I have produced small amounts of counterfeit money, I keep this in a few wallets in a few rooms in my house. When going outside I always have one such wallet with me in case I get robbed. Is using counterfeit money for this specific purpose legal?
Since you don't say which country you're in, it's likely that you're interested in United States law.
You are probably in the clear here, though you're getting close enough to the edge of breaking the law that I wouldn't be confident about not being prosecuted and/or convicted. The relevant laws in this case appear to be 18 USC 471, 18 USC 472, and perhaps 18 USC 514. All three of them begin "Whoever, with the intent to defraud...". It's questionable whether creating counterfeit money as a burglar decoy counts as defrauding the burglar.