Teaching Your Teen about the Financial Responsibility of Driving
Driving and having a vehicle is a huge responsibility. If you're teaching your teen how to drive, in addition to teaching them how to make safe decisions on the road, you should also teach about the financial responsibility of driving. The following tips will help teens and parents prepare for the added cost of driving.
Help Create a Simple Budget Early On. There are a lot of good apps that help you track your budget, and since your teen is probably glued to their phone anyway, this is a natural, convenient budget tracking system they’ll actually use. Start with income, whether that’s from a job or from an allowance, or parental contribution toward driving expenses. Add in the expenses that come with driving: insurance, fuel, repairs, maintenance, emissions inspection, toll fees, parking fees, etc. This is also the perfect time to discuss who is going to contribute to what driving expenses and develop a plan.
Provide the Responsibility of a Bank Account. By the time your teen is preparing to drive, a simple bank account can help take their financial responsibility to the next level. Many banks have joint bank accounts just for teens that allow a parent or guardian to help guide them through their first banking and debit card experience. This is a great way to provide your teen with the financial tools they’ll need for financial responsibility and to help them budget.
Discuss Insurance Coverage. Insurance coverage can be a confusing topic to understand for a lot of adults and much more so for teen drivers. Your insurance provider can provide you with your current insurance coverage breakdowns. Important aspects to discuss with your new driver are liability coverage, bodily injury coverage, property damage coverage, collision coverage, uninsured motorist coverage, medical expense coverage, insurance premiums, and deductibles.
Discuss Insurance Premiums. Insurance Premiums are more expensive for new drivers than for adults with a solid driving record. Explain the costs of insurance and how their driving will directly affect the cost of their insurance. Some insurance providers offer credits for teen drivers including:
Driver’s Training Discount for completion of a driver’s training course. Safe Driving Coach provides a certification of completion after six hours of behind the wheel training.
Good Student Discount for students enrolled who have earned good grades. You may have to provide a recent report card.
Away At School Discount for students enrolled in, and living near, a school at least 100 miles away from home.
Consider Roadside Assistance. If your teen has a flat tire or their vehicle breaks down, the cost of roadside assistance, if it’s not covered through their insurance or through a roadside assistance membership program, can cost several hundred dollars. As a parent, adding this type of coverage can give you peace of mind and can save money in the long run. Discuss the costs and benefits of this type of service with your new driver and fully explain the services offered so if they need to use it in the future, they will know how.
Every parent wants their teen driver to be a prepared, responsible, safe driver. If you are, or will be soon, teaching your teen the rules of the road, download the Free 5 tips for most common driving mistakes to make sure you are prepared for your teen's next driving lesson.