Welcome to start here the very special mini series within Sugar Mamma's Fireplay, where I answer your real life questions with practical empowering steps to help you finally get started.

Today's question comes from a very kind, caring, and thoughtful mother.

She wrote to me to share that when her daughter was young, she received twenty five thousand dollars from the government as compensation after a car accident.

That money was placed in trust about fifteen years ago, and it is only grown modestly with inflation roughly twenty five percent, meaning it is likely to be worth around thirty one thousand dollars today.

Her daughter has fully recovered, thank goodness, with no impact on her health, and is turning eighteen shortly, which means she'll soon have access to these funds.

So naturally, this mother has asked me, what should my daughter do with this money?

Now?

This is such an important question, not just because it's about setting her up financially, but how we actually use these opportunities like this to educate, empower and support young growing adults to make wise financial choices and to know how to grow their own wealth and financial independence themselves.

So firstly, I want to acknowledge this mother's care.

It is so natural to be protective, especially when this money came from something as traumatic as a car accident.

And whilst it's tempting to just want a straight answer from me now, the truth is there is no one size fits all solution.

What I can do in this episode, though, is walking through some possible pathways, explain the risks and the rewards, and hopefully spark a really empowerful conversation between you and your daughter.

Because this isn't just about the money.

It's about using this as a teaching moment, a defining teaching moment that could change the trajectory of her financial life.

So let's look at the money itself.

If twenty five thousand dollars was put aside fifteen years ago and it only tracked inflation, it's reasonable to assume it's now worth around about thirty one thousand dollars.

Now, that is a significant amount of money for an eighteen year old.

It could be used to tick off short term goals, provide long term security, or mix of both.

But before rushing into decisions, it's really important to think about the time frames and the actual goals themselves.

You know, what does she want this money to do for her today and in five years, ten years, twenty years, or even forty years.

We need to think about this and maybe write down some notes.

Also, if she thinks that she might need this money in the short term, maybe to buy her first car, help pay for university costs or other educational expenses.

You know, maybe she uses this money to put towards the home deposit or an investment property, or even if she's just not sure yet what she wants, then keeping it in cash, to be honest, is the safest option.

Why because investing in shares or property for a short period of time is fraught with danger.

It is risky.

You know, markets can drop suddenly, and the last thing you'd want is for her to need that money and the market is down and be forced to sell at a loss.

So if she needs flexibility, cash is really the best place right now.

It may not grow by money, but at least it will always be there for her now.

On the other hand, if she knows that she doesn't need this money for many, many years, and she's curious about how to make this money grow, then investing could perhaps be a really smart choice for her now.

This is where it's important to think about her risk profile at age eighteen, with potentially decades ahead before she needs this money.

She might be suited to some growth investments like ETFs, listed investment companies, or even individual shares if she wants to do this.

These offer strong long term returns, but they come with obviously an increased amount of risk and volatility, particularly in the short to medium term.

So the key question is that I would be asking her, is you know, how would she feel if her portfolio dropped by say, twenty to thirty percent in a market crash.

I'd also be asking her to sh you understand the difference between the market value of a share portfolio and the actual dividends the income paid from these investments.

I'd also be asking her is she interested maybe long term wealth creation or does she just want flexibility to be able to access that money sooner.

This is not about telling her what to do or manipulating her.

It's actually about giving her the tools and the language so that she feels empowered to make her own decisions with her own money.

And one of the best things that she can do right now before making any decision is to educate herself.

I encourage or I insist that you get her to read a couple of personal finance books and listen to a few podcasts and inspire her to take ownership of her financial wellbeing.

You know, Mindful Money is a great book to get started, or even the thousand Dollars Project.

Of course, there are so many books out there, and if she's interested in Australian shares, I've mentioned it before and I'll mention it again.

Peter Thornhill's motivated money because, as the saying goes, you can lead a horse to water, but she can't make it drink.

As her mother, you can guide her, but ultimately she's got to be the one that is ready and willing to build her own knowledge and confidence.

When she starts to understand how those small efforts made consistently over time create enormous long term financial results, hopefully she'll begin to see that she has the power to become a strong, independent and financially secure woman and be part of the ripple effect where she educates in powers the other women around her, and her children and her grandchildren.

This is so important, and of course it doesn't have to be all or nothing here.

If she wanted to, she could actually split this money and use it for say different buckets.

For example, she might want to keep behalf of this money and like a high interest savings account for short term security, and then invest the other half in to say, you know, a dividend based ETF for a listed investment company for long term growth, meaning that money can also be properly diversified.

This way, she has a safety of the cash, but she's also learning firsthand how compounding interest works.

In fact, even fifteen thousand dollars invested for twenty years could grow substantially, especially if she can contribute to this on a regular basis as well.

And it's not just about the returns.

It's about creating the habit and the confidence of being a young investor, hopefully a young wise investor.

So here is my advice to this mother.

Use this as a chance to teach, not to decide.

Encourage your daughter to set really clear goals, think about timelines, and reflect on her own level of comfort with risk.

Remind her that terr money should always stay in cash, but it is actually long term money that can grow through investing, you know.

Encourage her to contribute to this when she can, even small amounts.

Build up over time, and please don't forget about superannuation.

It's probably the last thing an eighteen year old's mind is on, but making sure her super when she gets her first job is set up correctly, the money's invested, and she understands about how to check her employee contributions, the fees.

You know, how it's going to work for her, and how she can if she wants to maybe look at contributing, because doing this can make an enormous difference later on, and as her confidence grows and she builds her post investment portfolio and is contributing and has that powerful aha moment, there's also the possibility of learning about more advanced strategies in the future, like, for example, borrowing to invest through say a margin loan.

Now, this is not something she needs to rush in by any means, and it is most definitely a higher risk strategy that should always be done with professional personal advice from a licensed financial planner and with a very clear plan in place so that you can proactively navigate those risks and obviously strategically minimize them as much as possible.

But when a gearing plan is done the right way for the right reasons, and at the right stage of life, it definitely can accelerate the wealth creation journey.

And it's something I started doing when I was in my early twenties actually, But of course it's most definitely not for everyone, but it's always worth her knowing about this particular tool and strategy and how you know it exists, and so that when she is older one day and more experienced and you know, then financially ready, she'll know whether it's right for her or not and how to set it up and do it in the best way for her.

Of course, most importantly right now, frame this not as a burden, and not that I think you're framing it as a burden, but for other listeners in similar situations.

But think of this as a gift.

This money is a chance for her to learn, to grow, and to start her adult life with a financial head start, if you want to call it something that many young people never really get.

So no, I'm sorry, there's no single right answer for you right now.

But with education, empowerment and the space to learn through books, through podcasts and lived experience, she'll be in the best possible position to turn this gift into something so much bigger over her lifetime, and maybe one day, when the time is right, she'll even be ready to explore more advanced strategies, but always doing so with confidence and knowledge by her side.

So thank you so much to this mother for such a full question and for caring so incredibly deeply about your daughter's financial future.

If this particular episode resonated with you, can you do me a huge favor?

Can you please Number one co and share it with a friend who might also be thinking about how to guide their kids with money.

Number two, can you please leave me a rating at a review And of course, remember if you would like me to answer your questions in the future for any of the start Here episodes, please make sure you send me a DM on Instagram at sugar Mama TV or at my lifestyle account Canna Campbell Official.

In the meantime, keep that financial fire burning bright within and I'll connect with you next Monday morning on Sugar Mama's Fire