Liz Pulliam Weston

The Basics

Should you buy your kid a car?

Here's how to navigate the tricky issues surrounding that first vehicle -- and what messages you're sending to your teenager about money.

By Liz Pulliam Weston

The story of Jane Hambleton of Fort Dodge, Iowa, says a lot about parenting today.

Hambleton is the self-described "meanest mom on the planet" who ran a newspaper ad to sell her 19-year-old son's car after she found a bottle of liquor in it.

Her ad in the Des Moines Register read: "OLDS 1999 Intrigue. Totally uncool parents who obviously don't love teenage son, selling his car. Only driven for three weeks before snoopy mom who needs to get a life found booze under front seat. $3,700/offer. Call meanest mom on the planet."

The car sold quickly, and Hambleton got a lot of media attention, as well as dozens of complimentary calls from strangers.

What Hambleton did really wasn't that extraordinary. She and her husband had two rules for the car purchased for her son: No booze and keep it locked. But the fact that she followed through by selling the car made her a star in many people's eyes -- and speaks volumes about how parents wrestle with issues surrounding buying their kids wheels.

For many parents, the idea of purchasing a vehicle for a teenager is a nonstarter: They either can't afford it or are dead set against indulging their children this way. Others long for the convenience of having another set of wheels in the family, but they struggle with whether, and how much, they should help with this major purchase:

  • If the parents contribute too little, the kids could wind up in an unreliable junker -- or working too hard to support a car rather than attending to their studies.

  • If the parents contribute too much, the kids could acquire an unhealthy sense of entitlement and be unprepared for how much things cost in the real world.

Then there's the issue of how the child will use the car and the consequences for violating those rules.

A gift with a message about money

There's no one right answer -- what you do and how you do it will depend on your financial situation and your values. But parents who are considering buying a car are right to be concerned about the messages they're sending and the potential effect on their children, said psychologist Gary Buffone.

"Children who have cars handed to them often never learn the value of money," said Buffone, author of "Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty." "They turn into financial disasters."

Buffone has watched some of his affluent clients buy their offspring luxury cars, only to buy a replacement when the irresponsible young driver totals the gift a few months later.

Sometimes it takes two or three cars for the parents to catch on, Buffone said.

Buffone set up a dollar-for-dollar matching fund for his own two daughters, and he co-signed the first car loan for each. Now grown, his daughters have taken similar approaches with their own children.

"If you're going to give a car, it should be tied to some effort on the part of the child," Buffone said. "You don't want them (to get the message that) other people are responsible for giving them what they want."

Parents who don't want their children to hold jobs during the school year could at least insist that the car's use be contingent on the children keeping up good grades, he said.

Should they get the Lexus?

Money manager Randy Shoker of Oxford, Ohio, thinks parents also should carefully consider the type of car they want their children to drive.

Shoker doesn't necessarily want his four children to drive a rolling death trap like his first -- a 1968 Mustang with no seat belts and the kind of straight steering column that causes massive chest injuries in a crash. (For safer options, see below for a Consumer Reports list of good cars for teens.)

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But he also didn't want to give the kids his used Lexus, even though it would have been the cheapest solution -- the residual value of the Lexus was pretty low, and he wouldn't have had to buy comprehensive or collision coverage.

"I told them that they are not going to drive more car than they can reasonably afford with their first job," Shoker said. "I see too many clients' children refuse to take a cut in their standard of living when they get out of school, and they are forever trying to live beyond their means."

Instead, the Shokers paid $8,000 to buy a four-year-old Subaru Forester for their eldest son, now 19. He pays his folks $70 a month for the vehicle, and they plan to gift the remaining equity to him when he graduates from college. The Shokers found a similar deal on a Camry Solara for their daughter, now 18.

"It's not a matter of what we can or can't afford," Shoker said. "We're trying to raise people who are fiscally responsible."

Shoker recognizes, though, that peer pressure isn't limited to teenagers. He sees many parents determined to show off despite the potential cost to their children.

"There's a little bit of parental ego tied up in their children's cars," he said.

In really affluent neighborhoods -- the kind where you can tell the students' parking lot from the teachers' because the former is where all the luxury cars are parked -- both kinds of peer pressure can be intense, said Eileen Gallo, co-author of "Silver Spoon Kids: How Successful Parents Raise Responsible Children."

Parents need to recognize that, Gallo said, and make their own values clear.

"When (our kids) said, 'Justin's dad is leasing him a Lexus,' we said, 'Isn't that nice for Justin?'" said Gallo, mother of two and stepmother of a third. "'But in this family, this is the way we do it.'"

Continued: What to consider

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