True or False: Individuals are more likely to spend wisely when using cash compared to credit.

Using cash as a method of payment generally leads to wiser spending habits for individuals compared to using credit. This phenomenon can be attributed to several psychological and behavioral factors. When people use cash, they physically see the money leaving their hands, which can create a stronger emotional response and a more tangible connection to the transaction. This visibility often encourages individuals to be more mindful of their spending decisions.

Additionally, research indicates that people tend to pay more for items when using credit because it feels less 'real'; the detachment from physical currency reduces the perceived cost of purchases. The act of handing over cash can prompt individuals to pause and consider whether they truly want or need the item they are purchasing, leading to more deliberate and often restrained spending.

In contrast, credit can lead to a sense of freedom or disregard for budgeting, potentially resulting in overextending financial resources and accruing debt. Therefore, the assertion that individuals are more likely to spend wisely when using cash is supported by these behavioral insights.