Expert: Talk with your teen about financials ahead of buying a car

Expert: Talk with your teen about financials ahead of buying a car
Louisville Financial Advisor Mark Lamkin of Lamkin Wealth Management said retirees and job seekers should not panic as the coronavirus outbreak impacts the stock market. (Source: Colin Watts)

RICHMOND, Va. (WWBT) - Buying your first car is a huge milestone, but it’s also one that can come with some big lessons.

Buying a car can mean independence and it can certainly teach responsibility, but don’t miss this opportunity to also teach your teen about finances and a host of accompanying lessons that will serve your child for a lifetime.

“I would have a conversation at 14 and 15 years old - before they even turn 16 - about what the expectations are when it comes to buying a car,” said Virginia Credit Union financial coach Cherry Dale.

What this looks like will vary from family-to-family. Some parents can buy a car for a child, some cannot. But the value of having these lessons is the same.

“If the parents are going to purchase a car for them it’s really important for them to understand what the cost of that was and what the value of it is,” said Dale. “And then also understand that it’s not just the car itself, but there are things and other expenses that come along with it. Obviously, like maintenance and gas and car tax.”

Dale says you’d be surprised how many students don’t know you have to pay taxes on cars. Also, this is a great time to talk about saving, debt and interest, monthly payment and defaults.

“So, understanding the full picture, and if indeed they’re going to buy their own car, like I did when I was in high school,” said Dale. “You can create goals around that and start looking at whether it’s $3,000 and how long is it going to take you to save $3,000? What do you need to do to be able to get $,3000 by the time you’re 16-and-a-half, let’s say, and really map it out for them.”

All these conversations now will help your child make a smart and affordable car purchase. But hopefully, these conversations and lessons will also translate to bigger purchases, like houses, down the road.

To start the conversation, maybe just start looking at cars with your teen, and teach him or her to research safety ratings and compare cars, then dive into the finances.

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