An Animal Spirits listener emailed in to ask:
Great question.
Michael and I both responded on the podcast in the same way — you do NOT buy a 16-year-old the new vehicle!
When your kid turns 16 they get the hand-me-down and you drive the new one. That’s how it’s always been and how it always should be. When I was in high school we maybe had one or two (rich) friends get a new car but everyone else drove a beater.
I did. Mine was a 1989 Honda Accord. It was a stick shift with well over 100,000 miles and bald tires. It was a car driven by a friend’s older brother who sold it to my older brother and finally it was passed down to me.
So my initial reaction was rooted in experience.
A listener took the other side of this argument:
You always buy the new driver the new car. New cars have safety features that are crucial to younger drivers. When young drivers don’t have the experience of an older driver, they need all the breaking, blind spot, lane assist, all those safety features the new cars come with. You want your child to have the million airbags, not just the one that popped out the steering wheel, do you want them to have antilock brakes. The traction control system. All those things. Although it’s counterintuitive always give your kid the newer vehicle. For a safety perspective.
My first thought after reading this email was, well, duh. It seems so obvious when you put it this way.
New vehicles have much better safety features. Of course you want your child to drive the newest, safest vehicle. What kind of parent am I?!
This line of thinking also explains how luxuries become necessities and why so many households get behind on their finances. What parent doesn’t want to give their children the very best life? So you spend so much money on them that you fall behind.
I can certainly see both sides on this one.
My 1989 Honda Accord had a tape deck, no anti-lock brakes, no sensors, no cameras, and no transmission by the time it finally ran its course and ended up in Honda heaven.
I grew up in Northern Michigan where we had brutal winters with lots of snow. The roads were often difficult to traverse.1 With a crappy car, I learned to drive conservatively in the elements, which was something of a blessing in disguise.
I’ve driven through multiple snow storms where a huge truck will fly by going 20-30 mph faster than me. Occasionally, those same trucks end in a ditch a few miles down the road.
This is not just an anecdotal observation. There’s evidence that added safety features increase driver confidence, causing them to behave more recklessly.
Without anti-lock brakes on my first car I quickly learned about the need to pump my brakes when the roads were icy.2 When anti-lock brakes were introduced widely the results were interesting.
Studies found that the advent of anti-lock brakes did help curb fender benders. Fatal and non-fatal crashes, especially on wet surfaces saw drastic reductions. But single-car accidents, rollevers and cars going off the side of the road all went up dramatically.
The added safety features offer some assurance but until we get full self-driving vehicles everywhere I’m not sure how much it’s going to help when it comes to 16-year-olds and their driving skills.
Look, I’m not saying you should make a financial decision that will negatively impact your child’s safety. All financial decisions are personal but this one is more so than most.
My heart says getting your 16-year-old a new vehicle is spoiling them while my head says you want to protect your child at all costs.
So what will I do when my oldest daughter turns 16 in *gulp* five-and-a-half years? I’m sure I will go back-and-forth on this one many times leading up to this decision. Maybe self-driving technology will make the decision easier but if it doesn’t…
My guess is I’ll probably let her drive my SUV to handle the Michigan winters so I can finally get back to driving my dream car…a Honda Accord.
Maybe a newer model this time.
Michael and I discussed this topic on Animal Spirits this week:
Subscribe to The Compound so you never miss an episode.
Further Reading:
Is the Ford F-150 Partially Responsible For the Retirement Crisis?
Here’s what I’ve been reading lately:
Books:
1I grew up in a house on a steep hill. There were times I couldn’t even make it up the hill in the old Accord and would be forced to turn around halfway and go downhill.
2The reason I learned quickly is because the first snowstorm I ever drove in at age 16, I slammed on the brakes and slid directly into a ditch. Luckily, I was close to home because these were the pre-cell phone days, so I had no way to contact my parents.
