Should Your Teenager Be Paying for Their Own Car Insurance?

Should your kids be paying for their own car insurance?

We’ve had this burning question pop up in a session where a client faced a daunting increase in her car insurance bill – from $755 to a staggering $1,400 per month!

We realized that sometimes parents don’t even question whether they should be paying their child’s car insurance. So, let’s have a conversation.

TL;DR: Here’s what we think: Yes, your kids should definitely be chipping in for their car insurance. It’s a great way for them to learn about responsibility, money management, and the value of independence. 🚗💪🏼💰

Why?

1. It’s about being responsible: Alongside the thrill of driving comes the reality of bills, and car insurance is a big one. It’s not just about paying up; it’s about understanding the value of what they’re using. When your kids contribute to their insurance, they’re learning that driving is a privilege that comes with its own costs.
2. Learning to adult: Paying their own insurance is like a mini crash course in adulting. It’s not just about the money; it’s about planning, saving, and understanding how regular expenses work. This is an essential skill, especially when they head off to college or start living on their own.
3. Cutting the cord: We’ve seen too many parents still covering their adult children’s expenses, which can delay their financial independence. By having your kids take on their own insurance costs, you’re helping them stand on their own two feet. It’s a gentle push towards self-reliance.
4. Balancing act: Juggling school, a part-time job, and other responsibilities is tough, but it’s real life. Learning to balance these as a teen can set them up for success in adulthood. Plus, it teaches them about prioritizing and managing their time effectively.
5. Help in other ways: Instead of simply paying their bills, guide them in managing their finances. Show them how to budget, save, and even invest. This way, you’re not just giving them money; you’re giving them skills that last a lifetime. And if you still want to help financially, consider matching what they save or pay as a way to encourage and reward their efforts (and you might not tell them / give this money until they’re older!).

So, what should you do? Talk to your kids about the costs of driving, including insurance. Maybe they can get a part-time job to help cover it. It’s about finding a good balance – you don’t want to overwhelm them, but you also don’t want to do everything for them. We usually have our kiddos work as much as they can during the summer to save up for what they want during the year.

Here’s your homework:

1. Have a chat with your kids: Explain the costs that come with driving, including insurance.
2. Check out your insurance options: See if there’s a cheaper plan out there. Maybe talk to an insurance broker like our friend Michelle.
3. Teach them about budgeting: Use our budget template to show them how to manage their money.
4. Set some goals: Help them figure out how to save for their insurance and other expenses.

Our main goal as parents is to get our kids ready for the real world, and knowing how to handle money is a big part of that.

We’re curious about your thoughts and experiences. Got any stories or tips to share? Drop them in the comments and let’s keep this conversation going. Stay strong and smart, ladies!