Financial Literacy from FLC: Credit and Debt

Credit? Debit? Cash?

Do you think you spend less when you pay cash than you do when you use a credit card or debit card?  Research says you do.  What do you think?

I love this example from Ashley the Money Talks Coach: She says that the whole question can be answered with ice cream! Read this to get the idea and check out her whole blog on the subject. .

Ashley says:   You spend less when you pay cash and the reason has to do with ice cream.  Yeah, you heard right… ice cream.

I love a bowl of ice cream after the kids go to bed.  It’s one of my favorite luxuries.  However, when I indulge in this treat more than about once per week I gain weight.  I know this, yet I still do it.  Once or twice a year I will eat ice cream every night for two weeks straight and then cry when the scale reprimands me.


I do it because the consequence is too far away from the action.  I want ice cream and I get an immediate benefit (happiness) when I eat it.  Of course, for every action there is also a consequenceBut the consequence doesn’t come right away.  I don’t see the numbers on the scale move for a few weeks.  So right at that moment, when I’m standing in front of the freezer, ice cream scoop in hand, there is only the benefit on my mind.  I know someplace down deep that I’ll regret it later but at that moment all I can see is happiness.

Same goes for your purchases.  When you buy something you get an immediate benefit.  When you pay with a credit card you don’t feel the consequence of that action until the bill is due, some 30 days later.

What about debit cards?  While studies show that you will spend the most with credit cards, they say you still spend more with debit cards than you do with cash. .  So again, this consequence comes maybe 7 to 14 days after the benefit.

But with cash the consequence is immediateYou have $20 in your wallet and then you don’t.  You can’t put it out of your mind.  You can’t “work it out later”.  The money is spent and gone in one motion.  Certainly makes you think twice about that purchase.

Have you done this experiment yourself?  Do you spend less when you pay cash?

Thank you Ashley for the quick lesson!

Now check out the Lesson Plan #3 to help your students learn the language of Consumer Debit and Credit, and watch a couple of videos on how and why people use credit cards. 

Enriching Your Financial Literacy (Fin Lit) Library

As a result of the increasing need for financial literacy education among Florida’s population, the Florida Literacy Coalition (FLC) will be conducting a FREE webinar detailing important financial literacy resources beginning at 12 p.m. (Eastern), Thursday, Jan. 27!  This fun and educational training event will include access to online and hard-copy resources, helpful financial literacy articles, and a tour of the most important websites.  Literacy tutors/teachers looking to expand their literacy libraries will not be disappointed!  This training will enable you to provide/create a diverse curriculum for all your students.

Macario (Mac) Garcia, one of FLC’s AmeriCorps* VISTA members, will be presenting this virtual training.  During his time at FLC, he has focused on financial literacy and web-based learning, and is coordinating a statewide initiative to expand financial literacy in adult education programs.  His professional background includes social work, and educational and financial counseling.

You can participate from the comfort of your home or office!  All you need is internet access and speakers. This training is free, but registration is required.  After registering, a confirmation email will be sent to you with additional details.

Is your program currently offering financial literacy classes?  If so, share your successes and challenges with us in the comment box below. Or share any of your thoughts related to financial literacy!