There seems to be a lot of confusion around what it means to be frugal versus what it means to be cheap.
People often will mislabel themselves or others. Somebody who is trying to manage their money well, and avoid costly purchases, might be called cheap by their friends and family.
And vice-versa, people who are being cheap tight-wads, and make bad choices in the name of “saving money”, will proclaim that they are just being frugal.
But as you dig deeper into what each of these concepts mean, you’ll find that they are actually significantly different approaches to personal finance.
Being frugal is the ability to use your money efficiently and effectively. A person that is frugal views money as a tool that can be intentionally managed to better their life.
- Looking for value in a transaction. Which means viewing both cost and quality as considerations.
- Purchasing only things that you need, or decide are important to you.
- Viewing money as a tool to improve your life. Actively managing your finances to improve your spending, saving, and
Being cheap is actively trying to spend the lowest amount of money possible. A person that is cheap views money as something that’s only purpose is to be saved.
- Looking for the lowest priced options. Sacrificing quality for a lower price.
- Avoiding purchasing some things they need. Sometimes even harming relationships and personal wellbeing in the effort to save money.
- Viewing money as a scarce resource. Avoiding any spending or generosity. Often even being afraid to invest saved money in fear of potential loss.
Be Frugal, Not Cheap
While both being frugal and being cheap involve “spending less money,” there are clearly different intentions behind the two mindsets.
Being frugal is an admirable trait. It’s a way to be a good steward of your wealth. People look up to people who are good with money.
Being cheap is short-sighted. Making choices strictly on trying to save money is something that can, and likely
So if your aim is to be good with money, be frugal, not cheap.