When it comes to money, children often develop misconceptions that can lead to unrealistic expectations and poor financial habits later in life. As a parent, it’s important you help them understand the truth about money and guide them toward responsible financial behavior. Here are some common money myths that children believe—and how you can help debunk them.

Myth 1: Money grows on trees

Myth: Many kids think that money is an endless resource. After all, whenever they need something, it seems like you can just swipe a card or pull out cash.

Truth: It’s earned through work, whether that’s a job, running a business, or providing a service. Helping them understand that money is finite and must be earned can help them appreciate its value and think more carefully about how they spend it.

Myth 2: You have to be rich to save money

Myth: Your child might believe that only rich people can save money because they have more of it.

Truth: Saving money is for everyone, not just the wealthy. Encourage your child to save a portion of their allowance, birthday money, or any other earnings. Teach them that even small amounts add up over time and that having more money gives them options.

Myth 3: Credit cards give you free money

Myth: To many kids, using a credit card might look like a way to get what they want without having to pay for it.

Truth: Credit cards aren’t free money—they’re a loan. When you use a credit card, you’re borrowing money that needs to be paid back, often with interest if the balance isn’t cleared quickly. The longer you leave the balance unpaid, the more interest you pay.

Myth 4: You don’t need to worry about money until you’re an adult

Myth: Kids often think that managing money is something they can worry about when they’re older.

Truth: It’s never too early to start learning about money. Early financial education sets the foundation for good habits that will benefit them throughout their lives. Encourage your child to understand the basics of saving, budgeting, and spending wisely.

Myth 5: If you want something, it’s OK to buy it right away

Myth: When your child sees something they want, they might feel the urge to buy it immediately, especially if they have the money.

Truth: Patience and planning can result in a better outcome. Encourage them to compare prices, wait for a sale or perhaps save up for something bigger or better. By guiding them away from impulse buying, you’re helping them to be more efficient with their money.

Myth 6: Adults don’t have to budget—they just know what to do

Myth: Kids might think that adults naturally know how to manage money without any effort.

Truth: Show your child that budgeting is a skill everyone needs, regardless of age. Explain how you budget for household expenses, savings, and other financial goals. Needs get taken care of first, then the rest can be spent on wants. By involving them in the budgeting process, you demonstrate the importance of planning income and expenditure.

Myth 7: All debt is bad

Myth: Your child might believe that all debt is bad and should be avoided entirely.

Truth: Not all debt is bad. Explain the difference between "good debt", which ultimately helps increase your wealth (like a mortgage or student loan) and "bad debt", which decreases your wealth without anything tangible to show for it (like credit card debt). Good debt can often help you get ahead faster than having no debt at all.

Why busting these myths matters

It’s important your child develops good financial habits and attitudes early so they don’t experience the stress and disappointment of having to fix bad habits later. By debunking these misconceptions, you’re equipping them with the knowledge and skills they need to be financially independent and  secure in the future.