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Is this something you could try with your kids?
Most important points
- Children can be very expensive.
- Many teenagers want to buy vehicles, but are priced too high.
- I started investing early so my kids have money to buy cars.
My kids aren’t teenagers yet. But as the person who already has to transport them to all their myriad activities, I look forward to the day when they can drive themselves places.
Of course, many teens can’t buy a car because of the high price of used (or new) vehicles and the high cost of car insurance. The good news is that my kids don’t have to worry about where the money for their first car will come from. That’s because I’m setting them up to be able to pay for a car when the time comes.
Here’s how I do that.
This simple approach will make a big difference in their lives
During my son’s first Christmas, I realized I had a few options available. I could buy tons of toys that he would probably play with for a few days or weeks and then get bored. Or I could instead start a plan to enable him to buy his first car when he turns 16 — something that I’m sure would mean a lot more to him since he’s old enough to be aware being of the gift and it would enable him to have the freedom that young people long for.
Since he already had a lot of toys, the decision was a good one for me. Instead of spending a fortune on items that he wouldn’t get much value from in the long run, I bought him a few small items to unbox at a garage sale and put the rest of my vacation budget in for him. a high-interest savings account. I also got his grandparents involved in the plan, encouraging them to buy just a few token items and then contribute money to his savings account.
We made the decision that this would be separate from his savings because we wanted this to be a nice gift he would enjoy, and we ended up putting a total of $500 in the bank for him. We decided to do the same on his birthday. And we committed to doing this process every year.
This means that he will eventually have $1,000 deposited into his account for a total of 16 years until he is old enough to drive — at which point $16,000 will be available to help him get a nice used car. And when my daughter was born, we decided we would do the same for her.
When my kids turn 16, I’ll let them know about these accounts and give them the choice. They can buy a car with the money in it, or choose to use it for something else fun, like financing a study trip abroad. They will be old enough to appreciate the money much more and use it for something much more valuable than the disposable toys young children are so often given.
Could this technique work for you?
If you also find yourself struggling to decide what to buy your kids or wish they didn’t get so many disposable items for holidays and birthdays, you might want to consider saving the money for them.
We still have great holidays and they appreciate the joy of opening the small, inexpensive gifts they receive – and they’ll appreciate it even more when they discover later in life that they have large savings accounts.
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