How to Save Money on a Car for Teens

For teens a car is probably one of the largest expenses in their life. The massive, initial price of buying a car, in addition to the maintenance, gas, and insurance, are all budget-breakers for teenagers working a part time job or no job at all. In this guide I want to address all of the major expenses involved in owning a car, and how to minimize them efficiently.

Car expenses can be broken down into five major categories:

1. Price of the car
2. Insurance
3. Gas
4. Maintenance
5. Depreciation

First category: Car price

Car price is a difficult barrier for owning your own car. Many teens have little to no savings, because they have no way to drive to a job. for ways to make money as a teen check out my previous post: https://thefiscalteen.finance.blog/2019/11/24/making-money-as-a-teen-is-easier-than-you-think/ Saving for a car is difficult, but there are many ways to fast track your savings. Here are some options:

• Talk to your parents about saving for a car. While I personally think its bad for parents to buy their children a car, talking to your parents and setting up a “savings matching plan” where your parents match how much you save could be beneficial. For example: if you saved $200 per month from various jobs, your parents would match that and give you an additional $200, bringing your savings total to $400 per month. Another option would would be to ask for money as birthday and Christmas presents instead of the usual gifts.
• Although talking to your parents can be beneficial, it only gets you so far. The other largest way to minimize the price of a car is to shop around and negotiate. there are many options to find cars at a reasonable price. CarGurus.com is one of my favorites, but Cars.com and other sites work well too. Don’t be afraid to drive a little ways away to save some money on the price either. Negotiating is another large part of bringing the price down. You never know unless you ask/talk about it with the sales person or dealership, but trying to negotiate can never hurt.

By limiting the actually price of you car you can keep more of your savings or reduce your loan payment which will drastically help later on.

Second category: Insurance

Insurance will likely be the largest monthly expense behind an actual car payment for teens, especially for males, but insurance cost is dependent on a plethora of factors. here are some of the best ways to keep insurance costs down:

• Consider what type of car you buy. Trucks, “sporty” cars, red colored cars, expensive cars, and turbo or supercharged vehicles will have much higher insurance prices. if you are only buying a car for transportation, then the best type of car to buy is a used car that is 1-6 years old (this will depend on your budget), is not a truck or a “sport” vehicle, gets good gas milage, and is from a reliable brand, but not a luxury brand such as BMW or Mercedes.
• Raise your comprehensive and collision deductibles. By raising the deductible your monthly insurance payment will go down, but I if you are involved in a wreck you will have to pay more out of pocket.
• Get good grades in school (B’s or higher), many insurance companies will lower your rate if you have good grades in school
• Training class discounts. insurance companies typically offer a discount on your monthly rates if you attend a driving training course. these courses typically only cost $100-$200 and will save you much more than that in the first year of the discount. (Your parents might be willing to pay for this, since it helps you become a safer driver)
• “Away” insurance breaks. If you are going to be in a different state or out of the country for a month or more without your car, some companies will reduce your payment drastically since you will not be using your vehicle.
• Enroll in driving “tracking”, these programs will either attach a piece of hardware that the insurance company owns to your steering column or they will make you have an app open on your phone wile you’re driving. The app or hardware will teach your speed, acceleration, braking, turning speed, and a few other factors to determine how safely you drive. if you are deemed a safe driver they will discount your monthly payment.

Third major category: Gas

Gas is another incredibly large expense for owning a car. Personally I own a truck so my gas expenses are usually $100-$140 per month! Here are the factors and best ways to save on gas:

• The absolute largest factor for your monthly gas bill is what type of car you own. Pay close attention to the MPG of any cars you are looking into buying.
• Driving style is the second largest factor. The way you drive also affects how much gas you use considerably. accelerate slower, brake sooner, coast as much as possible, and shift your car into neutral when going down hills to save gas. Also take advantage of your cars gas consumption feature. many new cars will have a way to access a graph or bar scale that actively shows you what milage you are getting.
• Car maintenance. maintaining your car also increases gas mileage. change your oil when it is necessary to do so, clean your air filters frequently and replace them when needed, keep your tires properly inflated (this also reduces tire wear)

Forth major category: Maintenance

• The absolute best way to reduce maintenance costs is to preform routine maintenance. Do not push off or wait to preform necessary maintenance, as this will make it more expense and cause worse problems in the long run. read your cars manual and stay up to date on everything that is necessary.
• Use an independent mechanic or preform some things yourself. The mechanics at the dealership are almost never cheaper and they usually don’t do a good job. Instead go to an 3rd party mechanic. Routine things such as oil changes, air filter replacements, and even brakes jobs can all be done quite easily with a quick tutorial on YouTube, so get your hands dirty and save some money!

Fifth major category: Depreciation

I won’t go into depreciation very much at all because there is little you can do to stop this. Obviously as your car gets older it loses value, the only way to minimize this is to take care of your car and drive safe, try not to scratch or dent your car, and maintain it so there are no mechanical problems.

Hopefully this guide has helped you learn about the many different expenses involved in buying and owning your first car, but also how to minimize those expenses and save money every month.