preparing for a teen driver

How to Financially Prepare for a Teen Driver

How to Financially Prepare for a Teen Driver

As of next month, we will have a new teen driver in our household. For most 16-year-olds, getting their driver’s license is an important rite of passage. However, it also brings a whole new set of concerns for parents and guardians. In addition to all the safety concerns of having a teen driver, there are also considerable financial ones as well. Before letting your child get behind the wheel, it is important that they are prepared for both the safety and financial responsibilities that come with driving.

Insurance Costs for a Teen Driver

It makes sense that adding a younger driver to your insurance plan will increase rates. Unfortunately, many adults do not fully comprehend just how much of an impact it will have on their wallets. According to recent data, insurance rates increase approximately 130-140% when you put a teen driver on your policy. While you may consider separate policies to avoid raising your premiums, it is still cheaper to keep your child on the family’s plan.

The good news is that there are several ways to save money and garner discounts for teen drivers. For example, many insurance providers offer discounts to teens who complete a Driver’s Ed course or maintain good grades. You should also carefully consider what kind of car your child will drive if they plan to have their own vehicle. Although he or she may have an eye on newer and sportier models, they also come with higher insurance premiums as well.

Covering the cost of insurance is an important aspect of car ownership. So my family has always included new drivers in this discussion and expected them to contribute to the monthly costs. Not only does it help teens understand the financial obligations, but also the increased responsibility that is being entrusted to them. In my family, taking over the insurance payments signified that the new driver was mature enough to accept the burden of responsibility as well. Because as my dad always reminded me, driving is a privilege, not a right.

Preparing Your Teen with Driver’s Ed

Another considerable expense is the Driver’s Ed course. While the cost varies from state to state, it typically ranges between $200-$800. Here in Nebraska, we are looking at a total cost of about $400. Although it is not required, it is still a wise investment for the insurance discount alone. However, there are also several other advantages for both parents and new drivers.

Sometimes parents and family members are not the most effective teachers. While you may be very knowledgeable, hearing the information from an objective outsider may have more of an impact. When you sign up for these courses, your teen driver will learn all the rules and hazards of the road in addition to getting driving experience from a professional instructor. Not only will Driver’s Ed save you money on insurance, but it will also teach your teen how to avoid costly accidents.

Choose the Best Car for a Teen Driver

If your child wants their own vehicle, you must discuss who will be paying for the car. Buying a car is an important financial lesson for any young adult. It also provides an opportunity to show them how to budget and determine what they can afford.

Although every teenager would love a new set of wheels, it is not always practical. It may be better to share the family car at first, especially if they cannot afford their own. However, there are plenty of reliable used vehicles available, if you know what to look for. Of course, price is not the only factor. You should look for a safe, modern car with a clean vehicle history. Choosing a fuel efficient model will also save your teen gas money. When buying a vehicle, it is important to find something that fits your safety and financial needs.

Car Maintenance and Repair

The financial burden of a car goes far beyond the initial purchase. Another important responsibility is the maintenance and upkeep of the vehicle. Before they can even drive it, you must pay for tags, title, licensing of the car. Then, you have the monthly cost of fuel, inspections, oil changes, tires, and any other repairs and maintenance costs to consider.

Preparing for a new driver has been the perfect time for our teen to establish an emergency fund. Although any financial expert will advise you to keep a rainy day fund, she earmarked this money specifically for driving purposes. It could be used to cover any unexpected expenses that come up, such as damage or repairs not covered by the insurance policy. The fact that she is planning ahead shows that she is ready to accept the responsibilities that come with the freedom of driving.

Reduce Costs with Safe Driving

The best way to prepare for a teen driver and reduce the associated costs is by teaching them how to be safe. Studies show that 16 and 17-year-old drivers are at the greatest risk for a serious accident. This is largely due to a lack of experience and the inability to anticipate dangers while driving. Driver’s Ed is a great introduction. But, continued practice is the best way to avoid accidents and minimize unnecessary vehicular expenses.

Even after your teen gets their license, be sure to reinforce the fundamentals of driving. It is also crucial to discuss the safety features of the car and the importance of wearing a seatbelt. Ensuring that they regularly check the condition of the car and fluid levels could prevent a serious or fatal collision.

In addition to state laws, you should establish household rules and enforce consequences if they are broken. It is also a good idea to prepare them for higher insurance premiums if they have any accidents or tickets.

Turning over the keys to a teen driver is a huge bode of confidence. Not only does it show that you trust them behind the wheel, but that you also believe your child is ready for the financial responsibility that goes along with it.

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