Financial Tips | Debt Management

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Teens and Car Insurance: Who Should Pay?

Teaching teenagers financial responsibility is vitally important. Good financial lessons at an early age carry over to successful money management when such teenagers become adults. As such, you should educate your teenager about savings, credit, investing, and real estate, to name a few subjects. Doing so will help your teenager avoid common money traps that snare many young adults.

One of the most important financial lessons to teach teenagers is the effort that it takes to earn an honest dollar. As such, if your teenager wants to get a job, you should let him/her to the extent that the same does not interfere with his/her education. Additionally, once your teenager is working, he/she will start to understand that you have to work for things that you want in life. Therefore, if they want to spend there money on something, they will know the effort that is required to obtain the same.

One item that it seems that every teenager wants is a car. As we are all well aware, a car can be a very expensive purchase. Outside of the actual cost of the car, you have to pay for gas, oil changes, insurance, registration, and maintenance. These costs can add up and thus, should you get your teenager a car, he/she should have to pay for some of these expenses. On such expense that a teenager should pay for is insurance.

Having your teenager pay for insurance is good because it will help teach financial responsibility. Additionally, because insurance can be costly for a teenager, he/she will respect the car and thus, take better care of the car that he/she has. Teenagers, like all people, respect things more if they pay for it. Thus, although the cost of the car may be outside of the financial realm of your teenager, the insurance payment is not. As such, your teenager should make this payment.

Insurance can be expensive and as such, if your teenager does not have a job, he/she will not be able to pay for the same. Therefore, making the condition that in order for your teenager to get a car, he/she has to pay the insurance will make your teenager take on the responsibility of getting a job and of maintaining his/her finances in order to pay for the monthly insurance payment.

Teach you teenager financial responsibility by having him/her pay for his/her own car insurance. Doing this will make your teenager respect his/her car more and will help your teenager appreciate the work it takes to earn enough money to pay for such an expense.