A Crash Course in

Money Management
Basics of Money and Personal Finance
for Kids & Beginners

By Rishi Vamdatt
About the
Author
Rishi Vamdatt
Creator
Rishi started his multi‐award winning
YouTube channel Easy Peasy Finance and
the website EasyPeasyFinance.com in
2018 as an 8‐year old, fascinated with the
world of personal finance and
entrepreneurship!

He loves to read personal finance books,

and keeps himself updated on the latest
by reading various personal finance
magazines. One of his favorite TV shows
is Shark Tank.

Since he was 7, Rishi has been investing

all his allowances, chore money and cash
gifts in stocks to build his retirement
fund. While the amounts he invests are
@EasyPeasyFinanc
not large, he is sure it would grow into a
hefty sum by the time he retires ‐ thanks Easy Peasy Finance
to the power of compounding.

Rishi was featured on CBS News as the "11‐year old whiz kid who offers free financial
advice to thousands online", and has been a guest on radio shows, podcasts &
corporate panels.

Through his books and videos, Rishi hopes to break down complex financial terms in a
way that even kids can easily understand ‐ he would love for other kids to be as
excited about finance as he is!

2
Table of Contents

01. Net Worth

02. Emergency Fund

03. Compounding

04. Saving for Retirement

05. Risk & Return

06. Dollar Cost Averaging

07. Diversification

08. Asset Class & Asset Allocation

09. Reviewing Credit Report

10. Identity Theft

11. Will & Estate Planning

3
Chapter
One

Net Worth
4
Net Worth
What is Net Worth?
Net Worth is your assets (what you own,
like a home or a car), minus your
liabilities (your debt or money that you
owe someone else, like a car loan,
student loan, credit card debt or a
mortgage).

Net Worth = Your Assets - Liabilities

Should Only the Rich

Calculate Net Worth?
No, not at all. Everyone should calculate their net worth - from the richest person in
the world, to average people like you and me. Even if you think that your net worth
is really less, you should still calculate it.

Why Should You Calculate

Your Net Worth?
Calculating your net worth helps you track your financial progress over time. By
finding out how much your net worth has grown or gotten smaller, you can decide
if you are taking the right financial decisions.

When Should You Calculate Your Net Worth?

You should calculate it at least once every year.

5
Summary
Takeaway for You
Now that you know why Net Worth is important, why don't you calculate your own
Net Worth?

To get some help, use the Easy Peasy Finance Net Worth Calculator, that would
take all the guesswork out of the Net Worth calculation process!

For Further Information, Check Out

What is Net Worth?

6
Chapter
Two

Emergency Fund
7
Emergency Fund
What is an Emergency Fund?
An emergency fund is money that you keep aside for unexpected expenses or if
you lose your job.

Who Should Have an Emergency Fund? And How

Much Should it be?
Everyone should have an emergency
fund. The amount each person has in
their emergency fund would be different
depending on their earnings and their
expenses. Normally, you should have an
amount equivalent to 3 to 6 months of
your expenses in your emergency fund.

Where Should the Money for the Emergency Fund

be Kept?
You can use your regular savings account to hold the money for your emergency
fund. Money meant for the emergency fund cannot be invested in volatile asset
classes like stocks, because if the market goes down and that is the time when
you have one of your unexpected expenses or you lose your job, then you won’t
have enough money to pay your expenses.

8
Summary
Takeaway for You
Now that you know why having an emergency fund is important, why don't you
calculate how much your emergency fund should be?

Once you do that, check how much money you actually have for your emergency
fund - and if you're falling short, create a plan to reach your Emergency Fund goal!

For Further Information, Check Out

What is an Emergency Fund and Why it is Important?

9
Chapter
Three

Compounding
10
Compounding
What is Compound
Interest?
Compound interest is interest on
interest.

Let's say you have $100 deposited

in the bank which has 10% rate of
interest. In the first year, you'll
receive $10 in interest, because
10% of $100 is $10. This would
make your balance $100 (the
amount you deposited) + $10 (the
interest you earned) = $110.

But in the second year, the

interest you receive will be $11,
because 10% of $110 is $11.

- You receive $10 interest on your original $100, and you receive $1 interest on the
extra $10 that you earned as interest the previous year.

- So while the amount you deposited is $100, the interest for the second year is
$11, while it was only $10 for the first year.

Why is this Concept of Compounding Important?

Compounding means that the longer you invest your money for, the quicker your
money grows - and its growth gets accelerated. So, the bottomline is that you can
make a lot of money if you use the power of compounding.

Example: If there's $100 deposited at a 10% rate of interest, it'll turn into $259 in 10
years, $673 in 20 years, $1,745 in 30 years, $4,526 in 40 years, and $11,739 in 50
years!

11
Summary
Takeaway for You
The example above demonstrates that given enough time, compounding can work
wonders for your investments.

So if you've been procrastinating and delaying your investments, please don't!!

Remember, the sooner you start, the more time your money has to grow through
the power of compounding.

For Further Information, Check Out

What is Compound Interest?

12
Book: Easy
Peasy Money
A Fun Money & Budgeting Book for Kids

The book covers all aspects of money:

Earning, Spending, Saving, Investing,
Borrowing and Budgeting through:

Beautifully illustrated, full-color

pages to help kids grasp and retain
information

Two lovable characters that make

learning fun

Intuitive infographics to recap

learning

Glossary to define the big fancy

words used in the book

Check it Out on Amazon

Financial literacy is a key life skill, and it’s never too early or too late to start the
personal finance journey. This book explains complex concepts in a fun & engaging
way for kids, tweens & teens, so they can grow into well-rounded adults capable of
making sound financial decisions.

Also makes a great gift: Inspire a lasting passion for money and personal finance in
the kids & teens in your life.

13
Chapter
Four

Saving for Retirement

14
Retirement
What happens when I
retire - where would the
money needs to live on
come from?
After retirement, the government helps
to some extent through social security
payments. But you need to plan ahead
and save for retirement yourself.

When should I start

saving for retirement?
Ideally, you should start saving for
retirement from your very first pay
check. If you haven’t started yet, you
should start right away!

Remember the concept of compounding

that we discussed last week? The earlier
you start saving, the more time your
money gets to grow exponentially
through the power of compounding.

How should I save for retirement?

You should set aside some money from every paycheck towards retirement.

This money should be invested using specific accounts meant for retirement –
these accounts provide income tax breaks and can also offer some other
advantages like the employer matching your contributions.

Some examples are 401K, IRA and Roth IRA.

15
Summary
Takeaway for You
Have you started saving for retirement? If not, today is the best time to start!

If you have started, check how much retirement savings you have accumulated - by
quickly referring to the Net Worth Calculator that you used a few weeks back to
find your Net Worth.

For Further Information, Check Out

Saving for Retirement and Retirement Planning

16
Chapter
Five

Risk & Return

17
Risk & Return
What is Risk-Return?
Risk return is a theory in personal
finance that talks about the
relationship between risk
associated with an investment or
asset class, and the likely returns
from it. It is also called risk return
trade off or risk reward trade off. It
says that generally speaking, the
higher the risk, the higher is the
possible return.

As a consequence, we can say that

if someone wants to earn a higher
return, they would need to take a
higher risk, which means that they
would also need to be prepared for
a higher possibility of a loss.

Can You Give me Some Examples?

Generally speaking, stocks are volatile and therefore are considered risky. So,
investment in stocks has a potential for a higher return - in the range of 7 to 8 % a
year on average.

On the other hand, bonds are less volatile and are therefore considered less risky.
So, investments in bonds has a potential for a lower return - in the range of 2 to
3% a year on average.

18
Risk & Return
Does a High Risk Always Give a Higher Return?
No. If higher risk always gave a higher return, then it wouldn’t be a risk, right?

An investment with a higher risk has a higher potential return, which means that the
return can be high - but is not guaranteed.

19
Summary
Takeaway for You
What kind of investments do you make: ones that are risky but have a potential of
providing a higher return, or ones that are safe and provide a low or moderate
return? Evaluate your investments to see if you have been able to strike a right
balance.

And if you want to find out your Investment Risk Profile, take this simple, free
online quiz:
Quiz: What Type of Investor are You? Get Your Investment Risk Profile!

For Further Information, Check Out

What is Risk Return

20
Chapter
Six

Dollar Cost Averaging

21
Dollar Cost Averaging
What is Dollar Cost
Averaging?
Dollar Cost Averaging is an investment
strategy in which you invest a fixed
dollar amount in a stock, mutual fund or
ETF periodically – usually every month –
irrespective of the stock price, and
without worrying about how high or low
the market is.

People usually try to time the market,

which means they want to buy when the
stock market is at the bottom, and sell
when it’s at the top. However, this
doesn’t work most of the time, since
consistently predicting market tops and
bottoms is not possible. Dollar Cost
Averaging is the only strategy that has
proven to give consistently good returns.

Why Does Dollar Cost

Averaging Always Work?
We know that stock market is very volatile, which means that the prices can
change drastically in the short term. However, we also know that the stock market
always goes up in the long term.

When you invest a fixed amount periodically, you buy less stocks when the stock
price is high, but when the stock price goes down, you buy more stocks for the
same amount. That way, your average purchase price per stock stays low over
time.

That is why this strategy gives great returns in the long term.

22
Dollar Cost Averaging
What are the Other Pros of
Dollar Cost Averaging?
Apart from providing consistent returns,
the biggest advantage of Dollar Cost
Averaging is to remove the emotion and
anxiety from investing – you invest a
fixed sum at a fixed time, without
worrying about whether the market is
going up or down.

Normally, when a stock’s price is going

down, people avoid buying the stock
thinking it is not performing well. But
with Dollar Cost Averaging, you would
continue to buy the stock even while its
price is going down - and why not?
You’re getting the stock at a discount!

Wouldn’t you be happy buying your

favorite pair of shoes at a discount?

Are there any cons of Dollar Cost Averaging?

A perfectly executed strategy of buying at the lowest price and selling at the
highest price can theoretically give a better return – something Dollar Cost
Averaging can’t. However, this is not a real disadvantage because it’s impossible to
time the market consistently.

Do You Need to Remember to Invest Each Month?

Not at all! Most brokerages can help you automate this process: you just need to
tell them how much money to invest, where, and how often, and they would take
care of investing the money on your behalf. And if you are investing through a 401k
plan, then you are already taking advantage of the Dollar Cost Averaging strategy!

23
Summary
Takeaway for You
Are you using the strategy of Dollar Cost Averaging? If not, check how it can be
implemented in your brokerage account, and start as soon as possible!

For Further Information, Check Out

Dollar Cost Averaging: Always Make Money in the Stock Market

Dollar Cost Averaging: Advantages and Disadvantages

24
Book: Easy
Peasy Investing
A Fun Investing Book for Kids

The book covers all aspects of investing:

Compounding, Risk & Return, Liquidity,
Asset Classes, Diversification, Asset
Allocation and Portfolio Rebalancing
through:
Beautifully illustrated, full-color
pages to help kids grasp and retain
information

Two lovable characters that make

learning fun

Intuitive infographics to recap

learning

Glossary to define the big fancy

words used in the book

Check it Out on Amazon

Financial literacy is a key life skill, and it’s never too early or too late to start the
personal finance journey. This book explains complex concepts in a fun & engaging
way for kids, tweens & teens, so they can grow into well-rounded adults capable of
making sound financial decisions.

Also makes a great gift: Inspire a lasting passion for money and personal finance in
the kids & teens in your life.

25
Chapter
Seven

Diversification
26
Diversification
What is Diversification?
Diversification means
investing your money in
different things, instead
of investing all of your
money in just one or two
things. You need
diversification to reduce
the risk of losing money
or getting negative
returns. Remember the
old saying "Don’t put all
your eggs in one
basket"?

What Factors Should You Consider?

Asset class: You should generally spread your investments among stocks, fixed
income, cash equivalents, real estate etc.

Geography: You should divide your investments among US, developed markets -
US, Europe, Australia etc., and emerging markets - China, India, Brazil etc.

Tax: Whenever possible, you should try to make tax-advantaged investments with
pre-tax money like a 401k or with post-tax money like a Roth IRA. You can also
make non-tax-advantaged investments like your regular brokerage account.

Liquidity: You should spread your investments between liquid assets like cash or
money market securities and not-so-liquid assets like CDs or certificates of
deposit and real estate.

However, when we say diversification, the most important factor is investing in

different asset classes.

27
Diversification
Why Should You Diversify Across Asset Classes?
You need to diversify across different asset classes because things within an asset
class generally show very similar risks and returns, but different asset classes have
different risks and returns.

When you invest your money in different asset classes, even if one asset class does
not perform well, another asset class is likely to make up for the loss. This means
that over time, your overall return would fluctuate less and will be more
predictable.

Let's say you have $1,000 to invest. You can invest 75% or $750 in stocks and 25% or
$250 in fixed income. This way, if stocks perform well, the bulk of your portfolio
gives a great return. But, if stocks do not perform too well, you still get a
predictable return from your fixed income investment.

28
Summary
Takeaway for You
Evaluate your investment portfolio. Are your investments diversified? If not,
evaluate if you can diversify by:
- Selling some of your investments and using the money to buy something from a
different asset class, or
- Making newer investments in a different asset class

For Further Information, Check Out

What is Diversification and Why Should You Diversify?

29
 Chapter
Eight

Asset Class & Asset Allocation

30
Asset Class
What is an Asset Class?
An asset class is a group of assets in which you can invest your money. All assets
within a specific asset class also shows similar traits, which means they would
have similar risks and would provide similar returns.

For example, equities have a higher risk but also usually provide higher returns,
whereas fixed income securities usually have a lower risk and provide lower
returns.

Items in the same asset class are also usually subject to the same laws, including
tax laws.

What are Some Examples of Asset Classes?

Some examples of asset classes are Stocks or Equities, Fixed Income or Debt (like
bonds), Cash and Cash equivalents (like Money Market instruments), Real Estate,
Commodities (like Gold, Silver or Crude Oil), Works of Art, etc.

31
Asset Allocation
What is Asset Allocation?
Asset allocation is deciding how much of your money is invested in various asset
classes. You need asset allocation to achieve diversification, so that you reduce the
risk of losing money and decrease the fluctuations in the return that you get.

Asset allocation is usually expressed as a percentage of your total investments. So

for example, your asset allocation could be 75% in stocks and 25% in fixed income.

How is Asset
Allocation Decided?
Asset allocation varies from
person to person and depends on
factors like your age, how much
you save, your risk tolerance etc.

But generally speaking, the

younger you are, the higher your
allocation to stocks should be.
And as you grow older your
allocation to fixed income
should increase. A general rule
of thumb is your investment in
equities should be 100% minus
your age.

Do You Ever Change Your Asset Allocation?

Yes, you do need to change your asset allocation if your personal and financial
circumstances change. Say, you get a promotion or you have a kid. You also have to
change your asset allocation with age.

32
Summary
Takeaway for You
Have you determined the asset allocation that is right for you, based on your age,
your income & expenses, your risk tolerance, etc?
- If yes, evaluate your investments to see if they are adhering to this allocation
- If not, determine the right asset allocation for you at the earliest, and shuffle
your investments to achieve it

For Further Information, Check Out

What are Asset Classes?

What is Asset Allocation?

33
 Chapter
Nine

Reviewing Credit Report

34
Credit Report Review
What is a Credit Report?
Credit bureaus like Equifax, Experian,
and TransUnion collect information
about your financial activity,
employment history, etc. from banks,
financial institutions and other sources,
and create a report which is called a
credit report. It is essentially a report
card on how you manage your finances.

It contains your personal information,

including your Social Security number,
detailed information on your existing
debt like credit cards and mortgages,
public records like bankruptcies and
debt collections, and a list of entities
like corporations and banks that have
asked to see your credit report recently.

When you apply for loan, rent a house or apply for a job, the bank, landlord or
employer usually accesses your credit report to check your creditworthiness. A
good credit report helps you get credit cards and loans at a lower rate.

Why Should You Review Your Credit Report?

You need to review your credit report because any incorrect information on your
credit report can negatively impact your loan applications, like a mortgage, and
credit card applications. Also, reviewing your credit report helps you catch signs of
identity theft early on.

You should check and review your credit report at least once every year. If you are
planning to apply for a large loan, like a mortgage or car loan, you should review
your credit report 3-6 months in advance so that you can fix any incorrect
information.

35
Credit Report Review
What Should You Look for When You Review Your
Credit Report?
Check for identity
related errors, like
wrong name or
phone number, or
presence of
accounts belonging
to someone else
with a name similar
to yours. Also check
for presence of any
accounts that have
not been opened by
you, or any financial
activity unfamiliar to
you – these could be
signs of identity
theft.

You should also check for any closed accounts reported as open, incorrect account
balances, incorrect dates of payments, incorrect credit limits, etc.

If You Find Incorrect Information on Your Credit

Report, What Should You Do?
You can get it corrected by raising a dispute with the credit bureau – the credit
report usually has information on how to do this. You can also contact the creditor
that reported this information, and request them to send an update to the credit
bureau.

36
Summary
Takeaway for You
Do you review your credit report periodically? If not, get a copy of your credit
report, and review it as soon as possible - and continue doing so once every year!

For Further Information, Check Out

What is a Credit Report?

How to Get a Free Credit Report?

How to Review Your Credit Report?

What is Credit Score / FICO Score?

Comparison: Credit Report vs Credit Score

37
Book: Easy
Peasy Banking
A Fun Banking Book for Kids

The book covers all aspects of banking -

Banks, Credit Unions, Checking & Savings
Accounts, ATMs, Checks, CDs and Online &
Virtual Banking through:

Beautifully illustrated, full-color

pages to help kids grasp and retain
information

Two lovable characters that make

learning fun

Intuitive infographics to recap

learning

Glossary to define the big fancy

words used in the book

Check it Out on Amazon

Financial literacy is a key life skill, and it’s never too early or too late to start the
personal finance journey. This book explains complex concepts in a fun & engaging
way for kids, tweens & teens, so they can grow into well-rounded adults capable of
making sound financial decisions.

Also makes a great gift: Inspire a lasting passion for money and personal finance in
the kids & teens in your life.

38
Chapter
Ten

Identity Theft
39
Identity Theft
What is a Identity Theft?
Identity theft or ID theft is when
someone steals your personal or
financial information and uses it to
commit fraud, in your name.

ID theft can have a huge financial

impact, since the stolen information
can be used to apply for credit cards,
withdraw money from your bank
accounts, take out loans or make
unauthorized purchases using your
existing bank accounts or credit
cards. Identity theft can also result in
a damage to your credit score, and it
could cost a great deal of time and
money to restore your good credit.

How do You Know if You Are a Victim of ID Theft?

If you regularly review your credit report, you can spot signs of identity theft early
on by looking for new accounts that have not been opened by you, and other
unusual financial activity.

You are also probably a victim of ID theft if you receive bills for things you didn't
buy, start getting debt collection calls for accounts you didn't open or there is a
sudden drop in your credit score.

40
Identity Theft
What Should You Do if You
Are a Victim of ID Theft?
As soon as you find out that you are a
victim of identity theft, you need to take
a few immediate steps.

First, call the fraud department of the

companies where the fraud occurred –
your bank, credit card issuer, etc. – to
report the fraud and to freeze or close
the accounts. Then, change the logins,
passwords and PINS for your accounts.

Once you have done that, you should

contact the credit bureaus – Equifax,
Experian, and TransUnion – and set up a
fraud alert.

This means that lenders will be informed about your identity theft, and they can
take extra precautions to verify the identity of anyone using your information to
open new accounts or apply for loans.

You should also get a copy of your credit report, and review it thoroughly for any
errors. And if you find anything suspicious, be sure to lock or freeze your credit
until you fix it.

Do You Need to Report Your ID Theft to the Police?

Yes, you should report the identity theft to the Federal Trade Commission – which
can easily be done online, at their website IdentityTheft.gov. They help with
recovering from ID theft by providing information on the steps you need to take,
the forms for filing any reports and disputing fraudulent charges, etc.

Once this is done, you can go to your local police office with a copy of your FTC
Identity Theft Report, and inform them about the crime.

41
Identity Theft
How Can You Prevent Identity Theft?

The best way to prevent ID theft is by keeping your identity and financial
information out of reach of others. This includes not sharing your social security
number and other personal information like your birth date, and safely shredding
old receipts, account statements, credit cards, etc.

You should also keep your online activity protected by using secure internet
connection and keeping your anti-virus software up-to-date.

42
Summary
Takeaway for You
Please review your credit report periodically (at least once every year) to make sure
that you are not a victim of identity theft. Also, always keep your financial
information safe - don't share any personally identifiable information with unknown
people or online, and always shred financial documents when you discard them.

For Further Information, Check Out

What is Identity Theft?

What to do if You Are a Victim of Identity Theft

43
Chapter
Eleven

Will & Estate Planning

44
Estate Planning
What is a Will?
A will is a document that
your create, which mentions
all the people who will get
your assets and who will get
the custody of your kids after
you die. Everyone who owns
valuable assets or has
children under 18 years old
should have a will.

When Should You

Create a Will?
The earlier you create a will, the better. But as soon as you have valuable assets like
a house or car; or have kids, its best to create a will if you don’t have one already.

How do You Create a Will?

You can create a will yourself but the laws around wills can be very complicated. So,
it’s best to do it with the help of a lawyer or by using online will creation services.

Can You Change Your Will?

Of course, you can change your will as many times as you want. In fact, it is very
important to perform periodic review of the will every one to two years, because
there could be a change in the assets you own or in the people you want to give
your assets to.

How Many Wills Can You Have?

You can have multiple wills. But at the time of your death, the latest will prevails,
and all your assets are distributed as per that will.

45
Summary
Takeaway for You
Do you have a Will? If you own assets and/or you have kids under the age of 18, and
you don't have a will, please consult a lawyer / online will creation service and get
a will at the earliest!

For Further Information, Check Out

What is a Will?

46
Enjoyed this book?
There’s a lot more where this came from!
Explore Easy Peasy Finance videos:
 Aligned with K-12 National Check Out
Standards Easy Peasy Finance
 Animated, Fun and Kid-Friendly YouTube Channel
 Informative and Concise
 Totally Free and Easy to Use in a Classroom
 Cover a Breadth of Personal Finance Topics

YouTube.com/@EasyPeasyFinance

47