Debunking myths about money is about more than setting your kids straight; it’s about backing up and boosting their financial education.
Read on to find out more about the most common money myths and how to ensure kids get the correct information.
Related: Teaching kids about money
Money myths kids & teens can believe to be true
Money comes out of the machine in the wall
Believing money comes out of the machine in the wall (ATM) whenever you want is just one of the common beliefs and questions children may have about money. Many kids believe that money is just there whenever you want because they see you going to the ATM, pressing a few buttons, and money coming out. Explain to children that the ATM is a machine that allows people to withdraw cash from their bank accounts, and if you don’t have money in your bank account, the ATM won’t give you money.
Money is unlimited
Children (even older ones) may also think there is an unlimited supply of money, especially if they get something every time they ask for it. So explain that money is a limited resource and people must work to earn it. You can help them understand this by comparing it to food - saying the fridge doesn’t automatically fill itself up. You have to go shopping for it. In the same way, bank accounts don’t automatically fill up; you have to work to earn money to put in your account.
You can’t teach someone to be good with money
Financial literacy is a skill, which means anyone can be taught to be good with money. Beth Zemble, VP for Education at GoHenry, says: “While there are many activities that can help kids understand the tenets of financial education, the most important things to teach kids about from a young age are the value of money and how to make personal economic decisions. Giving your kids pocket money so that they learn to make choices with their own money and giving them chores to do so that they understand the relationship between work and earning is a great place to start.”
Money is the most important thing in the world
If your child thinks that money is the most important thing in the world, you need to find ways to talk to your child about money and how it's related to life. Some children believe money is everything because they often hear adults talking about how much money they have or want to make. To combat this, talk about the importance of other things in life. Discuss the significance of love, family, friends, and health. And show your children that you value things other than money; you could even volunteer as a family to show them the importance of giving back or discuss all the things you have that make you happy but don't cost money.
Money equals happiness
Children often see that people with more money have more toys, clothes, houses, and holidays and can do what they want. This can lead children to believe that money equals happiness. While money makes life easier, be clear that money doesn't buy happiness. Talk about all the things unrelated to money that bring joy, like each other, friendships, health and being outside.
I'm bad at maths, so I can't be good with money
The idea that you have to be good at maths to be good with money is a myth that stops many kids from developing their financial education. While maths can be helpful with some concepts like compounding, it is not essential for money management. So your kids need to know that money management is a skill that can be learned. Starting early, giving regular pocket money, and teaching them to budget, save and delay gratification are all vital to being good with money.
Credit cards and debt are bad
Credit cards can seem scary to teens as they promise unlimited funds and a future of debt. Explain to teens that credit cards can be a great way to build your credit history if you understand how they work and that there are fees if you don't pay the money back or go beyond their credit limits. So ensure teaching kids about credit is part of their financial education.
Debt can also be a major financial burden if you can’t afford to make your payments. Yet, debt can be used to finance important purchases, such as a university loan or a house. But be clear with your teens that if they decide to take on debt when they are older, it’s essential to use it wisely.
It's not worth saving money if I don't have much to save
Kids need to remember that saving money is a marathon, not a sprint. Building up savings takes time and effort, but it's worth it as savings, no matter how small, can help you cover unexpected expenses, save for something special, or make you feel more financially secure.
Money doesn't matter
Money does matter. We cannot survive without money. We need it to buy necessities like food and shelter, and clothes. People who push this myth (usually influencers on social media) forget there is nothing wrong with accepting that having money is important and wanting to earn more if you can.
The Bank of Mum and Dad will always be open
It's a hard one to break, especially for teens, but they must understand that the idea that you will always be there to bail them out financially is a myth. Aside from helping them become more financially responsible, you may only sometimes be able to help them out financially, especially if your income changes in the future.
How can GoHenry help?
GoHenry's mission is to make every kid smart with money. The debit card and app are packed with great features that help teens and kids safely and securely learn about money, from saving to smart spending.
In-app Money Missions make learning about money fun and engaging with videos and quizzes covering everything from saving to budgeting.
Parents can set flexible parental controls in the GoHenry app, and receive real-time spending alerts whenever their kids or teens use their GoHenry kids’ debit card or teen debit card. You can also create savings goals and recurring pocket money payments.