Dave Ramsey: You Shouldn’t Buy a New Car for Your Kids, Here’s Why
Written by
Cindy Lamothe
Edited by
Nicholas Morine
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Parents generally take great pride in buying their child their first car — whether it’s to celebrate a graduation or as a way to welcome them into adulthood, a first car holds a great deal of meaning. But according to finance expert Dave Ramsey, the best thing you can do for your kids is have them buy their own car.
“When you buy new cars for teenagers, you’re setting them up for a life of ridiculous expectations,” he says. “Think about their future.”
“If you have enough cash set aside, you and your child could agree on a matching plan to help buy the car. Whatever your child saves, you’ll match.”
Teaching your kid financial responsibility is a key factor in setting them up for success — here are some other tips from Ramsey to give your kids a head start to win with money.
1. Let them manage their own bank account
As your child becomes a teen, helping them establish a basic bank account is a great step toward building good financial literacy, and equips them with the needed skills to handle more substantial accounts as they grow older. It also promotes a strong sense of self-accountability — a debit card, for example, allows them to manage their money, and learn to account for their purchases.
2. Teach them the value of managing a budget
“Now is the time to get your teen in the habit of budgeting their income — no matter how small It is,” Ramsey explained on his website. “They should learn the importance of making a plan for their money while they’re still under your roof.”
You can help your teen gain confidence by getting them started on a budgeting app like Every Dollar where they can create a monthly plan and track their expenses. Since your teen is likely glued to their phone for a better part of their day — budgeting apps can be an easy way to teach them the importance of planning and prioritizing their spending.
3. Help them find ways to make their own money
Another way to assist your kid in buying their first car is by helping them figure out how to make money in the first place. “These days, it’s easier than ever for your teen to start up their own business and turn a profit,” said Ramsey.
You can help them find a part time or seasonal job, brainstorm ideas for helping them become an entrepreneur or research gigs together online. The point is setting them up with a mindset where they can take the driver’s seat — not just on the open road — but in being financially savvy for life.
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