Kids, Cars and Money Management

One of the rites of passage in our society is getting a driver’s license. Kids want the independence and control that comes with getting behind the wheel. However, when it comes to money management, how can you help your kids understand the real cost of having wheels?

When you review your 2010 expenses, take a good look at your automobile costs. How much does it cost per mile to operate your vehicles? When we do our summary I’m always surprised at how variable these costs can be from year to year.

Here are some interesting things you track and analyze about your automobile costs, along with some suggestions on how to track these costs.

Mileage Record the starting and ending odometer readings of each car. With this number you can actually do cost per mile calculations.

We use our summary to compare our cost per mile to the amount allowed by the government for tax purposes. The federal allowance includes depreciation but this is not money you ever see. Depreciation does reduce the resale price of your vehicle but it not money that comes out of your pocket.

Insurance Record the amount per vehicle.

Gasoline We keep a log in each car and record mileage, gallons and cost at each fill up. If that sounds like too much recordkeeping, then simply keep receipts and code them for each car. At the end of the year we can see how much gas each car used and figures miles per gallon as well.

Maintenance Store receipts from repairs and maintenance in a folder, coding them by vehicle.

Payments Keep track of monthly payments for automobile loans. We use this to determine the cost per mile both with and without loan payments.

With this information you can have a meeting with your kids and explain how much it costs to run your family vehicles. The cost per mile is the most instructive number. You can help your kids understand that an extra trip to the mall cost x amount of dollars.

We once used this information in a negotiation with our daughter who wanted to take a part-time job at a mall 20 miles away. She had our permission to use our car if she reimbursed us for the cost per mile to drive to work.

When she did the calculations she realized that she couldn’t earn enough money to pay the automobile costs and have what she needed for her share of college expenses. So she worked in town. It was an illuminating experience for her that served her well when she later got her own car.

In all the years of tracking our expenses, we found that automobile expenses are difficult to budget for, for several reasons. Some years include loan payments. Other years include regular big-ticket maintenance, such as new tires.

Then there are the unexpected repairs. All car repairs are annoying, unexpected and always mess up monthly budgeting no matter when they happen. Our cars traditionally liked to break down in January, just after holiday spending.

Automobile costs are something your kids need to understand. You can make it even more instructive by assigning them the responsibility of keeping track of the expenses themselves

Even before they are old enough to drive, your kids should know that every mile has a cost. If your teenager wants to own a car, then they should “own” all the expenses as well. Learning how much it really costs to have and maintain an automobile is a good lesson that you can provide at no cost to you.

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