Helping Your Child Buy Their First Car

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Written By Colin Graves

For any teenager, buying a first car is a big deal.  Not only are there a lot of important decisions to make, it’s often the first major purchase of their young life.

In this post, we’ll take a look at some of the factors your child needs to consider prior to buying a first car, and how you as their parent can help guide them through the process.

Are They Being Honest About Their Needs?

Let’s face it.  A car will almost always be a money pit.  Whether new or used, owning any four-wheeled vehicle will put a serious dent into your budget.

We’ll get into this more later on, but considering how expensive owning a car can be, it’s important for you and your teen to discuss whether or not it’s a purchase they may be better off deferring.

Delaying the purchase for a year or two might allow your child to save more money, thus strengthening their financial position as they get closer to adulthood.

Instead of rushing into buying a car, perhaps they could share a family vehicle for a period of time, and help out by paying for the gas that they use.

If you live within walking distance of school or work, or have transit readily available, this might be the best decision.

Do They Understand The Operating Costs?

It’s important to make sure your child fully understands the expense of not only buying a car, but of owning it as well.

Before my son bought his Mazda last year, I made sure to explain all of the costs he would encounter on a regular basis.  But although we had the conversation, it was still a huge eye opener for him.

After all, his mother and I expected him to cover all of the maintenance costs; gas, insurance, and any required repairs.

The thing is, when you’re working a part-time job only slightly above minimum wage, those costs add up quick.

Fully understanding the operating costs will help your son or daughter make a more informed decision about the type of vehicle they should be shopping for.

How Much Should You Spend On A First Car?

I have a rule of thumb when it comes to how much you should spend on a car, which is that the price shouldn’t exceed 10-12% of your gross annual income.

This approach makes it much easier to save enough money to buy your car with cash, and avoid going into debt.  Trust me, I’ve learned from experience.

And while that’s only a guideline, the formula seems to work at all income levels.

For a first car however, it’s tough to use an income-based calculation, for good reason.  Your teen’s income is likely pretty minimal.  In other words, 10% of let’s say…$7500, won’t buy them a whole lot.

How much your child should spend on a first car really depends on their wants and needs. In most cases, that need is for basic transportation.  In this day and age, you can find a decent used car for well under $5000.

My son’s car is as basic as it gets, but he only spent $1800.  Still, it’s given him almost worry-free driving for close to a year.  Anything else will be considered a bonus.

If your child is willing to spend more money in hopes that their car will last for a few years, they should set their budget closer to the $5000 I mentioned.

Helping Your Teen With The Car Buying Process

It will be important for you to help your child as they go through the steps to buy a car.

They will likely begin their search for a vehicle online, so it’s important to let them know what to look out for.  As an example, they should understand the differences between buying from a car dealer and buying privately.

If you’re shopping at a car dealership, make sure you prepare them for what to expect going in. After all, there’s a good chance they’ll already be in love with the car they decide to negotiate on.

It’s important to be willing to walk away from a potential purchase if the right agreement can’t be settled upon.

There are many other facets of the car shopping experience that your teen will need your help with;  determining the right make and model, mileage vs. age of vehicle, inspections, CarFax reports, etc.

Money Lessons From Owning A First Car

In the year since my son bought his first car, it’s clear that the experience has taught him some valuable lessons about money.

It’s not the most cost effective way of getting a financial education, mind you, but it’s real life, something he will experience many times in the future.

In hindsight, here are just a few of the important lessons he’s learned:

  • He’s learning how to budget.
  • He’s learned the importance of tracking his spending.
  • He has a greater appreciation for the value of money.
  • He’s experienced pride of ownership.

Which brings us to an interesting question….how much should parents contribute to their child’s first car?

How Much Should Parents Contribute?

I get it.  It’s your kid.  You love them. You want the best for them.

But how much should you contribute financially towards their first car purchase?

I’ve asked a lot of parents about this topic, and it always amazes me how many bought their child’s first car for them outright, and/or cover the ongoing expenses.

If this is what you decide, more power to you.

But I would suggest that in doing so, your child is missing out on an opportunity to learn many of the valuable lessons I highlighted above.

Instead of buying them a car outright, how about meeting somewhere in the middle.  That’s the approach my wife and I took.

As I mentioned before, our son only spent $1800 on his car.  But after saving his first $1000, we let him know that we would give him $500 towards the purchase when he was ready to buy.

That meant a lot to him, and gave him some extra motivation to save the remaining funds he needed.

For us, it was a way of rewarding his good savings habits, while letting him know we were proud of him.

What Is a Good First Car For Teens?

There are a ton of resources online that will help you and your child find the best car for their needs.

I will say this however.  When buying a used car on a budget,  reliability should be a top priority.

My recommendation would be to check out Consumer Reports to determine which used cars have the best reliability record.

From personal experience, I’m partial to Toyotas, but there are a number of car manufacturers making great, reliable cars, and Consumer Reports will have all of that data available.


I’d love to know:  What advice are you giving your child about their first car purchase? Please share your experience in the comments below.  




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6 thoughts on “Helping Your Child Buy Their First Car”

  1. They do learn fast once they start buying gas and paying expenses, don’t they! Our first son decided he really wanted an older (1999) Jeep Cherokee when he was 15 (school permit). He can’t say we didn’t warn him that the gas would cost him! After a year of owning it, he ended up getting a smaller, more fuel efficient car. He’s now off on his own (Air Force) so we’ll see if he decides to keep this one. We’ve had the talk – you know, the one telling him he’ll be so much further ahead if he just keeps the older car and doesn’t finance a newer one. Time will tell! 🙂

    • Our son’s car is a ’99 as well. Super old, but the insurance is cheap due to the age, which is nice. I hope everything is going well for your son in the Air Force, It must be quite an adventure. Is he able to come home to visit often?

  2. Thanks, MMM! We’ve talked to him twice briefly – and it sounds like it’s going pretty good. We get to see him soon when he graduates from basic training – and I’m counting down the days. 🙂 He gets 30 days of leave a year, but he can’t come home until he’s done with tech school – so probably late winter or early spring.

  3. Oh, that’s good to hear. As excited as I’m sure you are for him, it must be a tough adjustment having your kid move away from home for the first time. Hasn’t happened for us yet, but that time is coming.

  4. The thought of my son behind the wheel of a car terrorizes me. The thought that I am only 7 years away from this terrorizes me further! But in all seriousness, I think your approach is the right one. Not much need for a car where we live, but if my kids go away to school, that could change. I will say that I had more disposable cash in college than I have ever had in my life before or since. I worked the whole time and was dripping in cash. My 18 year old self bought things at price tags that make my 43 year old self blush. Ah if only I could go back and tell that girl to put some of that cash in the bank! I probably could have easily saved for a car if I had needed one back then. Hopefully I will be able to do a better job convincing my kids to be smarter than I was. My dad tried so hard and failed with me back then. But they say things skip a generation!

    • I think that the day a teenager learns to drive, is the day their parents feel their sense of control begin to slip away, ever so slowly. My son’s been driving for over two years now, and I still get a little bit nervous from time to time. Our daughter is next, she begins driver’s ed in September. My little girl…it’s tough to wrap my head around the whole idea. That said, I let her go driving down some country roads last month in our car, which has a standard transmission. Didn’t stall it once. She’s a natural. 🙂


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