Buying your teenager their first car might seem like a proud, memorable milestone. But according to financial expert Dave Ramsey, it’s not the best move if you want to set your kids up for a successful future.
Ramsey believes that buying your kids a car can create “ridiculous expectations” about money that could affect them for the rest of their lives. Rather, he advises letting them purchase a car independently, perhaps with some assistance.
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The best thing to do for your kids is have them buy their own cars.
When you buy new cars for teenagers, you're setting them up for a life of ridiculous expectations. Think about their future.
If you have enough cash set aside, you and your child could agree on a matching plan...
— Dave Ramsey (@DaveRamsey) October 10, 2024
“When you buy new cars for teenagers, you're setting them up for a life of ridiculous expectations,” Ramsey tweeted. In other words, handing over a car might give your teen the impression that big-ticket items are easy to come by. Instead of giving them a car, Ramsey advises giving them the opportunity to work, save and learn what it takes to make a major purchase independently.
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“Think about their future,” Ramsey says. Encouraging your teen to purchase a car independently helps them develop lifelong financial skills. It also motivates them to see the benefits of saving money, working hard and making wise financial decisions.
Now, this doesn’t mean you can't help at all. Ramsey suggests a middle ground: “If you have enough cash, you and your child could agree on a matching plan to help buy the car. Whatever your child saves, you'll match.”
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This method encourages your adolescent to save money while also lending a helpful hand without making things too simple. It lets parents encourage their children while ensuring they contribute fairly.
Encouraging your teenager to buy their own car isn’t just about getting the car. You’re teaching them important money skills. Dave Ramsey says, “Personal finance is 80% behavior and only 20% head knowledge.” When your teen saves for a car, they learn the habits they need to manage money well – which can help them a lot later in life.
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Another essential component of this strategy is assisting teenagers in finding independent income sources. Ramsey points out that today, it’s arguably easier than ever for them to start making money through part-time jobs, freelance gigs or even small entrepreneurial ventures.
In the end, Ramsey stresses that allowing your adolescent or even older child to purchase a car on their own is “a tremendous gift” and a chance for them to learn responsibility, budgeting and the satisfaction of reaching a major objective.
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This article Dave Ramsey Says Buying Cars For Your Teenagers Leads To A Lifetime Of 'Ridiculous Expectations.' Better To Have Them 'Buy Their Own Cars' originally appeared on Benzinga.com
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