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How to Teach Your Kids to Save Up for Their Own Car

When teens reach an age where they can start working, it’s helpful for them to own a car. While many parents may want to help financially with this purchase, they simply can’t. It isn’t in their budgets. However, that doesn’t mean parents can’t help their kids get into a car of their own. Instead of buying their kids a car, they can teach them how to save up for one. Doing so teaches kids important financial skills that they’ll need down the road. Here are four tips for parents to get this process started.

Start Early

It’s really never too early to start teaching kids about money. According to Forbes, kids start understanding the concept of saving and spending as early as three years of age. Additionally, most kids’ money habits are in place by the time they reach seven.

That’s why it’s important to give kids an early education in money management. By the time, they’re ready to buy a car, it may be too late for them to form good financial habits.

Help Them Earn Money

Most kids can babysit or do yard work. When an opportunity arises for them to earn their own money, parents should encourage their kids to take advantage of the opportunity.

Teens can walk around their neighborhoods and ask the neighbors about doing yard work or babysitting. Teens who have a bike can run small errands for neighbors for a fee. Long before they’re ready to talk to the local Hyundai dealer about buying a car, this neighborhood work teaches them how to be resourceful, a trait that will help them down the road.

Teach Them About Saving

Saving is an important part of financial literacy. As an article in The Simple Dollar points out, a time will come when kids start to understand that some items cost more than others. As such, if kids want to buy those items, they’ll have to save up for them. When they’re younger, bigger purchases might include a bike or a video game console. When they’re older, it’ll be a car they save for.

Budgeting

Creating a budget not only helps people allocate their money properly, it also helps them to keep track of recurring payments, like utilities and car insurance. While teens may not pay utilities just yet, they do have to pay for car insurance and car repairs if they buy a car.

This is why it’s important for parents to teach them about budgeting. As they get older and their money needs to go to more places, this early lesson in budgeting for a car and its upkeep will serve them well.

Teens who buy cars with their own money learn valuable money lessons. They learn about saving and budgeting. They also develop a work ethic and an eye for opportunity. While owning a car may be a practical purchase, the skills that a teen develops in the process of buying the car will last a lifetime.

Tim Esterdahl

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