It’s no secret that saving money will help you to build wealth. Unfortunatley, some people take extreme measures to reduce their monthly expenses and maximize their savings. So much so, that they walk a fine line between being frugal vs cheap!
Regardless of whether you’re frugal vs cheap, there are benefits to saving more money. It allows you to pay down debt, build an emergency fund, and achieve financial freedom faster!
Still most people view being frugal vs cheap negatively and alike. While each one has a similar goal of spending less and saving more, it’s important to realize that there are some major differences between them!
Being frugal with money means being an economical and careful spender. Before making most purchases, you explore your options, weigh the pros and cons, and buy the item that meets your needs the best!
It’s no surprise that frugal people don’t like wasting money, either. Not only are they mindful of their spending, but they buy strategically based on value.
When you buy things you value, you’re spending money on items that are important to you, like your happy expenses. Even though you’ll likely shop around for a good deal, you’re willing to buy them because they add value and improve your quality of life!
Oftentimes, frugal people get a bad rap because they don’t buy items that society says they need. In general, they don’t splurge on status symbols or other material possessions because they view these items as unimportant and in some instances a complete waste of money!
When it comes to being frugal vs cheap, frugality has a more positive connotation whereas being cheap is viewed negatively!
For some money personalities, spending is painful. Even though they may need or want a good, they won’t because it’s difficult for them to part with their money!
When cheap people do spend money, their primary concern is cost. Rather than weighing products’ features and benefits, they’re only concerned with differences in price!
Truth be told, people who are cheap tend to be great bargain hunters. They’ll spend countless hours scouring the web until they find the lowest price. But, when you factor in the hours and effort that they spend, it’s likely not the best use of their time nor a good return on investment!
Besides that, when you make purchases on price alone you’re going to sacrifice quality. Although you’ll spend less at first, you’ll end up paying more in the long run. As the product wears out, you’ll face repair bills, upkeep, and other hidden costs. Not only that, but in some instances, you may even have to replace the entire purchase altogether!
While being cheap helps you save money, it often comes at the expense of many of the other types of wealth, like your relationships. Given that spending is painful, you’re less likely to join a group of friends for an evening out or part with your fun money. When your self-deprivation gets to this level, your overall well-being and sense of life satisfaction are going to suffer!
After reading the above, you can tell there are some key differences between being frugal vs cheap. While they’re subtle and not always clear-cut, they can end up having a large impact on your quality of life!
Here are 5 major differences between being frugal vs cheap!
One of the primary distinctions between being frugal and cheap is that cheap people tend to put their interests first. Their main concern is how a purchase is going to affect them and their savings ratio, not the impact it will have on others!
Conversely, when you’re being frugal you still want to save, you just won’t do it at the expense of other people. You’ll consider their feelings, finances, and wants when you make decisions. Because of this, you’ll splurge on events with family and friends even when these activities aren’t your first choice!
For example, imagine that a group of your friends want to get together to celebrate someone’s birthday. A cheap person would choose the option that accommodates them best, such as being close to their home or at their favorite restaurant. However, a frugal person would take the group’s preferences into account and choose the option that makes everyone happy, even if it puts them out!
For one reason or another, cheap people tend to make decisions based on short-term outcomes. They’ll spend the least amount on something today even though it will likely cost them more in the long run!
For example, imagine you’re hiring someone to do some home improvements. A cheap person would pick the lowest price option regardless of quality. Even though they’ll get the best price upfront, they’ll likely face additional costs to have someone else repair where the original contractor cut corners!
While a frugal person also wants to get a good deal, they’re not willing to sacrifice quality. They’ll pay more for someone reputable and reliable. Not only that, but they understand there’s value in having peace of mind and knowing that the job will get done right the first time around!
Whether they realize it or not, cheap people tend to have money fears that keep them closefisted. They may tip poorly or refrain from donating to charity just so they can save a few extra dollars. Despite their savings and net worth, most believe they’ll never have enough money, either!
Whereas when you’re frugal you understand that money is abundant and a tool. You can use it to improve the quality of your life as well as the lives of others to an extent. After all, there are some things that money can’t buy, and that makes them priceless!
Your emotions play a large role in the way you manage money and the financial habits you develop. At times, cheap people are so afraid of losing or running out of money that they’ll hold on to it at all costs.
On the other hand, people who are frugal understand the importance of balancing saving and spending. They budget their money so that they can do both. Because of this, they’re able to build their net worth while also enjoying life!
One of the best ways to improve your life is by spending on things that foster connection with others. Research has found that the closer you feel to family and friends the happier you’re going to be!
When it comes to spending, a cheap person prioritizes the cost of goods and services above all else. They’re willing to put themselves and others in subpar situations as long as they get the best price in the process!
Even though a frugal person is also concerned with price, it’s not the only fact they consider. They also take into account the product’s features, quality, and the number of times it will get used to determine whether they’re getting a good value!
One way to figure out if you’re getting a good value is by looking at purchases in terms of their cost per use. For example, imagine you’re in the market for a new shirt. You find one for $5 and another that costs $10. If your only concern is price, then you’d buy the $5 shirt.
But, if you wanted a good value then you’d do a little more research. You may find the $5 shirt is low quality and doesn’t hold up well. If you buy it, you may only get to wear it 5 times before it starts falling apart which puts its cost per use at $1.
However, after reading some online reviews you discover the $10 shirt is made using quality fabric. Because of this, you’ll likely get to wear it at least 20 times before it starts deteriorating. This puts its cost per use at just $0.50. Even though it has a larger upfront cost, it provides a better long-term value!
Despite what society says, there’s nothing wrong with being frugal vs cheap or spending less so that you can save more. But, you should understand their differences and the effects on your money mindset.
If you believe that money is in short supply then you’re more likely to hoard it. You’ll be less willing to spend it or use it to enjoy life!
But when you realize that money is abundant, you’ll part ways with it more easily. You’ll be inclined to spend it on the people, experiences, and things that add value and improve your quality of life!
How do you tell the difference between being frugal vs cheap? Comment below.
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