Many people aspire to be frugal, but let’s face it, they usually just end up being cheap. Today, we’ll dissect the difference between the two and show you how to avoid this common pitfall.
What is Frugal?
“Frugal” is a gold star on your financial report card. It’s a virtue, a badge of honor. Thrifty, a synonym, is basically frugal’s twin. Benjamin Franklin, the original frugality influencer, said:
“Make no expense but to do good to others or yourself; that is, waste nothing.”
And,
“Be industrious and frugal, and you will be rich.”
Frugality is your ticket to financial security, your dream life, and being so charitable it hurts.
What is Cheap?
Cheap is the financial equivalent of a slap in the face. It’s stingy, miserly, and generally unpleasant. Cheapness is born from greed or an unhealthy attachment to your wallet. Observe how the word is used:
“Talk is cheap.”
“The cheap seats.”
“A cheap shot.”
You call someone cheap when you think they’re laughable, but call them frugal when you admire them. Neither “cheapskate” nor “spendthrift” is a compliment, but hey, it’s better than nothing.
Frugal or Cheap? The Eye of the Beholder
Everyone has their own financial philosophy. It’s a spectrum, and if someone’s not on your wavelength, you might see them as a spendthrift or a cheapskate. But judging others is pointless. Personal finance is a solo sport. You only need to out-earn, out-save, and out-invest yourself to win and be happy.
However, you do need friends to be happy, and being extremely frugal (read: cheap) can be a problem.
The Road to Frugality
There’s a lot of gray area between being cheap and being a spendthrift. Here are some tips to avoid sliding down the cheapness scale:
#1 Spend Intentionally
Spend on what you love. Shoes, vacations, handbags, cars—whatever floats your boat. Splurge on those, save on the rest. Be frugal overall but go all out on your passions.
You might spare no expense on outdoor gear for adventures. Yet, your driveway might boast a 2005 Toyota, and your wardrobe’s highlight is a Carhartt hoodie and comfy pants. Some might still call you cheap, but at least you’re true to yourself.
#2 Don’t Be Penny Wise and Pound Foolish
“Buy nice or buy twice” holds true for many things. If you’re a golfer who frequently loses balls, stick to the cheap ones. But most things in life aren’t like canyoneering, where gear is disposable. Trying to save money by buying cheap often leads to spending more in the long run.
Preventive healthcare and fitness are other areas where being cheap can cost you big. A $10 gym membership might save your life. Worth it? Absolutely.
#3 Don’t Do Illegal or Unethical Things
Here’s a no-brainer: save money legally and ethically. Avoid tax evasion, stiffing debts, fare dodging, account sharing, WiFi hacking, sneaking food into places, stealing, and other shady practices. Don’t be that person.
#4 Tip Appropriately
If you can’t afford the tip, you can’t afford the outing. Period. We wish everyone could work for tips for a while. It’s an eye-opener about people and customer service.
#5 Know What Others Care About
Consider your loved ones’ standards. Your spouse might not tolerate a sketchy motel, even if it’s dirt cheap. Compromise is key. Their idea of frugal might not align with yours, so be considerate.
#6 Know the Value of Your Time
Don’t let your cheap tendencies waste your time. Calculate what your time is worth. Spending an hour to save $50 might not be worth it if your time is more valuable.
#7 Remember the Big Rocks
Sometimes spending extra is worth it. Don’t let a minor saving ruin a major experience. Pay the entry fee, skip the extra walk, and enjoy the time you’ve paid so much to have.
#8 Have a Financial Plan
Know when to be frugal and when to splurge. Financial independence should change your approach. When you’re broke, saving every penny makes sense. When you’re well off, it might be time to loosen the purse strings.
#9 Don’t Nag Others to Pay You Back
If you organize trips or events, don’t harass friends over small debts. If someone’s struggling, let it go. Only lend what you can afford to give.
#10 The Wealthiest Should Be the Most Emotionally Intelligent
When hanging out with less well-off friends or family, be considerate. Offer to cover costs subtly, without making them feel like charity cases. It’s a delicate dance, but worth it for maintaining good relationships.
#11 Remember What You’re Teaching Your Kids
Model good financial behavior for your kids. Teach them to save resources for the right reasons, not just to pinch pennies. They’ll see through it if it’s all about the money.
By following these tips, you can master the art of frugality without crossing into cheapness. Enjoy your financial journey, and remember: it’s all about balance.
