Now, my husband and I have a teen who is almost ready to be an independent driver. As a result, we are currently determining what should teen drivers contribute to the expense of a vehicle? If you ask this question to other parents, you’ll find answers just as varied as the parents themselves.
Avoid Burdening Them Too Much
Teenagers should learn that financial responsibility is the flip side of increasing independence. Most of us don’t want spoiled, entitled teens, and asking them to be at least partly responsible for some of a vehicle’s expense that they use is fair. However, I’m of the mindset that we shouldn’t burden teens in high school too much.
When I was 16, I inherited my dad’s fixer-upper El Camino. I was responsible for gas and insurance. That meant I had to have a job to have the vehicle, and I needed the car to have a job. When I had been driving for six months, my mom bought me a used Ford Escort in better shape than the El Camino. I made payments to her for the car and was also responsible for all of the maintenance and upkeep as well as gas, insurance, and registration. With this purchase, I was locked into having a job throughout the rest of high school to afford the car. That affected my grades.
I’ve decided to handle things differently with my kids.
What Should Teen Drivers Contribute to the Expense of a Vehicle?
Ultimately, what you choose is based on your beliefs and values. However, here are some popular options.
Pay All Expenses & Tie Car Usage to Behavior
One option, especially if you don’t want to give your vehicle to, or buy a vehicle for, your teen is to not have the teen pay anything. (This is also a good option if your teen doesn’t have time to work a part-time job.)
Using this approach, the vehicle is yours, and you’re simply allowing the teen to borrow it. However, you clearly state that the teen can lose the right to use the vehicle if he doesn’t maintain his good grades or if he has an attitude or does not keep up on his chores.
Pay for Gas
Some parents have their teens pay for gas only. If your child only works during the summer or does not have a job and does chores at home for money, paying for gas is a good option since she doesn’t earn a lot of money. If she’s financially savvy, she’ll soon learn to drive only when necessary and to combine errands so she doesn’t spend too much on gas.
Pay a Percentage of Their Income
Another option is to have your teen pay a percentage of their income to help pay for the car’s expense. If your child makes $100 a week at his job, maybe he pays 15% of his income, $15 in this case, per week, for the privilege of using the vehicle.
The Child Pays for Unusual Expenses
Regardless if you have the teen pay for gas or a percentage of their income or nothing at all, many parents have their children pay for unusual expenses.
For instance, if your child gets a speeding ticket, he is responsible for both the ticket and the amount that the insurance increases because of the ticket.
Or, if he has a car accident that is clearly his fault, he pays for the car repairs or at least a portion of the repairs. You may also require him to pay the deductible for the car repairs.
Why They Shouldn’t Be Responsible for Maintenance
Some parents want their children to be responsible for the car’s maintenance and upkeep, but I would argue against that. Car repairs nowadays can be expensive. Some teens will avoid routine maintenance like oil changes and regular tune-ups because they’re too costly. That’s unfortunate because routine maintenance lowers the cost of the car’s upkeep. Plus, many repairs are cheaper if they’re made as soon as the driver recognizes a problem.
That second car my mom bought for me? The Ford Escort? We bought it from a college student who we didn’t realize had not maintained it because he couldn’t afford to. Even though my mom bought the car with only 40,000 miles on it, it lasted me less than a year because the former owner never added oil to the vehicle or maintained it.
When your teen is driving, you want them to be safe, and you also want to maintain the quality of the vehicle. That’s why my husband and I plan to pay for the maintenance and repairs while our kids are in high school.
Save the Money for Them
If you can afford the vehicle and you’re having your child contribute only to learn financial responsibility, you have another option to consider. Some parents in this situation take the money that they require the teen to contribute for use of the car and save that money. They may put it in a Roth IRA for the child, which is only possible if your teen has a job. Or, they secretly put the money in an account that the child can use to buy a car when they move out or to use to fund the expenses they have when they move out.
Saving the money for the child (without telling her) is a good option because you’re teaching financial responsibility, but you’re also helping her in the future with her own money.
Having a car or access to a car as a teen is a privilege, not a right. Determining what should teen drivers contribute to the expense of a vehicle is a personal choice. We will most likely have our teen contribute the price of gas, and we’ll cover the rest until he’s older and has a part-time job.
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in Arizona where she dislikes the summer heat but loves the natural beauty of the area.