Can your car budget handle a teen driver?

Teen driver
  • Troubled economy may make it more difficult to afford a teen driver.
  • Children who drive can learn important financial lessons.
  • Setting clear ground rules is the key to success.

The troubled economy may have forced some parents to rethink the notion of a car as a mandatory teen rite of passage. Making a car available for a teen driver can have big consequences on a family's budget and car insurance rates -- not to mention the child's safety and financial mindset.

"I really think we're shifting to a point where we really don't quite have that luxury in as many households as we may have had in the past," says Judy Lawrence, author of "The Budget Kit: The Common Cents Money Management Workbook" and publisher of

AAA estimates that it costs $6,496 in interest expenses, gas, car insurance, maintenance and other expenses to keep the average small sedan running for a year.

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The insurance costs are based on those for a 47-year-old male. Such costs would be significantly higher for a teen driver.

"Parents pay higher car insurance rates for teens because (the teens are) more likely to get into crashes," says Russ Rader, a spokesman for the Insurance Institute for Highway Safety in Arlington, Va.

And the aforementioned numbers don't even include the cost of actually buying the car.

However, managed correctly, a car be "a financial school on wheels" that teaches teens valuable money lessons, says Joline Godfrey, author of "Raising Financially Fit Kids" and CEO and founder of Independent Means, a financial education firm based in Santa Barbara, Calif.

"This is a great opportunity to teach kids about a balance sheet, about hidden costs, about maintenance and sustainability -- all those big ideas," Godfrey says. "Those families that approach this as a training vehicle rather than just a vehicle are going to have a much better experience."

Safety and maturity

Whether your child can drive safely and meet the financial responsibilities of car ownership usually comes down to one thing: maturity, Godfrey says.

Just because a child has reached the proper age to legally drive doesn't mean he or she is ready for the substantial safety and financial responsibilities that come with driving a car, Godfrey says.


"Just because they can get a car at a certain point doesn't mean necessarily it's a good idea," she says. "Helping kids develop the ability to wait -- to earn things -- is a long-term quality that is going to pay off down the road."

If you decide to take the plunge, it's important to consider the message you want to send your teen about responsibility, money management and safety, Godfrey says.

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