Most kids (over the age of 20) of my friends and clients have cars, but a handful of the most resourceful ones do not. OR, by necessity and affordability of car insurance, certain kids – in discussions with parents – have made the smart decision to forego owning a car until a future date. This situation may continue to happen especially in families, even wealthier families, with multiple kids under the age of 25.
Car insurance is expensive and becoming more so. The number of uninsured drivers (why is that even legal?) ramps up the cost of car insurance for all – even drivers with impeccable driving records. In addition, lingering inflation is contributing to exorbitant increases in auto insurance premiums.
Another factor to consider: the average monthly car payment in the US in 2024 ranges from $535 for used cars and $735 for new cars*. That is only the average! And if truck payments were broken out, the average for monthly truck payments would be over $1000. These figures are simply to own the car or truck, without fuel and insurance, not to mention upkeep. It may soon become cool not to own a car until a certain age. Thoughts on this topic are welcome.
Figures on recent inflation for tons of items including food, energy, travel and insurance – including homeowners insurance – are more mixed (read: higher) than headlines indicate. Home prices remain stubbornly high and are increasing. In the midst of costs of living, younger people including those with college degrees and younger married couples in many cases simply cannot afford a car without assistance from parents.
Finally, the costs related to owning and maintaining cars prevent younger people from saving. Younger savers can benefit the most in the long-term from compounding of investment gains along with regular, periodic saving. Monies spent on the costs from owning a new or expensive car can drastically hurt the ability to become financially independent in future years. Consider the concept of delaying car purchases for younger people and kids.
One of my clients’ kids recently took the train to get back to her apartment in a different state. Brilliant.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.