A lot of what we think we know about money isn’t true. Dollar bills aren’t made of paper, the Fed doesn’t print money, and a coin toss isn’t exactly 50/50. Here are 12 money myths and the real facts behind them.
Money affects almost every decision that we make throughout our day: what we do, where we go and how we do it. We all think that we understand what it is because we use it to buy everything from our morning coffee to the house we sleep in at night. But there are a lot of things that we don’t know about money. How many of these 12 common myths about money do you believe?
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Table of Contents
12 Common Money Myths Debunked
From what your bills are actually made of to how coin tosses really work, these facts about money might change the way you think about it entirely.
1. Myth: Money is made from paper and printing it kills trees.
Truth: All money in the US is made from a cotton-linen blend that only the Bureau of Engraving and Printing can use. It is more like a cloth than a paper, but I wouldn’t suggest sleeping on it since most US bills are dirtier than your bathroom floor!
2. Myth: You have to order official checks from your bank.
Truth: A Check is just a set of instructions to your bank and can be written on anything as long as it has the necessary information on it. Maybe you can write it on your bed sheets and sleep on a mattress of money after all.
3. Myth: Holding about 4,580 metric tons of gold, Fort Knox is the largest store of gold on earth.
Truth: The Federal Reserve Bank of New York’s vault holds about 6,331 metric tons of gold, roughly 1,750 more than Fort Knox. Most of it belongs to foreign governments and central banks.
4. Myth: Money was born out of barter.
Truth: Money started being used to keep track of debts. If my neighbor gave me a chicken with the understanding that I had to give a chicken and sheep back to him in the future. It quickly became hard to keep track of, so people would use rocks to represent these items: 1 rock for a chicken, 4 rocks for a sheep. That way there was no need to remember which actual items were owed, just how many rocks.
5. Myth: The US Federal reserve prints all the money that goes into circulation.
Truth: The Fed doesn’t actually print money. The Bureau of Engraving and Printing prints bills, and the U.S. Mint makes coins. And most money isn’t physical at all: it’s created electronically, mostly when banks make loans. Of the roughly $21 trillion U.S. money supply, only about $2.3 trillion exists as cash.If you’re curious about why money is important and how modern banking works, it goes deeper than most people think.
6. Myth: It is illegal to print your own money.
Truth: Over 60 communities throughout the United States print their own local currency to encourage local spending. Disney issued its own Disney Dollars from 1987 until 2016, and its U.S. parks still accept them like cash. Other communities such as Ithaca New York and Berkshire Massachusetts do the same.
7. Myth: Coins are always used for denominations less than $1.
Truth: Today coins are used for these smaller denominations, but when metals were in short supply during the Civil War America issued a 5-cent bill.
8. Myth: The largest US legal-tender bill is $100.
Truth: The largest denomination of currency ever printed was the $100,000 Series 1934 Gold Certificate. It was only used for transactions between Federal Reserve Banks, was never circulated to the public, and can’t legally be owned by collectors. The U.S. also printed $500, $1,000, $5,000 and $10,000 notes, but because they weren’t used much, they were discontinued in 1969. Most of these large bills are held by collectors now, but they’re still legal tender.
9. Myth: A coin toss has a 50/50 chance of being heads.
Truth: A tossed coin is slightly more likely to land on the same side it started on. Stanford mathematician Persi Diaconis predicted this, and a 2023 study of more than 350,000 flips confirmed it: coins landed on their starting side about 50.8% of the time.
10. Myth: The USD, two-dollar bill is a rare collector’s item.
Truth: Even though the $2 bill was discontinued in 1966 it was reintroduced 10 years later as part of the U.S. Bicentennial celebration. There are still millions of them in circulation and the gift shop at Thomas Jefferson’s home in Monticello gives them out as change to encourage their circulation. Maybe surprisingly, they are still worth…$2.
11. Myth: Most bills printed in the USA are used by Americans.
Truth: While Americans use money each day, they use less and less cash. As a result, Federal Reserve economists estimate that roughly half of all U.S. cash is held overseas, especially $100 bills, though estimates vary.
12. Myth: Money can’t buy happiness and money is the source of happiness.
Truth: Researchers have found that money and happiness are closely linked – though more complex than once thought. A landmark 2010 study set $75,000 as a happiness threshold, but more recent research suggests wellbeing continues to rise with income beyond that. What consistently matters most is financial security and choosing to spend on experiences rather than possessions. While it may be true that money can’t directly buy happiness, research has shown over and over again that it is very difficult to be happy in modern society without it. One of the simplest habits for building that financial security is paying yourself first.
Money shapes almost every part of our lives – yet most of us know surprisingly little about it. Understanding how it actually works is the first step toward managing it better.
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