How Your Teen Driver Affects Your Budget

The post How Your Teen Driver Affects Your Budget appeared first on Penny Pinchin' Mom.

Ever wonder how a teen driver affects your budget?  Get ready to learn!!

This is a sponsored post on behalf of Progressive Insurance. All tips and opinions are my own and were not influenced by any parties.

 

how to budget for your teen driver

As much as many of us don’t want for it to happen, there will come a day when your teenager will be ready to jump behind the wheel.  It also seems to sneak up on us too.  When did that 5 year old kindergartner suddenly ask to borrow the car on Friday night!?!

Parents and guardians all want to make sure that our kids learn to drive and are always safe behind the wheel. One way to do that is to create your own safety contract.  It is the terms your teen agrees to in order to ensure that he or she is safe on the road.  The violation of these terms results in immediate jail time for the car keys.

In addition to ensuring that they stay safe, it is also time for your teen to budget for the cost of a vehicle.  While Mom and Dad may help from time to time, driving comes with responsibilities and some of those are financial.

To start, make sure your teen has his or her budget prepared.  Yes, even teens need to learn how to create and follow a budget! And, mom and dad should also know how a teen driver affects your budget!

Once your teen has a budget in place, you can then sit down with them to go over the costs of actually owning a car.  There is much more to it than they may realize.

 

Buying a car

As much as most teens would love a brand new set of wheels, most parents know that will not be the case. That doesn’t mean that he or she has to drive a clunker either.  Look at your budget and determine how much you are willing to spend on a car — but don’t tell your teen!

Instead, develop a plan to help him or her save for that vehicle. You might offer a dollar for dollar match.  So, if your son saves $3,000, you will give him $3,000 as well to buy that car.

When your teen has to use his or her money to buy a car, they will have more of a vested interest in insuring that they take good care of it.

Read More:  How to Get the Best Deal on Your Next Car

 

Insurance

Teens and insurance do not usually go well together. The cost to insure your teen driver can be expensive.  Take the time to research companies and plans to find the best option for your family.  Remember that less expensive does not always mean best plan.

Don’t forget to see if you qualify for safe driver, multi-policy or good credit discounts as those can help keep your insurance costs low.

teen driver affects your budget

Fuel costs

As a teenager, having the freedom to drive yourself where you want to go is part of the thrill of having a license.  But, cars don’t run on air.  They run on fuel.

Help your teen develop a budget so they know how much they have to spend to fill up the tank.  They may not realize how expensive it can be.  After all, if gas is running $2.50 a gallon, it will cost more than $40 to fill that 18 gallon tank!

Read More:  Tricks to Save Money on Fuel

 

Snacks and Treats

I remember when I was learning to drive.  My mom was too nervous to teach me, so a family friend volunteered to help. He told me that the first lesson of driving was to go through the drive through for a soft drink before you really hit the road.

While that was a fun lesson, the truth is that many teens do this as well. It is convenient to drive through to grab dinner or stop into the convenience store for snacks.  Those costs can add up very quickly.

If your teen has to foot the bill for the snacks, it can quickly put a damper on his or her budget.  They may be forced to choose between lunch out and putting a bit of fuel in the car just to get to work.

 

Maintenance

There is much more to owning a car than putting gas in the tank.  In order to ensure that your vehicle lasts, maintenance is a must.  This includes regular oil changes and tune ups, as well as new tires.

Whether you plan to help your teen with these costs or not, it should also be included in their budget.  Oil changes are not cheap and if your teen driver spends a lot of time in his or her vehicle, these will be needed more frequently.

To determine how much to budget for savings, show your teen the cost for an oil change and tires.  Then, have him or her include a small amount of monthly savings to help cover those costs.

 

Your teenager is growing up.  Owning and operating a vehicle comes with responsibilities which include more than safety.  Help your teen learn how to properly budget his or her money when it comes to car ownership.  Your budget will thank you.

This post brought to you by Progressive. You could save $620 when you switch to Progressive.

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Flexible Spending Accounts: Rules, Regulations, and Uses

clear piggy bank

Flexible spending accounts, or FSAs, are special savings accounts offered through some employer benefit plans. They allow the account holder to pay for certain out-of-pocket medical and dependent care costs with tax-free money.

However, “tax-free money” is a phrase that’s not used too often in personal finance articles—at least not legitimate ones.

So it’s no surprise that FSAs come with a decent number of rules and regulations, which limit the application of this special, tax-favored savings vehicle.

For instance, FSA rules cap the amount of money that can be placed in the account each year ($2,750 for 2021), and also dictate which types of expenses qualify for an FSA distribution.

Still, FSAs can be a powerful tool for taking care of unavoidable medical costs that frequently wreak havoc on American finances, even with the rules that keep them in check.

Flexible Spending Account Explained


We’ve covered flexible spending accounts in depth elsewhere on our site, but as a quick refresher, FSAs are savings programs offered through employers—which means that self-employed people, like freelancers, aren’t eligible.

(Psst: if that’s you, buying a healthcare plan on the market might be an option to consider, though you may also be able to get coverage through an employed spouse’s plan.)

FSAs are also sometimes called flexible spending arrangements, and there are a few sub-types, such as dependent care FSAs (DCFSAs) and limited purpose FSAs (LPFSAs).

However, for the purposes of this article, the focus will be on the account rules that govern plain old healthcare FSAs, whose funds can be used to cover you, your spouse, and your dependents.

Flexible Spending Account Rules: An Overview

IRS Publication 502 .

From acupuncture and alcoholism to birth control pills and psychological counselling, many services do count as qualified medical expenses.

Along with being the right kind of medical expense, services paid through FSA funds must be applied to the right people in order to be covered. Eligible beneficiaries include:

•  The account holder
•  Their spouse
•  Dependents claimed on their tax return
•  Children age 26 and under

Keep in mind, too, that FSAs generally work in conjunction with other types of health benefits and coverage, and funds can’t be used to reimburse services that are covered under other health plans.

It might be a valuable exercise to write out all of the expected medical expenses you’ll face as a family at the beginning of the plan year in order to decide how much to contribute, including additional coverages, in order to avoid overcontribution. While nobody can predict the future, some routine expenses can be foreseen—and a little bit of planning might save a lot of forfeited funds in the end.

Taking Distributions from an FSA


The process for taking distributions from an FSA may vary based on the plan. In some cases, distributions are made from an FSA to reimburse the account holder for medical expenses they’ve incurred. Some FSAs also have a debit, credit, or stored value card that can be used to pay directly for qualifying expenses.

Fair Health Consumer , would set back an uninsured person living in Portland, OR more than $20,000. Although that cost varies depending on location, it’s clear to see that additional coverage is necessary for most.

Furthermore, although the tax-free nature of FSAs is attractive, the prospect of forfeiting parts of a paycheck is definitely not—and there are other ways to save cash for medical expenses and other emergencies which offer not just flexibility, but growth.

For example, the average savings account earns 0.50% APY in interest, and up to 0.80%, per the latest FDIC rate cap information, which isn’t a huge return, but is more than the 0% you’ll earn on an FSA. That said, the value of tax-free dollars could easily eclipse the interest rate if the funds in the FSA are actually used.

While an FSA can be a beneficial tool, especially for those who know they’ll spend a decent amount out of pocket on healthcare, a SoFi Money® cash management account can add additional help in this instance; there are no account fees and account holders can earn cashback while they save and spend.

The Vaults system allows you to set money aside for specific savings goals—including medical expenses as well as more exciting objectives like vacations or home renovations. The tax benefits of the FSA can make them an appealing and useful tool. But if you’re not sure you’ll use the funds saved in an FSA, SoFi Money could be an alternate solution. Those that will definitely use funds saved in an FSA may consider using SoFi Money as a complementary tool to work toward other saving goals.

Want to learn more about how SoFi Money might help you get your money right? Signing up takes minutes.


SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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6 Fun, Inexpensive Ways to Revamp Furniture

FunInexpensiveWaystoRevampFurniture

Dresser Storage

If your country kitchen is running out of room, consider a dresser. Even though you’re used to bureaus being only for bedrooms, it can be a valuable addition to a kitchen for storing napkins, utensils, and more. Repaint the dresser in colors to match your kitchen and you’ll have guests asking where you got your newest piece of kitchen furniture.

Don’t Discard Dingy Dressers

If your furniture is weathered or out of style, that’s not necessarily a reason to replace it. There are plenty of ways to spruce up old dressers, chairs, and tables. Everybody loves quilts, so why not drape one over that old chair that needs re-upholstering? You can also try using colorful fabrics on the fronts of nightstand and dresser drawers. Just get some scrap cloth from your last project or from a fabric store, and attach it to the dresser drawers with a staple gun. To have even more fun with it, we like to paint part of the piece and color-coordinate it with the cloth we’re using.

Handled With Style

If your cabinets are getting old and worn, you can revive them just by replacing the knobs and handles. A good variety should be available inexpensively at your local hardware store. They’ll make your kitchen or bathroom look brand new!

A Gift for Decoration

Dress up an inexpensive set of plastic drawers by covering them in wrapping paper. Choose some paper you love (you can even pick several coordinating designs), and cut the pieces to fit the size of the drawers. Then spread a crafting glue/sealer, such as Mod Podge, on the plastic and smooth the wrapping paper onto it, being careful to eliminate bubbles. Allow to dry, and apply a coat of sealant on top. Not only does the paper look beautiful, but it also hides the contents of the drawers, making everything appear neat and tidy.

Matching Not Necessary

You’ve probably noticed this at the restaurants you frequent, but it’s becoming more and more acceptable nowadays—even hip—to eat your meals on vintage, mismatched chairs. Instead of spending a fortune on a dining-room set, go for the mismatched look and hunt for your chairs at thrift shops and used furniture stores.

Brighten Up the Bookshelf

If you’re looking for an easy, inexpensive way to add a pop of color to a room, look no further than the bookshelf. You can paint the interior back “wall” of the bookshelf a color that either contrasts or coordinates with your decor. It will add a modern touch for not a lot of money! 

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Budgeting Help

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How Mint offers budgeting help

Ready to start budgeting and tracking your money? See our article Budgeting Tips from Mint — and subscribe to our blog for more budgeting help.

Budgeting Calculators

We’ve also got some calculators that can help you figure out exact dollar amounts for your budget:

How Much do I Need for Emergencies? Saving enough money for emergencies is the first step in setting a budget. Don’t be caught by surprise. How much do you need in your emergency fund?

How Much Should I Save to Reach my Goal? Are you budgeting for a house, vacation or retirement? Quickly find out if you’re saving enough to reach your goals on schedule.

Value of Reducing or Foregoing Expenses. Small changes in your daily routine can add up to big budget savings. Find out how much.

How Much Does Inflation Impact my Standard of Living? How much will you need in 5, 10 or 30 years to maintain your standard of living?

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4 Ways to Save Money with a No-Spend Challenge

There’s more than one way to implement a no-spend challenge. These ideas can help boost your savings and make you rethink your spending habits.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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