YOUNGER AMERICANS WALK AWAY FROM CARS

According to CNNMoney, young Americans aren't buying cars like they used to.  In the last five years, the share of new cars bought by the 18 – 34 age group fell 30 percent. Is it a sign of the economy or are other social factors at play?

This age group has been hit particularly hard by the recession.  There is also a trend to re-urbanization which affords greater access to public transportation.  The expansion and popularity of car-on-demand rentals is off-setting some of the need to own and insure a vehicle that may not be used very often.

The ever-growing use of social media is reducing the traditional social importance of owning a car.  Now that this generation can meet and interact on the internet, the need to get in the car and go for a cruise downtown isn't as important.

According to a Deloitte study, forty-six percent of Generation Y kids “would choose Internet access over owning a car.” Recent increased driving restrictions such as raised age for licenses, restrictions on cell phone use and limits on car occupancy are taking away that appealing feeling of freedom.  The restrictions actually serve to “cut them off from their friends.”

Auto manufacturer analysts offer a rosier long-term-theory.  They tend to agree that, even though young people may hold off on buying new cars, at some point they will have families, move to the suburbs and need their own cars.

Whether or not you live in an urban location and even though trends maybe changing, you have to teach your kids the financial truth about car ownership.  The manufacturers are probably right in thinking that your kid will be buying a car someday.  Your child needs to know the real cost of having a car and the necessity to budget and save.

In Money Still Doesn't Grow on Trees, I have a chapter titled: TEENS AND CARS – HOW NOT TO DRIVE YOURSELF CRAZY.  I suggest a short quiz for your kids about the different costs associated with buying a car and different costs associated with operating a car. How much are these costs?

Go over your kid's answers with them.  Remember to include sales tax, registration and inspection fees, insurance premium and maintenance.  Don't forget the ever-climbing cost of gasoline. Have your kid do the research and put a realistic price next to each item.  The result is sure to be sticker shock.

I am not in favor of a generation of young people staying at home, tweeting and surfing the net as a substitute for face-to-face human interaction, but perhaps riding a bicycle and utilizing public transportation will continue to be an appealing, economic and Eco-friendly, alternative to owning a car.