Thursday • September 02 • 2010

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Home » Advice » Teens and Cars - The Ultimate Teachable Moment

Teens and Cars - The Ultimate Teachable Moment

A Resource from Dave Ramsey

Editor's Note: How do you teach your children about money? If you're a youth pastor, does this topic come up in your youth group or in meetings with parents? Join the discussion at facebook.com/ymtoday.

For your teenager to have a well rounded view of money you need to teach them to work, save, spend and give. Paying your child a commission for chores they complete each week creates teachable moments where your teenager will make the emotional connection between work and money. Their view of saving, spending and giving changes when it involves money they earn.

Since you pay your child only if he or she works you need a tracking system. Write down the chores and how much is paid for each one. Some of the chores may be things you would expect them to do anyway – feeding the dog or cleaning their room – but paying for them is what creates those teachable moments.

Around our house if you missed a chore one week, you didn't get paid for it; if you missed it for too long your life was in danger. Some chores should be done with no pay just because you are part of the family, but if they are all done that way there are no teachable moments.

Once the work is done have a payday. Then the money should be divided into three categories: spending, saving and giving. Spending and giving fosters problem solving skills as the goal setting can get really detailed, depending on your teenager.

In our family, saving started to get serious when we announced to our children that we would not be buying cars for our teenagers nor would we allow them to buy a car on credit. My first child started saving for her car when she was ten. By the time she was fourteen she had picked out the kind of car she wanted and was looking at prices.

Since we have been blessed financially, we instituted "401DAVE" for their cars, matching their savings dollar for dollar. Our first daughter saved $4,500 and we matched that amount. She and I shopped for months until we bought a really nice Mustang at below wholesale for $9,000 cash.

The two younger children saw no leeway in the formula, saw we weren't kidding, so they poured on the work and even started looking for ways to make money outside the family.  My second daughter was able save $8,000, so after shopping we found her a really nice $16,000 car.

This is where I learned something: Put a cap on how much you will match. After seeing how the process works my son really got to work. He joked that he had his eye on a Hummer.

In our house the work doesn't stop when the car is paid for. My wife, Sharon, and I don't pay for insurance and tires either. If teens pay their own insurance, they tend to know what the speed limit is and actually stop at stop signs. When teens buy their own tires, they don't turn them over more than needed to roll the car forward.

I personally think it is brain damage to buy a sixteen-year-old a brand new car with everything paid for. Where are they going to get that deal out in the real world? All that does is teach my daughters to look for a Sugar Daddy instead of a committed relationship where both husband and wife are responsible and share goals. It is teaching my son that somewhere out in the world there is some magic fairy dust that coughs up cars. The only magic fairy dust I've found is CASH!

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