Entering the module
One sentence: everything you own answers three questions — how fast it becomes money, how much it can lose and who is making the promise.
After the module you will be able to:
- arrange the things you have by "how fast they become money" (liquidity);
- tell cash equivalents apart from investments;
- say what is guaranteed, what is secured and what is only promised.
🎓 Why this way: the EU/OECD-INFE financial competence framework for children and youth (2023) has a separate area, "risk and reward". The three "big questions" of Lusardi and Mitchell (compound interest, inflation, diversification) measure exactly the knowledge in this module. Meta-analyses show that knowledge sticks when it is learnt just before the decision (Fernandes et al., 2014). That is why every chapter ends with a step in the portfolio.
Chapters:
- What an asset is
- The liquidity ladder
- Cash equivalents
- Money in the bank and its guarantee
- "Backed": guarantee, collateral, promise
- Risk and return: compound interest and inflation
- Gold, property and things → The iron principle of the module
For the youngest · ages 6–7
🐣 The youngest: Some things become money quickly — like the coin in your pocket. Others become money slowly — like the bike you first have to sell. And some things are your wealth without being money. For example, being able to fix a toy.
Play together (5 minutes): Lay out a coin, a book, a toy and a drawing on the floor. The child arranges them from "becomes money fastest" to "slowest". There is no wrong order — ask "Why like this?".
A question for the evening: "Which of your things is most precious to you, even though it is not worth money?"
Chapter 1 · What an asset is
👧 Child An asset is something of yours that is useful to you or can be turned into money: a piggy bank with coins, a bike you can sell, knowing how to fix phones.
🧑 Teenager There are two definitions, and it is good to know both:
- The accounting one: an asset is a resource you control now (because of something that happened in the past) and that can bring you a benefit.
- Robert Kiyosaki's ("Rich Dad Poor Dad"): an asset is what puts money in your pocket; a liability is what takes money out of your pocket.
By the second one, your phone is a liability — you pay for it every month.
🧔 Adult The two definitions differ most sharply over the home you live in. In accounting it is an asset. For Kiyosaki it is a liability, because it brings costs, not income. Both are right — they ask different questions. Accounting asks "what do you own?", Kiyosaki asks "what brings you cash flow?". Pecuvo uses both: in "Net worth" the home is an asset; in "cash flow" it is an expense.
Myth → truth
- Myth: "Assets always go up in value."
- Truth: the car, the phone and clothes lose value from day one. They are assets in accounting terms, but they are not investments.
Who profits? Sellers, when they convince us that a purchase is "an investment".
Scene for 3D: a room full of objects. Next to each object an arrow lights up: green (brings money in), red (takes money out), grey (just sits there). The child sorts them.
→ Continue at the source
- The Pecuvo guide — Robert Kiyosaki (an honest note and the official website).
Sources
- ✔ IASB, Conceptual Framework 2018 — https://www.ifrs.org/issued-standards/list-of-standards/conceptual-framework/ · "An asset is a present economic resource controlled by the entity as a result of past events"; an economic resource is a right that has the potential to produce economic benefits (from the IASB staff paper, Agenda ref 10E, Feb. 2017, paras 4.5–4.6 — the Board does not change the text; https://www.ifrs.org/content/dam/ifrs/meetings/2017/february/iasb/conceptual-framework/ap10e-cf.pdf, opened 21.10.2026; the full text of the framework requires registration). Corrected: the text used the older definition (1989) with "expected future benefit".
- ✔ Kiyosaki, "Rich Dad Poor Dad" (1997, first edition).
Chapter 2 · The liquidity ladder
👧 Child You can spend the coin in your pocket right away. The bike you first have to sell. The house — even more slowly. The faster something becomes money, the more liquid it is.
🧑 Teenager The ladder from top to bottom:
- cash;
- money in an account;
- a fixed-term deposit;
- a money market fund;
- bonds;
- shares;
- gold;
- property.
The further down, the more slowly things become money and the more you can lose if you have to sell quickly. Usually the possible return is also bigger further down. Liquidity has a price.
🧔 Adult The ECB arranges money itself on the same principle — by liquidity:
- M1 = currency in circulation + overnight deposits;
- M2 = M1 + deposits with an agreed maturity of up to 2 years + deposits redeemable at notice of up to 3 months;
- M3 = M2 + repurchase agreements, money market fund shares and debt securities of up to 2 years.
For a household the rule is the same: money for tomorrow sits high on the ladder, money for ten years from now — lower down.
Myth → truth
- Myth: "Property is the safest money."
- Truth: property is among the least liquid assets. If you need money within a month, selling can cost you dearly.
Who profits? The intermediaries at every step down: fees, commissions, "buy/sell" spreads.
Scene for 3D: a ladder down which the child drops a coin. The further it falls, the longer the climb back to "money in hand" and the more "dust" (fees) is lost on the way.
→ Continue at the source
- ECB — the monetary aggregates: https://www.ecb.europa.eu/stats/money_credit_banking/monetary_aggregates/html/index.en.html
- ECB data — "What are monetary aggregates?": https://data.ecb.europa.eu/methodology/what-are-monetary-aggregates
Sources
- ✔ ECB, the definitions of M1/M2/M3 (the addresses above); Banco de España FAQ — the same definitions.
Chapter 3 · Cash equivalents
👧 Child Some things are "almost money" — like a voucher that becomes real money in a week without losing value. Grown-ups call them cash equivalents.
🧑 Teenager The accounting standard IAS 7 says: cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Usually their maturity is up to about 3 months from the date of acquisition. They are held to meet short-term payments, not for profit.
🧔 Adult It matters why you hold something, not only what it is: the same instrument can be a cash equivalent for a company covering salaries in two months and an investment for another. The "3 months" is a guide, not a law. In 2026 the European accounting advisers (EFRAG) and the standard-setting board (IASB) are still discussing whether it should be a hard limit. Shares, as a rule, are not cash equivalents.
Myth → truth
- Myth: "Anything that sells quickly is like money."
- Truth: a share sells in seconds, but at an unknown price. A cash equivalent is fast and has a known value.
Who profits? Knowledge benefits the company: whoever understands their cash equivalents sees how many months they can last without new income (Module 7).
Scene for 3D: three boxes — "money", "almost money", "investment". The child throws cards into them and sees which ones "melt" their value if opened tomorrow.
→ Continue at the source
- IFRS — the text of IAS 7: https://www.ifrs.org/issued-standards/list-of-standards/ias-7-statement-of-cash-flows/
- IAS Plus — overview: https://www.iasplus.com/standard/ias07.htm
Sources
- ✔ IFRS Interpretations Committee, AP23 (2013) — paras 6–7, the purpose and "3 months": https://www.ifrs.org/content/dam/ifrs/meetings/2013/january/ifric/ap23-ias-7-identification-of-cash-equivalents.pdf
- ✔ EFRAG (2026) — the debate about the threshold: https://www.efrag.org/sites/default/files/media/document/2026-05/06-03_-scf_project_cash_and_cash_equivalents-_efrag_fr_teg-user_panel_26-05-12.pdf
Chapter 4 · Money in the bank and its guarantee
👧 Child When you leave money in the bank, the bank owes you that money. If something happens to the bank, a special fund protects people's savings up to a large amount.
🧑 Teenager The money in your bank account does not lie in a safe with your name on it — it is a claim on the bank (Module 1, Chapter 8). That is why the EU has a deposit guarantee: up to €100,000 per person per bank. In every country a national deposit guarantee scheme pays it out if a bank fails.
🧔 Adult Under EU law the guarantee covers €100,000 for the aggregate deposits of each depositor in one bank, regardless of the number of accounts there ✔ (Directive 2014/49/EU on deposit guarantee schemes, Article 6(1)). Above that amount the depositor is an ordinary creditor of the bank. The guarantee protects against the bank failing, but not against inflation: a deposit with interest below inflation loses purchasing power (Chapter 6).
Example: Bulgaria — The guarantee is paid by the Bulgarian Deposit Insurance Fund (BDIF): up to €100,000 per depositor in one bank, regardless of the number of accounts ✔. From 1 January 2026, deposits in leva were converted into euros at 1.95583 leva = €1 ✔. After Corporate Commercial Bank (KTB) failed in 2014, the guaranteed deposits were paid out from 4 December 2014; by 4 December 2019, 112,021 depositors had received 3.687 billion leva ✔ (BDIF).
Check in your country — Which deposit guarantee scheme covers your bank (your central bank or banking supervisor will name it)? Is your bank licensed in your country or is it a branch of a bank from another EU country — and which country's scheme pays then? If you hold more than €100,000, how much of it is in one bank?
Myth → truth
- Myth: "A deposit has no risk at all."
- Truth: up to €100,000 in one bank it is protected against the bank failing. It is not protected against inflation, and above the threshold not at all.
Who profits? The bank earns the difference between the interest it pays on deposits and the interest it charges on loans.
Scene for 3D: a bank with a transparent wall. The child sees that the deposits are not little piles with names but numbers. Above each account a "shield" glows up to €100,000. Above that — none.
→ Continue at the source
- BDIF (the official fund, Bulgaria): https://www.dif.bg/bg/za-vlojitelite/kolko ✔ (in Bulgarian)
- Directive 2014/49/EU: https://eur-lex.europa.eu/eli/dir/2014/49/oj
Sources
- ✔ Fibank — €100,000 from 01.01.2026 and conversion at 1.95583 (a bank's source; to be checked against BDIF): https://www.fibank.bg/en/introduction-of-the-euro-in-the-republic-of-bulgaria/your-deposits
- ✔ Directive 2014/49/EU, Article 6(1) — €100,000 for the aggregate deposits of a depositor: https://eur-lex.europa.eu/eli/dir/2014/49/oj · ✔ BDIF — up to €100,000 per depositor in one bank, regardless of the number of accounts: https://www.dif.bg/bg/za-vlojitelite/kolko
- ✔ KTB — BDIF pays out from 04.12.2014; by 04.12.2019, 112,021 depositors received 3.687 billion leva: https://dif.bg/bg/za-medii/novini/informacija-za-izplateni-ot-4-dekemvri-2014-g-do-17-00-ch-na-4-dekemvri-2019-g-garantirani-sumi-na-vlojiteli-v-korporativna-tyrgovska-banka-ad-n
Chapter 5 · "Backed": guarantee, collateral, promise
👧 Child Some things have a "guarantor" — like a grown-up who says "if he doesn't pay you back, I will". Others have a "pledge" — something valuable that stays with you if the debt is not repaid. And some have only a promise.
🧑 Teenager Three different words that people mix up:
- Guarantee: a third party takes the loss (deposits up to €100,000).
- Collateral: specific property stands behind the promise (a mortgage, covered bonds).
- Promise: only the issuer's word (most stablecoins, loyalty points).
Money market funds are investment funds, not deposits. The EU regulation prohibits external support from the sponsor (for example a bank), so that nobody is misled into thinking they are guaranteed (Article 35), and their marketing must state clearly that they are not a guaranteed investment (Article 36(3)) ✔.
🧔 Adult For crypto, the MiCA regulation makes a distinction:
- e-money tokens (tied to one currency, such as the euro) may be issued only by banks and electronic money institutions. The holder has the right to redeem them at par value at any time and free of charge (Articles 48–49) ✔.
- asset-referenced tokens require a separate reserve protected if the issuer fails (Article 36). They are redeemed at the market value of the assets they reference, or against the assets themselves — not at par (Article 39) ✔.
Outside MiCA, many "stablecoins" have none of this. The lesson of TerraUSD (2022) is that "backed by an algorithm" is not backed (Module 5).
Myth → truth
- Myth: "Backed = no risk."
- Truth: backing reduces one kind of risk. Always ask: what exactly backs it, who keeps it and what happens if the issuer fails?
Who profits? The issuer earns interest on the reserves. The holder gets no interest (under MiCA this is prohibited for both kinds of token — Articles 40 and 50).
Scene for 3D: three safes. In the first there is a shield (guarantee). In the second — a real house behind glass (collateral). In the third — only a sheet with a signature (promise). The child "hits" them with a storm and sees which one holds.
→ Continue at the source
- EUR-Lex — Regulation (EU) 2017/1131 (money market funds): https://eur-lex.europa.eu/eli/reg/2017/1131/oj
- EUR-Lex — Regulation (EU) 2023/1114 (MiCA): https://eur-lex.europa.eu/eli/reg/2023/1114/oj
Sources
- ✔ The ban on external support — Société Générale, overview of the MMFR: https://securities-services.societegenerale.com/de/insights/views/news/money-market-funds (to be checked in the regulation)
- ✔ MiCA — redemption at par, reserves (secondary overviews: Clifford Chance, Management Solutions): https://www.cliffordchance.com/content/dam/microsites/talkingtech/PDFs/Client%20briefing%20Crypto-assets%20table1.pdf · https://www.managementsolutions.com/sites/default/files/publicaciones/eng/nt-regulation-on-cryptoassets-mica.pdf — to be checked against the text of the regulation.
Chapter 6 · Risk and return: compound interest and inflation
👧 Child If you save €100 and every year you get 5 % on top, after a year you have €105. The next year you get 5 % of 105, not of 100. Money "gives birth" to money, which also gives birth to money. This is compound interest.
🧑 Teenager €1,000 at 5 % a year for 10 years becomes €1,628.89 (1,000 × 1.05¹⁰). A quick trick — the rule of 72: 72 ÷ the interest rate ≈ the number of years it takes money to double (at 6 % — about 12 years). The flip side: if prices rise by 3 % a year, after 10 years €1,000 buys what about €744 buys today. Inflation is compound interest working against you.
🧔 Adult The real return is roughly the nominal return minus inflation. A deposit at 2 % with inflation at 3 % loses about 1 % of purchasing power a year. Diversification (spreading money across different assets) reduces the risk that depends on a single issuer — this is the third of Lusardi and Mitchell's "big questions". The price of "a higher return" is always a bigger or a different risk. If someone promises a high return and no risk, they are selling something — most often, you.
🎓 The academic basis:
- Compound interest, inflation and diversification are the "Big Three" financial literacy questions (Lusardi & Mitchell). Fewer than 30 % of Americans answer all three correctly (NFCS 2021) [~]. That is why we go slowly here, with examples.
- Teaching works better when it is linked to a specific decision (Fernandes et al., 2014).
Myth → truth
- Myth: "Money under the mattress is safe."
- Truth: it is safe from a bank failure. It is not safe from inflation — which takes a little every year.
Who profits? With high inflation, debtors with a fixed rate gain. Savers with a low rate lose.
Scene for 3D: two trees. One grows with compound interest (branches grow branches), the other melts like ice cream in the sun (inflation). The child moves sliders — interest, years, inflation — and watches both.
→ Continue at the source
- GFLEC — the "Big Three" and the "Big Five": https://gflec.org/education/questions-that-indicate-financial-literacy/
- ECB — inflation and the 2 % target: https://www.ecb.europa.eu/mopo/strategy/html/index.en.html
Sources
- ✔ GFLEC (the questions; the address above).
- ✔ Lusardi & Mitchell (2014), Journal of Economic Literature 52(1) — see
04_Akademichna_osnova. - The calculations are Pecuvo's (1,000 × 1.05¹⁰ = 1,628.89; 1,000 ÷ 1.03¹⁰ ≈ 744.09).
Chapter 7 · Gold, property and things
👧 Child Gold does not make little baby golds. A house can give you rent, but it can also stand empty. Some things just keep their value, and others lose it.
🧑 Teenager
- Gold has no cash flow: it pays no interest and no rent. Its price depends only on how much the next buyer will pay. That is why it can swing a lot. Central banks hold it in their reserves.
- Property can bring rent, but it is illiquid and needs maintenance, taxes and time.
- Things (cars, gadgets, clothes) lose value.
🧔 Adult In many countries the home is the biggest part of a family's wealth; Eurostat publishes the share of people living in a home they own for every EU country (table ilc_lvho02). The choice is understandable, but it has a price:
- concentration in one asset;
- illiquidity;
- hidden costs (maintenance, taxes, empty months).
Example: Bulgaria — The 1996–1997 crisis in Bulgaria wiped out savings held in banks (Module 2). Today over 85 % of people live in a home they own (Eurostat, ilc_lvho02: 86.1 % for 2025) ✔ — for many families property is their biggest wealth. How far this comes from the crisis rather than from incomes and tradition has not been studied separately.
Check in your country — Look up your country's share in the same Eurostat table (ilc_lvho02). Then look at your own family: how much of your wealth is in the home, and how much could become money within a month?
Pecuvo does not say "property is bad" or "gold is good". It says: see how much of your wealth is in one thing and how fast it can become money if you need it.
Myth → truth
- Myth: "Gold always goes up."
- Truth: there are decades in which it loses real value. It is insurance against certain crises, not an income machine.
Who profits? Gold dealers earn on the "buy/sell" spread. Estate agents — on the commission.
Scene for 3D: the scales of the family's wealth. The child puts on a house, a gold bar and an account. The scales show how much each weighs and how long it takes to "lift" it.
→ Continue at the source
- World Gold Council (an industry body — with its own interest): https://www.gold.org
- The Pecuvo guide — Kiyosaki and property (an honest note).
Sources
- ✔ World Gold Council (an industry source, with its own interest) — https://www.gold.org (opened 21.10.2026); not used for attitudes in Bulgaria.
- ✔ Eurostat, ilc_lvho02 — share of people living in an owner-occupied home, Bulgaria: 85.0 % (2022), 86.1 % (2025) (opened 21.10.2026). Removed: the claim that "some families keep value in property and gold" because of 1997 — there is no verified study; the text no longer explains the share with a single cause.
The iron principle of the module
Before you put money into something, answer three questions: how fast it becomes money, how much it can lose and who is making the promise.
- 👧 Child: "Can I take it back tomorrow?"
- 🧑 Teenager: "Who is promising me this profit, and what do they lose if it doesn't happen?"
- 🧔 Adult: arrange your wealth on the liquidity ladder. How many months of living do the funds at the top of the ladder cover?
Your step in Pecuvo: in "Net worth", put a label next to each account — money · almost money · investment · thing and who makes the promise. See how much of your wealth sits at the top of the ladder.
Check yourself (3 questions per level)
- 👧 1. Which becomes money faster — the bike or the coin? 2. What does compound interest do? 3. What does the deposit fund protect?
- 🧑 1. Why is a phone a liability according to Kiyosaki? 2. How much does €1,000 become at 5 % for 10 years? 3. What is the difference between a guarantee, collateral and a promise?
- 🧔 1. What does IAS 7 say about cash equivalents? 2. What is the real return on a deposit at 2 % with inflation at 3 %? 3. Why is a money market fund not a deposit?