Frugal vs Cheap. Who knew there was actually a difference? If you have heard these words used interchangeably you’re not alone. I use them interchangeably all the time.
But there is an actual difference between being frugal and being cheap and its all about perception.
Top major differences between cheap and frugal
Before we get into the major differences between cheap and frugal it may be a good idea to look at how dictionary.com actually defines these two words.
The first thing you will notice is that the word cheap seems to come off as negative while the word frugal is a bit more neutral.
However the biggest difference between the two is cheap refers to cost while frugal focuses on value.
It could be hard to understand the difference based on just those definitions so let’s go over some examples.
Characteristics of Being Cheap
Price is more important than value
This person will opt for the cheap item every time without regard to whether the two items are comparable.
Laundry detergent is a great example.
You can buy a gallon of the cheaper brand and you’ll be lucky to get a handful of loads out of it. However, if you spend a few extra bucks for the more expensive brand that gallon will get you double and even triple the number of loads.
If you don’t believe me give it a try and see for yourself. There is a reason why brands such as Tide are a best seller. Just check out the reviews and see what people are talking about the most.
Price is always the bottom line
Think about the people that spend hours online to get a great deal on a tv on Black Friday. Yeah, that TV was $299. However, you saved $100 bucks but stood on line for over 24 hours. Was it really worth your time? BTW that works out to about $4.16.
I was actually able to find this 50in on amazon for a deal. No need to standing on line.
Another example is experiences. So let’s use a vacation as an example. I am all about planning a vacation on a budget. However at what point does it turn into a nightmare as opposed to your dream vacation.
So for example if you book a cheaper hotel in an inconvenient location but have to spend hours everyday trying to get to all the sites and places you want to visit. If that is cool with you great. But if you are miserable taking public transit or even worse spending money on taxis then is it really even worth it?
Another example of this is driving to the other side of town just because something cheaper. I am pretty sure you probably spent your savings in gas but not to mention the time spent driving across town.
Prioritizing spending as little as possible
Cheap means not wanting to spend money. It can almost translate to being afraid to spend money. Even when you have it. And cheap people don’t want to spend money.
I am soo guilty of this. (I did say I was cheap right). But I am getting better. See when you prioritize spending as little as possible sometimes you end up spending way more than you anticipated.
Let’s use the example of buying a home or renting an apartment. Now assuming you can afford it and you’re not making a decision based on absolute need. Let’s say there are two apartments. One is $1200 and within a short walking/biking distance to work and entertainment. The other is $900 but it is about an hour away from work and entertainment.
That is a $300 savings and that is a lot of money. Now assuming you can afford the $1200 here is where opting for the $900 apartment could cost you more money.
First let’s start with commuting costs. Depending on where you live and whether you own a car or take mass transit commuting costs add up. For example an hour commute from my job to my home in Westchester is over $300 a month. So there goes the savings and then some.
That is only Monday through Friday. Not what about entertainment. Let’s say your activities, friends, and things you like to do are likewise located an hour away. Late night with friends means grabbing a cab home. (That can get expensive). And the list goes on.
You see how quickly that $300 that you thought you were saving goes out the door.
In this instance (and assuming you have it) it’s worth considering whether the savings is worth the quality of life. In this example it hardly is.
What would you do in that situation? And is opting for the cheaper apartment being frugal vs cheap.
Characteristics of Being Frugal
Value is more important than price
While being frugal means trying to get the best price this does not mean compromising value.
So for example instead of opting for a cheaper brand of an item a frugal person will find ways to find the same exact value at a cheaper cost.
So for example buying an older model phone with the same features as the most recent one.
Cost value is just as important as time value
While being frugal means trying to save it means saving money and time.
Having the time to do the things you enjoy is sometimes more valuable then saving a few bucks. And this is how frugal people measure things. It is a combination of time and money.
So for example (and I use this example a lot), taking a connecting flight that is 8 hours long vs opting for the more expensive flight that is only 2 hours long.
How much is that 6 hour difference worth to you?
A $50 difference might be worth it. A $500 difference might not. Assuming it is within budget and not outrageous the frugal person will opt for the slightly more expensive flight as the 6 hours savings is worth it.
Prioritizing spending on things that are most important.
Being frugal means you save money on some things so that you can spend on others. It is never just about the costs of something but more the value or joy that thing brings you.
So for example someone that is cheap will almost always go cheap on everything and everything. So they will always buy the cheapest coffee and book the cheapest vacation. On the other hand someone frugal may opt for a less expensive coffee option in exchange for being able to stay at a nicer resort for their vacation because these are the things that they most value.
Frugal people are resourceful
Research is your friend and because value is so important, finding the best value is always better than finding the best price. Sometimes this may result in actually finding the best price but frugal people are resourceful because they will do the research in order to get to that point.
So for example we are currently shopping for a wine fridge. We initially bought a cheap one that has since broken down so now we are looking to invest in something that will last longer.
While we were shopping we noticed that prices vary wildly between similar quality models. So we are doing our research looking for the specifications that we want and trying to find the model with the best price that will give us the quality we want.
How can I be frugal without being cheap?
The first step to being frugal without being cheap is to focus on the value of something rather than the price tag. So for example next time you reach for that off brand ketchup that will end up saving you a whole dollar think about it.
Is that dollar worth the experience when you put that ketchup on your burger. (This is coming from someone who is married to a ketchup snob and only loves one brand and that brand alone).
Or better yet when you’re booking a flight. Let’s say you find a direct flight to your dream location that is $100 and gets you on the beach by 10am. Versus a connecting flight that is $75 but is longer and won’t have you at your destination until 10pm.
Which would you choose?
The cheap person will choose the $75 flight because well it is cheaper. While the frugal person will go for the $100 because time is money and that $25 is not worth losing a whole day at the beach.
Focus on being intentional
In addition to being value conscious it is also important to be intentional. In addition to always trying to find the cheapest prices in the inverse being cheap sometimes can mean being lured by the cheapest price.
So for example if your shopping in a store and see something on clearance. Its a great deal. And even though you don’t need it at the moment it is so difficult to pass up and you know you will need it eventually. And don’t want to have to pay full price.
The frugal person will look at that item and decide whether or not it will serve them now. While the cheap person (and this is soo me), may buy because you know its cheap and they may need it eventually.
Find ways to save money without sacrificing your lifestyle
What’s the point in saving all that money if you’re miserable.
Now this isn’t a free pass to just spend irresponsibly but it is free pass to actually spend.
Being frugal is finding ways to still enjoy the lifestyle you want within your budget. So for example checking out some free and cheap date ideas versus overspending on a night out.
One of our favorite things to do is eat and drink wine. That can get crazy expensive. However, we have learned by frugal by thinking outside of the box. We may opt for an outdoor picnic with wine over an outdoor restaurant. Or we will visit a winery where you can buy wine at cost and bring your own lunch to enjoy on the property.
With a little creativity, you can find ways to maintain your lifestyle while still keeping things within budget and being frugal.
Don’t be a cheapskate
There is definitely a slippery slope between frugal living and becoming a cheapskate. When I think extreme cheapskates I think of someone that goes to the point where not only is their behavior potentially harmful to themselves but also harmful to others not to mention unethical.
I am talking about the person that buys things, uses them and returns them. Or the person that “borrows” supplies from work to take home. I get it. You’re trying to save money but you are crossing the line to stealing.
So before you start putting the office toilet paper in your backpack or stiffing your waiter think about how this action can potentially harm you or others.
Why being cheap is bad?
There is a thin line between being cheap and frugal. At the end of the day whether you consider yourself cheap or frugal you have one goal in mind. To save as much money as possible and make that dollar stretch.
However being too cheap can actually end up costing you more money.
Shoes are a great example of this. I used to buy black pumps for work that were relatively inexpensive. However I noticed that I was replacing them pretty often because I would wear through them in a way that I was unable to fix them. At $20 a pop every couple of months I was spending over $120 a year on work shoes.
I’m talking you buy shoes for the fall in August and by October you gotta replace them.
A few years later I decided to splurge (or invest) in a pair of leather black pumps. They originally retailed for $200 but I got them for $100 which was painful but I still bought them.
Fast forward almost 10 years and I still have those pumps. I have the pumps resoled once a year which costs me anywhere from $10-20 depending on how much wear. And I have brand new shoes. So I am actually spending way less than I would if I just kept on replacing the cheaper shoes.
What is the difference between stingy and frugal?
The biggest difference between being stingy and being frugal is generosity. I am not speaking about just generosity with money and with others but generosity even with yourself.
So for example someone that is stingy cares more about costs and saving every little dime than their time and relationship with others. Cost is the bottom line and the only thing they care about.
Be inspired by these money and relationships quotes. And discover what is truly more important.
Think of the person that has to spend but would rather stay home because they don’t want to spend money therefore taking away from their time with friends.
The cheap vs. frugal test
If you are trying to figure out whether you’re cheap or frugal think about how you would answer some of these questions.
- When you go shopping you almost always reach for the item that has the cheapest price every time?
- When you go shopping if a brand item you love is not on sale do you wait until it goes on sale or do you just buy a cheaper version?
- Do you complain when things seem expensive or do you just ignore it and keep it moving?
- If your friends invited you out would you try to find deals, happy hours or use coupons if it meant that it will save you money on a dinner out or would you opt to stay home so you don’t have to spend money?
- If you had a few extra bucks would you donate it to someone in need or keep it for yourself just in case?
Being cheap vs frugal is truly more about perception than everything else. The way someone perceives your actions determines whether they consider you cheap or frugal.
I get it. You’re trying to do everything you can to pay down those credit cards and work on those savings goals.
I mean, at the end of the day I consider myself both cheap and frugal. It’s all about saving money so that we can afford the things that truly bring us joy. However, it doesn’t mean being in a position where we are miserable because we are sacrificing our time, relationships and quality life for the sake of saving a few bucks.
Taking labels away concentrate on value first and then price because price and value are not equivalent.
Remember that time is money. Think about it. If you make $15 hours. Is it worth you standing in a line for 20 hours to save $100. Probably not.
And finally you’re well being and happiness is most important. If you can afford it then buy the thing that brings you joy versus settling for the cheaper thing that does not.