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Ask Dave

Splitting The Expenses

Lisa's about to spend some money to buy her son a car ... maybe a little too much for his own good.

QUESTION: Lisa’s son just turned 16. He wants a car, which they will buy. Their son has to pay for half of his insurance. How should they divide up other car expenses? Dave describes, “401 Dave” – how his family handled kids and cars.

ANSWER: You can do whatever you want to do. The way my family did it, the kids paid for tires and insurance. That would keep them from rolling the tires over more than is enough to make the car go forward. If they buy their own tires, they tend to drive different. It’s also good to have them pay their own insurance if they can.

We did a plan jokingly called 401 DAVE. We didn’t buy them a car, but we matched their savings to buy one. If they saved $2,000, I’d give them $2,000. It was their car and they had a lot of blood, sweat and tears into it. If you’re worried about how safe the car is, remember than just putting metal around them can be safe … it doesn’t have to be a 1-year-old car with side airbags. It’s good for a 16-year-old to drive something a little bit clunky because they are going to tear it up. I wouldn’t use safety as a rationalization to put this kid in an expensive car.

I think your son needs to pay for something, and has no clue where the $15,000 that you put into this car came from. Personally, I think it’s too much car that he isn’t invested in. I think that’s a dangerous message to send to him, because he has no concept of where $15,000 comes from. Paying for tires and gas doesn’t really offset that. I’d rethink how you are approaching this. Put him in a $4,000 car and he can work his way up.