Financial Responsibility for my Teen – Checkbook

04/30/2017,  1pm

From a very young age, my children were expected to put one half of all their very generous monetary gifts into a bank account (pot of money) from which they cannot withdraw any money.  The other half (pot of money) was theirs to spend with ritually no limits, just guidance.  For the purpose of this blog, I will refer to the first pot of money as their long term savings, and the second pot of money as their discretionary money.  The purpose of the long term savings is to get the children accustomed to taxes being taken out of earning, as well as getting into the habit of always putting something aside for the future, to limit the need to pay to borrow money.  The kids discuss using this long term savings for college expenses, to buy their first car, or other large future expenses that may be unknown at this time.  Yes, we started these conversations when they were in elementary school!

As they grew, they both began to ask Mom to hold onto their discretionary money, because this way they wouldn’t have to remember to bring their money to the store when they saw something they wanted to buy.  Mom would dutifully ring up their purchase on a separate transaction, write their name at the top of the receipt, and subtract it from a running balance kept on the computer at home.  When the balance on the computer at home became zero, then they would be told, “NO, AGAIN” when they asked mom to buy them something because they didn’t have any of “their money” to use, and they understood this.  Believe me, they always try to get me to spend my money first, and have a sales presentation ready to go on why this isn’t a discretionary purchase.  Often, they come to me to ask their balance, and I am sure to have it available.

Now comes step two, and I am very excited to share.  My daughter is beginning high school in the fall.  With that, she will also be taking responsibility for her discretionary money.  This is not a choice, but an expectation.  If she decides she doesn’t like the idea, or is “not ready” for the responsibility, she will quickly change her mind when she realizes the only way she will be able to access any discretionary money is through this method.  This summer, beginning with her birthday in June, and the possible gifts she may receive from her grandparents, along with her current very small balance of discretionary money, she and I are going to the bank (probably a virtual one, on line) to set up her first checking and savings account with an ATM card.

Here is the plan, so that my daughter learns good financial habits.  My expectation for her to have “control” over her own money is that she MUST do the following things:

  • On a smart phone app, she will keep track of every expenditure to the penny (debit side of balance sheet).  If she does not have access to electronics, an envelope with the notes on the outside, and the receipts on the inside works just fine.  My intent is for her to be aware of how she spends her money, not to criticize and judge.  I may not agree with her decisions, but they are hers to make, and hopefully from which to learn.  To help me stay true to this, I will not be transferring money into this account for her to spend on anything that I consider my responsibility as her mother (ex:  school fees and the like).
  • Every week, she will give me a balance sheet (credits – debits = balance in checking account) of her spending with the purpose that reconciles with her on line bank account balance.  She must give me the balance sheet BEFORE I deposit (credit) her her next week’s allowance.  Now my hope is that as time goes by, we will be able to move this exercise to every two weeks then monthly, but we’ll see.
  • She and I will get together to figure out the repercussions for abuse of the account (ex:  over draws), which will be VERY severe beyond bank penalties, which she will pay – Probably loosing her Smart Phone for an entire semester.  I have exercised this consequence before, so she will not doubt that I will do it again.  Teenagers with flip phones are mortified teenagers.
  • Last, she will balance her checking account AGAIN, once a month to check her work, and submit for approval.

To keep me honest, I read this blog posting to my rising 6th grader.  Besides having to learn the meaning of the word discretionary (“Mom, why didn’t you just say my choice money?”), he confirmed the truth of my words. He has also advised me that he may not want to wait until High School to take over managing his discretionary money in this way.  I love it!

Buying a car for my child?

April 30, 2017, 2:30pm

I found a link for potential Georgia drivers, and wanted to share.
April 16, continued

My initial list expanded:

Hyundai Elantra

  • MPG good (2013 GLS HP 148 & Torque 131)
  • J.D. Power – 3 Dots for 2013 GLS
  • Big overall room inside, except lack of rear headroom.

Kia Rio (surprise add)

  • MPG good (2013 LX – 138 HP & 123 Torque)
  • J.D. Power – 4 Dots for 2013 LX
  • Experts loved it.

Nissan Versa (disappointing elimination)

  • MPG good (2014 S – 109 HP and 107 Torque)
  • NHTSA Safety Rating Font. For Driver 3 stars & passenger 2; side 5 stars
  • J.D. Power – 2 Dots for 2014 S
  • CarMax has no expert reviews.

Nissan Sentra

  • MPG good (2015 S –  130 HP & 128 Torque)
  • J.D. Power – 5 star
  • CarMax has no expert reviews.

I have eliminated the Versa and the Chevy Spark because they do not have enough power to get out of their own way.

So my list to look into further on another day, in no particular order:

  • Hyundai Elantra
  • Kia Rio
  • Nissan Sentra (my first new car by the way, after my 1975 Opel Station died)
  • Mazda 3
  • Honda Fit
  • Ford Focus
  • Mini-Cooper (too expensive?)

April 16, Noon

Wow!  Without the Rear View Camera, my search increase to 51 available vehicles, including the Nissan Versa which is one that I though would come up on my initial search.  More to come …  I am going to go through the list and eliminate sports cars, and the lower rated cars.  To save time, I am not going to include the specifics on this elimination process.

April 16, 2017, 10am

First, Happy Easter and Passover!!  I have begun my research for a more specific make and model vehicle that fits my needs.  So the first person I asked was my amazing mechanic of 18 years, the owner of The Oil Pit, Gary Sanders.  His suggestion was to download the CarMax App, not necessarily to purchase from CarMax, but they provide great search options and specifics about the vehicles.

My first search includes the following perimeters.

  • 4 Cylinders
  • Less than 30,000 miles
  • Manual Transmission
  • 4 doors
  • Air Conditioning
  • Rear View Camera

Here are my initial results (non including Volkswagen and Chevrolet, due to personal bias)

  • 2016 Mazda 3i
  • 2015  Honda Fit EX
  • 2015 Mini Cooper Hardtop S
  • 2013 Mazda 3s
  • 2015. Subaru WRX
  • 2016 Ford Focus S

My next step is to look at the information CarMax provides on the examples.  As I compare this information, several things will happen.  First, I will learn what is important to me.  Second, I will adjust my search results and specs based on my budget without sacrificing safely.  Notice that I did not use cost in my initial search because I really don’t know how much a vehicle with these types of perimeters cost.

  • Specs on the vehicle that are important to me are gas mileage, features, horsepower and torque.
  • NHTSA Safety Ratings -Vehicles with the highest ratings receive their NHTSA 5-star certification.
  • J.D.  Power – Power Circle Ratings gives Overall quality, mechanical quality, body and interior quality, Feature and accessory quality Powertrain quality, design quality, etc.
  • Expert Reviews

Here are some of my observations from my initial search.

Honda Fit

  • MPG is great.
  • First model year is 2001
  • J.D. Power – 2015 – 2 dots. And 2014?
  • Very roomy within.
  • 2015 model year began the 3rd generation (first total makeover) – only in a hatchback.  The 2016 has even more improved safety.  This vehicle has room in the back seat for 3 adults. (Before 2015 is big , but not this big).

Mazda 3

  • MPG may not very good for some models (2013 3s. Grand Touring is 20/28, but. 2016 3i. Sport is 29/40
  • J.D. Power – 2013 – 3 dots. And 2016 – 4 dots.
  • CarMax. Did not have expert reviews.

Subaru WRX

  • MPG not very good because of Turbo?  If so, it does not meet my specs.  268 HP and 258 Torque for WRX.
  • Not spending more time to research this vehicle because it is obviously a sport s car.  Good for me, trouble for an inexperienced driver.

Ford Focus

  • MPG is good.
  • J.D. Power – 2016 Focus S – 2.5 dots
  • No expert reviews on CarMax
  • 2016 S has 160 HP and 146 Torque

Mini Cooper S

  • MPG is good
  • NHTSA ratings High (front – driver – 4 stars and passenger 5 stars)
  • No J.D. Power info.  and no expert reviews

My conclusions after initial search?  My next two types of searches will be one general with new perimeters, and several specific searches over several model years for on the Honda Fit, Mini Cooper, Ford Focus, and Mazda 6 in that order of preference, so far.  The new general perimeters will be to keep all the same features except rear view camera.  My biggest concern  so far is that my initial search did not bring up a car that costs less then $10k or built before 2013.

April 12, 2017, 10:35pm

So why am I starting the process to “buy a car for my child?”  Well maybe I will end up changing the title of this blog before I am through.  What I am actually doing is buying a car which which my child will learn to drive.  The car will be mine.  The costs will be mine, until such time as she decides she is able or wants to own her own car with all that means.  I am not providing this car for her use, at her convenience, but for mine.  This is where I see the biggest challenge.  If the car is mine, I cannot allow her to assume it is her car until she pays me for it, or buys one of her own.  Wish me luck!

The other reason I am starting the process now is that I do not want to be in a hurry.  I am looking for a manual transmission, 4 cylinder, low mileage vehicle with high safety ratings, lower maintenance cost, in the brightest non-blue or green (most difficult to see) color I can find.  My preliminary research is turning up cars like the Honda Fit, Nissan Versa and Mini-Cooper.

April 12, 2017, 10:10pm

When my now 14 year old daughter came to me earlier this year to let me know that she would be able to get her learners permit this summer after she turned 15 years old, I kept a straight face and said “that’s nice.”  When I said nothing more, she was very confused, and told me so.  I explained that I would believe it when I saw it.  She became even more confused.  I explained that the responsibility to get her learners permit was hers.  Her first question was, “aren’t you going to help me?”  “Of course I am.  I am happy to drive you where ever you need to go, as long as you coordinate with my schedule,” I calmly said.  Soon she understood what I meant…

I explained to my daughter that I feel it is very important that a person driving next to me on the highway should be capable and responsible enough to figure out how to get their own driver’s license up to and including paying for drivers education and the license itself.  ALSO, she must pass her drivers test in a manual transmission vehicle.

We had our conversation about my requirements for her first car quite some time ago, and she has been saving half of all her gift money for years.  She understands she has to pay for it (in full, no payments or financing). Now I plan to match her savings dollar for dollar, so that she will hopefully be able to afford a safer/more reliable vehicle.  I will be happy to pay for her insurance as long as she is a full time student, and maintains a 3.0 grade point average every semester.  The additional premium charged by the insurance company for losing the good student discount will be her responsibility.  As soon as she is no longer a full time student, I no longer have the responsibility to pay for her insurance.  She will be responsible for all gas and maintenance costs for HER car.

April 12, 2017, 10pm

This is going to be my attempt to document and share my efforts every step of the way.  I wanted to start by sharing some basic information.  As an insurance agent and a single mother, I am probably overly cautious; not to mention down right terrified about the idea that my daughter will be driving in the next 18 months or so.

I am also a very value conscious person.  There are very few purchases I make that are not well thought out and researched.

As I share my experience, I will try my best to also share my reasoning, resources and tools.  One other disclaimer…  I usually reserve publishing for my polished pieces.  This particular blog is intended to be more of a journaling piece, and will be written with less editing and corrections.  I guess this will be my first “real” blogging attempt since “Help My Family Has Cancer” Blog which ended with my husband’s death in October, 2012.  I cannot wait for the wonderful challenge.