To Buy or Not to Buy: Your Kid’s First Set of Wheels
Times have changed a lot in the past ten years. If you drive past a high school parking lot, chances are that some of the students are driving newer cars than the teachers. The average age of a car driven by a class of 2016 senior this year was just 4 years, but for the class of 2006 seniors, their cars averaged 14 years. What’s driving the difference?
Loose Change in the Center Console
The biggest change has been in the price of used cars. In 2006, a used car averaged just $8,000, and the cost for a new car was on average $28,800, check out this article for statistics. Minimum wage was $5.15 an hour, and for students who worked part-time after school or college, with full time summer hours, their annual income was most likely less than $10,000. If they only spent their hard earned wages on used car payments, it would take them just over a year to pay their car off.
By 2016, however, the average price of a used car has jumped to $18,800, with new cars increasing an average of $6,851. Part time workers are making $2.10 more an hour for minimum wage jobs, and if a student worked the same hours that a graduating senior did in 2006, their annual salary will only be barely $4,000 more, taking them a year and a half longer to pay off their used car.
Gift Wrapped Wheels
Considering the increase in used car prices, you might be surprised to know that 41% of teens in 2015 were given their first car by their parents, as opposed to buying it themselves. Of those same parents just 14% of them were given their first cars by their parents. Their reasons varied, but they had less to do with price than with the fact that safety features on vehicles had improved, and by purchasing the car themselves, they were better able to feel confident in the type of vehicle that was being driven.
Driving the Learning Curve
In a society where many feel that young people are given more than they earn, are parents giving too much? There once was a time when working to save for your first car was a rite of passage for many. It taught responsibility, the value of money, and instilled a good work ethic. Most graduating seniors are still learning those values, but not always in the same ways their parents or grandparents learned them.
But the economy has changed in the last several decades, and for some graduating seniors, if they had to buy their own first cars it could be decades more before they could afford it. Minimum wage has not increased at the same rate as prices on used vehicles, and while salaries for their parents might have gone up, so has the cost of living.
Where Is the Middle of the Road?
Solid arguments can be made for both sides of the issue depending on where you live and your income, and in some families there are no options. In others there may be the expectation that the graduating senior will get the “hand-me-down” vehicle from an older sibling, or from a parent or grandparent. But if the value of getting a first car was once tied to learning good work ethics and responsibility, what is it tied to now?
Were you given your first car? Would you give your child their first car? Tell us in the comments what your first car was, whether you were given it or saved for it on your own, and what you feel you learned (or didn’t learn) from the experience.