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Whether you just embraced the concept or you’ve had a focus on becoming financially independent for years, you’re building good money habits and saving for the future.
In order to save more, you may be tracking expenses, using a budget, working side hustles or adopting a minimalist lifestyle. You might even do all of those and more.
But with a laser-focus on saving, it can be hard to spend (and some people always struggle with spending their money.)
Questioning each purchase, working more hours, and adjusting how you live can help you reach your goals faster – and others may take notice.
You call yourself “frugal”, but friends or family members might call you “cheap” instead.
As you seek out great deals and practice savvy spending, they tell you to “live a little” because they don’t think twice about spending money.
Then you begin to question it yourself. Am I frugal or cheap?
You embraced frugality but the label “cheap” makes you cringe.
How can you tell which one you are and does it even matter? Read on to learn more. And yes, there’s a good chance it will matter to you.
What It Means To Be Frugal
Some people use the words frugal and cheap interchangeably. But when you consider examples of each, it’s clear there are important differences between the terms.
The Merriam-Webster Dictionary defines frugality as the” careful management of material resources – especially money.”
Being frugal is being careful with your money.
Frugality means your spending decisions are aligned with your priorities and values – not going without or suffering because you lack things you need.
It means you cut back on frivolous spending, stick to your budget, and spend more on things that matter to you.
When you spend, you do so thoughtfully-purchasing quality items that last longer or reduce the impact on the environment. Buy gifts to brighten someone’s day, even your own sometimes.
Frugal Choices Might Include…
- Buying generic drugs when possible
- Cutting out cable TV
- Buying things you use in bulk
- Choosing MVNO’s over the “Big 4” cell phone providers
- Picking favorite store brands over national brands
- Buying shoes/sneakers for comfort and support, not just style
- Establishing sinking funds for family vacations and future home expenses
- Adjusting the heat/air conditioning a few degrees to conserve energy
- Using coupons and cashback sites like Ibotta or BeFrugal when buying
- Shopping at discount grocers like Aldi
- Driving older cars (or driving your new one until it won’t run anymore)
- Borrowing books from the library rather than buying them
- Having cookouts with friends rather than dining out
Most frugal people don’t make all of those decisions. But they consider both their short- and long-term goals and make choices to help them meet those goals.
What It Means To Be Cheap
Cheap is defined as “at minimum expense” or “for little cost” according to Merriam-Webster. While it seems like being cheap should be your goal if you’re trying to save money, there’s more to it.
If you are cheap, your only goal is to save money. You spend as little as possible and you don’t worry about how it affects anyone or anything else.
Your decisions might negatively impact our world, but you don’t care because it saves you money.
Being cheap is being selfish with your money.
And while you think your actions are forgivable in the name of “saving money” or “taking care of yourself” – ignoring other people, their feelings, and even their bank accounts can hurt you.
Being cheap might even have the opposite effect and cause you to spend more money and time in the long run. Cheap products often break or wear out quickly needing quicker replacement.
When You’re Cheap You Have Money But Do Things Like…
- Give a lousy tip (or worse yet, no tip) even if you have great service
- Buy inexpensive items like clothes or shoes that fall apart or only last a handful of wears
- Lie about your age (or your kid’s age) to get discounts
- Disappear when it’s your turn to buy a round of drinks
- Buy impractical inexpensive gifts for people just because of the low price
- Wait to replace bald tires on your car
- Come up with excuses to miss important events because you don’t want to spend money
- Use a product and then taking it back to the store for a refund
- Choose the lowest bid for a repair without checking references
- DIY something that isn’t safe for you to do
It makes sense that you might be “cheap” if you’ve had trouble with debt in the past and are afraid to spend. But some people are “cheap” because they don’t really care.
If you have money but you’re scared of spending, shifting your mindset to frugality can help.
- If you want to save when you go to a restaurant, skip the beer or order an appetizer as your meal so you’ll have money for a decent tip
- Go to a matinee to save money at the movies rather than having your child lie about their age
- Skip the cheap gift and do a chore to help the person or give them something homemade
- Replace your bad tires so you avoid an accident which could cost you and others money and your health!
- Borrow a tool from a neighbor instead of buying it and returning it to the store after use
Saving Money Matters But Your Approach Does Too
Trying to save money can be a real challenge and there may be times where you find yourself being cheap instead of frugal.
If you’re worried you won’t recognize it, your gut will probably let you know if you’re being cheap.
- Are questioning whether you should add a dollar or two to your waiter’s tip? Go ahead and do it.
- Wonder if your sister will really like what you picked up for her birthday on the clearance rack? If it is something she’d like, that’s fine! If you bought it because it was cheap – return it.
- Plan to make up an excuse to skip out on your cousin’s wedding because of the cost? Set up a sinking fund or think of ways to make some extra money (sell something, side gigs) so you can attend.
When spending money to buy or do something will put you further into debt, do what you can to limit your spending.
But remember that “penny-pinching” and “cutting corners” can be detrimental to not only you but to others as well.
Vicki and Amy are authors of Estate Planning 101, From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning, from Adams Media.