Knowledge is power.
We empower our clients.

Get Started Now
<< Back to Helpful Tips

The Financial Costs of a Teen Driver

Getting a driver’s license may be a rite of passage for teens but for parents, handing over the keys can be stressful. They are excited because of their newfound independence, while parents may feel nervous about their teen driving off in a vehicle and arriving home safely.

A new driver not only brings about emotional costs—there are also sizable financial expenses to consider.

Along with the cost of a car is the auto insurance that goes along with it. Often younger drivers translate to higher insurance costs. According to Bankrate.com, the average insurance premium increases 130% when a 16-year-old is added. If a teenage boy is added, the premium could be an additional 30%1.

To reduce your overall insurance costs, talk with your insurance company about discounts that may be applied to your policy, including discounts for being a good student, taking a defensive driving course, and having a car with a high safety rating.

Regardless of these discounts, as young, inexperienced drivers, accidents sometimes happen. In fact, the risk of car accidents is higher among teens aged 16–19 than any other age group.2 With accidents come repair costs along with higher insurance rates.

Take the Wheel with a Young Driver’s Pledge

One way to help your family contain the costs of a young driver is to try to prevent accidents and promote safety before you hand over the keys. Consider agreeing to a Young Driver’s Pledge, which sets clear, reasonable limits on their driving. Sit down with your new driver and discuss the rules and responsibilities of your household, as well as the specific rules in your state related to curfews and having passengers in the vehicle. Use the pledge to help them clearly understand that violating these rules and laws—no matter what the cause—is serious and comes with consequences.

Importantly, work with your teen to set specific penalties for rule violations; talk to them about the what-ifs and what they think is a fair punishment. This allows your teen the opportunity to talk about their feelings and to hear your thoughts before the rules are applied. It also helps to avoid disagreements about “unfair punishment” if a rule is broken.

Help them understand that driving is a privilege. With the driving agreement in place, both you and your child understand the expectations and the penalties that will occur if the family’s expectations are not met.

From driving pledges to financial security, Jemma Financial is here to help you.

Fill out the form to download Jemma Financial’s Young Driver’s Pledge


1 “Should you add your teenager to your car insurance policy?” Bankrate.com, 10/30/20
2 “Teen Drivers: Get the Facts,” Centers for Disease Control and Prevention

Log In to Your Existing Account Get Started Now

Need assistance? Call 855.662.2121 or email info@jemmafinancial.com

You are now leaving Jemma Financial

Yes, I would like to leave No, I would like to stay

Important Notice

You are now leaving the Jemma Financial Services website and will be entering the Charles Schwab & Co., Inc. (“Schwab”) website.

Schwab is a registered broker-dealer, and is not affiliated with Jemma Financial Services or any advisor(s) whose name(s) appear(s) on this website. Jemma Financial Services is/are independently owned and operated. [Schwab neither endorses nor recommends {Name(s) of Investment Management Firm(s)}, unless you have been referred to us through the Schwab Advisor Network®. (This bracketed language is for use by Schwab Advisor Network members only.)] Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with “Name(s) of Firm(s)” under which Schwab provides Jemma Financial Services with services related to your account. Schwab does not review the Jemma Financial Services website(s), and makes no representation regarding information contained in the Jemma Financial Services website, which should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.