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The average car payment these days is $482 a month. That’s right—$482!
Even more surprising is that many people simply believe that a car payment is “just a way of life.” If you are one of these people, think about that for a moment. Is it truly just a way of life for nearly 500 of your hard-earned dollars to go out the door every month? Are you really choosing to throw money at something that drops in value faster than an iPhone in water?
That just isn’t right! I want to help teenagers and young adults understand that car payments aren’t just a part of life. You can actually drive paid-for cars for the rest of your life!
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Instead of stopping by a dealership and signing off on a new $26,000 car with a $482 payment, what if you saved that $482 instead? In just 10 months, you’d have $4,820 saved in the bank.
For fun, let’s say you sell your current car for $1,500. That means, in less than a year, you’ve got more than $6,300 to put toward a nice, used car—without taking a dime from the bank!
If you keep saving like that—after all, you’ve already made it a routine—you would have another $4,820 saved ten months later. If you sold your newest car for around the amount you paid for it, you would have about $11,000 to put toward another, even nicer, used car! And that’s less than two years after you started this whole saving thing! Even if you only save $250 per month, you’ll have $3,000 to put toward a car after a year.
Related: Buying a Used Car? 5 Tips You Need to Know
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The takeaway here is that driving a paid-for car is totally doable. If you’re a parent, this is a great way to help your teen learn to budget—because what teenager doesn’t want their own car? Saving over a longer period of time will teach them the discipline, patience and self-control they’ll need to with money in college and beyond.
Here’s the deal: I don’t want you to be average. I don’t want you to get stuck with hundreds of dollars in car payments every month. I want you to be different and unique. And one great way to do that is to quit believing car payments are just a way of life.
Budget. Make a plan. And pay cash.
You really can drive paid-for cars the rest of your life!
To help you have the tools and knowledge to guide your teens with all things money, Dave Ramsey and his daughter Rachel Cruze created Smart Money Smart Kids, a six-week home study program based on the #1 New York Times best seller of the same title. In addition to saving, you can learn more about teaching your kids to work hard, spend wisely, and give generously—all with a spirit of contentment that will transform their lives.