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How to Save For a Car as a Teenager

We walk you through our step-by-step process on how to save up for your first car. From considering what car you want, to setting a savings goals, we have it all here at Kids’ Money!

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Just imagine the first day of summer; the sun is in the sky, the road is clear, and you and your best friends all pile into your car to make the most of the day. Maybe you’ll head to the beach, the mall, or just to the edge of town where the view is stunning.

Congratulations, your first car is just over the horizon, and soon you won’t be imagining an awesome adventure; you’ll be having it. As a teenager, getting a car is undoubtedly one of the best feelings in the world. But, there’s a long way to go before you put the keys in the ignition, and getting there isn’t always easy. So, let’s shift into gear and discuss how to overcome the speedbumps! 

Step 1: What to Consider When Finding a Car

Finding the right car for your lifestyle and budget is essential, no matter your age. For example, a foreign-made car has more expensive repairs as most parts need to be ordered. A sporty car will come with far higher insurance, and it’ll be harder to convince your parents you’re ready for a vehicle. An older vehicle generally has fewer safety features and is prone to breaking down more often. Another important factor in finding the right automobile is finding one with an excellent reliability rating and great consumer reviews – you can find that info on Kelly Blue Book and other reputable car history websites. 

Once you find the right make and model for you, it’s time to make sure the precise car you buy is up to code. Check to ensure the title isn’t branded / salvaged and that the engine, transmission, and other essential systems are working as they should. Then check other parts, like the thread on the tires, as new tires can easily cost $1,000 or more. Check that the defrost works; otherwise, winter driving will be impossible. The same is true for windshield wipers and rainy days. It’s ok if you’re not a car person. Chances are you know an adult who is – which leads us into step 2. 

Step 2: Talk to Parents

At the very least, you’ll need your parents’ permission before buying a vehicle. And if you’re lucky, they’ll be able or willing to help pay for it. Plus, their experience with buying cars and fixing or paying for repairs is valuable. Keep in mind that the car convo is a big one and takes time. There are basically two ways to approach it – the way we recommend is that you carve out time on your parents’ schedule to go over the pros and cons of you driving. And to learn about their concerns regarding your physical and financial safety. Bring it up during a long car ride or over dinner. Your odds of success are better if your parents aren’t busy or exhausted after a long day. The other method of bringing up the car talk is to do it over time and introduce a new point each time you bring it up. 

For example, the first time you bring it up, talk about how convenient it would be for your parents to not worry about driving you around for work, school, practice, etc. The second time you bring it up, touch on the convenience factor but then mention how much it prepares you for adulthood. We’ve got more tips about the car convo, but we’ll save them for later in this same article. For now, let’s move on to step 3.

Step 3: Set a Savings Goal

One of the most effective ways to save is to be goal-oriented. Once you find the right car and figure out exactly how much it’ll cost, then you divide the cost into small chunks. For example, let’s say the car you want is $5,000. Divide it by 12, and it’ll come out to approx $420 per month, which is about the monthly wage of a part-time job as a teenager. That means, with no outside help, it’ll take you roughly a year to afford the car. But a savings goal is nothing without a proper budget. 

Step 4: Budgeting 

Budgeting is a big deal. Consider how much money you make each month and how much of that money you have to spend. Do you take the bus everywhere? The average monthly bus pass is around $50.00. Subtract that from your income. Go down the list of your necessities, and whatever number you arrive at is how much you can potentially save each month. The exact amount will vary based on hours worked, unexpected events, and more, but it’ll give you a pretty solid idea of how long it’ll take you to save up. Now all you have to do is stick to your budget. 

Step 5: Down Payment

A hefty down payment gets you in a car faster, and most places lower the interest rate based on how much of a down payment you make. To avoid debt, saving up for your first car and paying it off in one or two payments is best. But that’s not always possible, and to be fair, most adults have a car payment for most of their lives. If you have your heart set on college, living abroad, and other activities that can make money scarce, then avoiding debt should be your number one priority.

How Much Should a 16-Year-Old Save Up for a Car?

There’s no set amount that a 16-year-old should have saved up. It will depend on your environment, job, and local economy. But between $5,000-$10,000 is the average that a reliable used car is going to cost.

Don’t worry if you do the math and $5,000 is still out of your budget. You can find a reliable car for cheaper, but it’s going to take patience and a lot of time. Some people sell their older model cars for far less than they’re worth to clear up space in their garage or have less to worry about before a big move. The deals are out there if you’re patient enough to find one. 

How to Save if You Don’t Have a Job

The easiest way to save money is by generating it through a consistent income. Things get a little trickier if you don’t have a job. But not impossible. If you have a wealthier family, you can save birthday and birthday money. Otherwise, you’ll have to start doing odd jobs like cutting grass, detailing cars, painting houses, and other project-based work that you can use to generate income. Want more ideas about making money as a teen? Take a glance at our other article for specific apps and gigs that can get you one step closer to your first car. 

Tips to Negotiate with your Parents to Help you Pay for your First Car

Talking with your parents is a pretty big step. Here are a few negotiation tactics to tilt the odds in your favor. 

Talk About How Responsible You Are

Do you get good grades? Do you do a great job babysitting your younger siblings? Leverage those traits with phrases like “I’ve shown that I can handle big responsibilities by doing _____” Or, “I understand that having a car is a major responsibility. But so is _____.” 

Take Safe Driving Courses

If your school doesn’t offer driver’s ed, then research programs in your communities. A rec center is a great place to start, but chances are there are dedicated driver’s ed courses in your neighborhood. 

Drive Them Around

Show them you know what you’re doing by offering to take the wheel next time they run errands. Just don’t forget to check your blind spot, have your hands on either side of the wheel, oh and wear your seatbelt!

Getting your first car isn’t impossible. All it takes is time and a budget. Drive safe out there!

About the Author

Chadhurst Sharpe

Chadhurst Jainlett Sharpe spent over six years working as a personal finance banker. He's passionate about giving young minds the tools and resources they need to succeed with money.

Last updated on: September 9, 2022