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Saving money is a great habit. However, it’s possible to become so obsessed with money that it earns you a reputation of being a cheapskate. It can be hard to strike a balance of spending responsibly without seeming like a tightwad.
The real difference between being frugal and cheap is that frugal people focus on getting the best value for their money, whereas cheap people try to get the lowest price no matter what.
While there are definitely some significant distinctions between the two, it can be hard to draw the line between cheap and frugal. In this article, we’ll talk about what the difference is, why it’s better to be frugal than cheap, and how to adopt frugal habits to save money without hurting your reputation.
Frugal vs. Cheap: What’s the Difference?
Being cheap or frugal has very little to do with how much money you have. Billionaire investor Warren Buffett is infamously known as frugal despite his astronomical net worth. Some wealthy people are also known for being cheap and stingy with their money, while some poor people spend recklessly.
The main difference between being frugal and being cheap comes down to how you think about money. Frugal people tend to see money as a tool to improve their lives, whereas cheap people see it as something to be saved and hoarded. Whereas cheap people are hesitant to shell out money for any reason, frugal people try to maximize the value of their money by spending it strategically.
Although there’s no hard and fast rule to figure out if your penny-pinching ways are frugal or cheap, there are some signs you can look out for if you want to figure out the difference.
Frugal People Think About Quality When Making a Purchase
When a cheap person goes shopping, they’ll likely pick whatever option has the lowest price. However, frugal people will also look at the quality and reliability so that they can weigh the two factors against each other.
For example, a frugal person who’s buying a jacket may look at the materials, brand reliability, and reviews to figure out which one will keep them warm and last a long time.
If there’s a $200 jacket with great reviews and a three-year guarantee compared to a $100 jacket that seems like it would fall apart after a year, the frugal shopper will probably opt for the $200 one. Contrastingly, a cheap shopper will probably buy the $100 jacket, just because it’s cheaper.
The frugal person focuses on getting more value for their money, and in the long run, they’ll probably spend less on having to replace or repair their purchases later on.
Cheap People May Try To Save Money at the Expense of Others
Cheap people may go to extreme lengths in order to save themselves a buck, including making others cover their costs. A cheap person may mooch off of their neighbor’s WiFi, crash a stranger’s inexpensive wedding to get free food, or stiff the waiter on a tip to cut down their restaurant bill.
Frugal people, on the other hand, won’t put their own savings over others’. Instead, they may use a coupon at dinner on their own bill, or they could suggest going to a restaurant with a special deal or a happy hour. They don’t allow their desire to save to get in the way of how they treat others.
Frugal People Are Willing To Shell Out Money for Necessities
Cheap people are disgusted at the idea of spending money for any reason. They may put off going to the doctor in order to avoid paying medical bills, and if there’s a problem with their car, they’d be hard-pressed to take it to the mechanic.
Frugal people, on the other hand, realize that some expenses are unavoidable, like paying for doctor visits, food, or even furniture. They’ll try to be proactive with their habits in order to avoid larger expenses down the line. For example, they’ll probably decide to have regular check-ups at the doctor or the dentist in order to avoid paying more and facing lasting damage from not taking care of themselves.
If something does happen, and they need to get a part replaced on their car or get some plumbing work done in their house, a frugal person will likely be willing to pay the money to take care of it.
However, they’ll probably do their research to figure out how they can get it done at an affordable price without sacrificing the quality of the service. They can also figure out what’s a good price by taking into consideration the average cost for similar services.
Frugal People Can Still Be Generous With Their Money
Wanting to save money doesn’t necessarily make you a stingy person. While a frugal person will try to avoid wasting money, they may still enjoy giving gifts and donating to charity.
At the same time, they’ll want to make sure that they’re maximizing the value they’re getting for the money. For example, they might conduct thorough research on charitable organizations that they want to donate to in order to make sure that they have low administration fees.
Frugal People Value Their Time and Energy
Some money-saving strategies are simply not worth the extra effort. For example, if you wash out your Ziploc bags so you can reuse them in the future, you may save money on bags, but you’re taking on extra work in order to do so. Similarly, you might be able to save money by going to five different grocery stores and getting the best deals from each one, but that might add to the time you spend running errands.
Frugal people recognize that they need to pick and choose ways to save money, so they don’t get burnt out. For example, they might decide to buy a sweater online instead of in-store to save $5, but they won’t take the time to hold onto empty soda cans that they can turn in for 5 cents each. Some people even try to convert the money they save as an hourly rate to see if it’s worth their time.
Why It’s Better To Be Frugal
Being cheap may save you money, but it comes at a high cost. If your primary focus is always saving money, your family and friends may grow distant if they think that you don’t care about them as much.
It could also take a toll on your health and well-being if your habits are too extreme. For example, sleeping on a cheap mattress can give you back problems, which will make you less happy overall and can even rack up some medical bills if it gets bad enough.
You don’t want to be wasteful with your money, but having a lot of it isn’t the end-all-be-all. It’s better to handle it wisely so you can use it to improve your life. By thinking carefully about how to spend your money, you can get more out of it.
How To Be Frugal Without Being Cheap
Whether you think you’re not frugal enough or crossing the line into cheap, there are a few habits you can adopt to achieve the right balance of financial savvy.
Stay on Top of Your Finances
Most frugal people try to know exactly what their financial situation is at all times. They’ll religiously keep track of bills, paychecks, and receipts to make sure everything is in order.
They may also adhere to a strict budget each week or month based on their income and expenses. Whenever they make a purchase, they’ll record it on their budget, so they know what they’re spending money on.
Frugal people will pay off their credit cards and bills on time to avoid spending extra on interest or late fees. They’ll also look through each phone and utility bill that they receive to check for any extra charges or increases in rates. If necessary, they’re willing to call their bank or credit card to ask questions about their account or dispute charges that look suspicious.
Review Your Previous Purchases
In addition to keeping a budget, you can start living frugally by looking through your past purchases and thinking about whether or not they brought lasting value.
Challenge yourself to save your receipts for one month and look over each purchase, line by line. Mark every item as a necessity, a worthwhile treat, or an unnecessary luxury.
That’s not to say that you have to cut out anything that falls outside of the basic necessities, but it can give you an idea of what matters to you. That way, if you have to make a decision about where to allocate your budget in the future, you’ll have a good point of reference.
Repair Before Replacing
You can save a lot of money by repairing your items instead of buying new ones right away. For example, replacing a battery on a 13-inch (33.02-cm) MacBook Pro only costs $129, compared to the $1,299 it costs to buy a new one. Similarly, you can often take your ripped jackets and broken zippers to the tailor for an inexpensive repair before you have to go out and replace your wardrobe.
However, it can also get to the point where your item is beyond repair, and fixing it would just be a waste of money. Even so, it’s a good idea to look into fixing it first. Then, after considering your options, you’ll have to decide for yourself what’s the most worth it.
Figure Out How To Do-It-Yourself
While you probably don’t have time to make everything on your own, there are a few DIY substitutes that you can easily start to incorporate into your life. For example, a lot of people advise learning how to make your own laundry detergent, as it’s a pretty quick and easy activity that can save a lot of money over time.
Another classic DIY example is making your own coffee at home. While going out to get a drink from a cafe every once in a while can be a fun treat or outing, it can be wasteful to pick up coffee every single day. If there’s a particular roast that you enjoy, you can usually find a bag to make yourself at home. You can also invest in a coffee pot, creamer, and add-ons to replicate your favorite beverage.
You can also cut down your budget by learning how to take care of your own grooming. Hair and makeup appointments can be really pricey, and with the right products and enough practice, you can get the job done just as well on your own.
The same goes for spa treatments and nail appointments. There’s no harm in getting a mani-pedi to treat yourself for a special occasion. However, if you just want your nails to look good, it’s a lot cheaper to do it at home.
Plan Out Your Meals
Eating out and wasting food can cause a big strain on your budget. Experts have calculated that it costs about five times more on average to order delivery from a restaurant compared to cooking at home. Therefore, in order to be frugal, it’s important to cook as often as possible.
It can also help to prepare a list before going to the grocery store. You can think through the next few meals you’re going to cook so you can make sure that you have all of the ingredients you need. Then, since you know exactly what you’re looking for, you’ll be able to get in and out of the store quickly, saving time and avoiding making impulse purchases.
Cut Down on Waste
It’s also important to keep track of the groceries you have. Pay attention to expiration dates and label your leftovers with the date you packed them. If you have a bad habit of letting your food expire, make sure you place your items that are closest to expiring at the front of the fridge or pantry. If you like to use a schedule to plan out your meals ahead of time, prioritize dishes that use ingredients that you need to finish soon.
You’ll also want to be familiar with guidelines for when your food becomes unsafe to eat. Expiration dates are a good indicator, but they’re generally understood as guidelines for quality over safety. Here are some rules of thumb you can follow in the future:
- Use the smell test for milk and yogurt products.
- Eggs often last up to two weeks past the expiration date, but you’ll also want to test them in a glass of water before cooking; if the egg floats, it’s rotten.
- Pantry snacks like cereal and chips often last months after the expiration date, but you’ll be able to taste if they’ve gone stale.
- If your hard cheese grows mold, just cut off the moldy pieces before using it.
- If your soft cheese grows mold, throw out the whole thing.
Save on Groceries
To save even more money by cooking at home, you’ll also want to try to spend less on groceries. That doesn’t mean you should buy the cheapest option without looking at the quality of ingredients, but see if there are any easy substitutes you can make without sacrificing nutrition. For example, store-brand products are often cheaper than their name-brand counterparts just because you’re not paying for the label.
It can also help to buy in bulk when you can. You obviously don’t need to buy all of your groceries in industrial sizes. In fact, you’ll actually be wasting money if you buy more eggs than you can eat, and they end up going bad. However, if you notice that you’ve been buying a lot of the same non-perishable product, like granola bars or boxed macaroni, it could save you a lot of time and money to buy it in larger quantities.
Do Your Research Before Making a Big Purchase
If you’re in the market for something pricey that should last a long time, like a car or a laptop, it’s important to conduct thorough research beforehand. Consider all of your options, including the pros and cons of each one. Ask around to see if any of your friends have recommendations or advice for you. You’ll want to think about the expected lifetime of the product, the features that you’ll use, and warranty options to figure out which one is right for you.
Once you’ve decided on which model you want, check out a few different stores and websites to make sure you’re getting the best price. If you think it may go on sale soon, try to wait until you can get a better deal. However, be careful about buying the product used. Even if it is cheaper, it might not last as long, and you probably won’t be able to get the same warranty that you would if it were new.
Cut Down on Your Bills
One reliable way to save money without sacrificing your quality of life is to try to lower your monthly bills. For example, many recommend shopping around for insurance plans every few years to get quotes from different companies. Then, if you get a better deal, you can either switch or try to negotiate with your current insurance company to lower your rate. You can also try to bundle different types of insurances to save money.
It’s also a good idea to think about how much you spend on your mode of transportation. While having a car can be extremely convenient, it’s also really expensive, and it may not be necessary for everyone’s lifestyle.
If you live in a city with good public transportation, or if you don’t use your car very often, think about investing in a yearly bus or train pass instead and just using a rideshare service if you need a car. If you live in a region where it’s warm and sunny year-round, you may also be able to switch to a bicycle or an electric scooter.
Another smart and eco-friendly way to save on your monthly expenses is to try to reduce your water and energy consumption. On top of lowering your utility bills, you can also feel good about reducing your carbon footprint. Here are some useful tips you can follow to cut back on utilities:
- Turn off the lights when you leave the room.
- Open the curtains to let in natural light during the day.
- Use task lighting (table lamps, under-counter lights, etc.) where possible.
- Time your showers to try to get them as short as you can.
- Unplug electronics when you’re not using them.
- Turn off the A/C when you’re away.
- Fix any leaky faucets.
- Wait to do the laundry until you have a full load.
- Toss a dry towel in the dryer with your wet clothes to reduce drying times.
- Turn off the faucet while shaving, scrubbing your hands with soap, and brushing your teeth.
Take Advantage of Community Resources
Many cities and towns have plenty of events and resources that are free to community members and the public. Typically, you’re already paying for these services through taxes, so you might as well take advantage of them.
If you’re looking for a book, a movie, or even a CD, see if it’s available at your local library before buying or renting it elsewhere. Some libraries will charge a small fee for checking out multimedia items, but it usually doesn’t exceed $1 at the most. The money you save can add up, and the time constraint may even motivate you to get through it faster.
Community events can also be a great source of free or cheap entertainment. Check out your town website and local billboards to figure out what events may be happening near you. During the summer, you might be able to check out some outdoor concerts, movies in the park, or street fairs. There are often a lot of fun activities for kids as well, so you might be able to save some money on your next family outing.
Find Low-Cost Ways To Exercise
Gym memberships can be a great deal for some people. Paying a monthly fee might motivate you to work out more often, and if you use your pass every day, it only works out to a few dollars each time. However, some people might not get enough use out of their gym membership to make it worth the money. After all, a $100 monthly membership fee will add up to a whopping $1200 every year.
If you don’t need a gym to exercise, consider canceling your membership and finding ways to work out at home instead. If you want to run outside a few days a week, you can buy a pair of running shoes for a fraction of the price of a gym pass.
Similarly, you can buy low-cost workout equipment like a yoga mat, resistance bands, or free weights. Then, you can section off a part of your house as a workout studio where you can follow along with free exercise videos online.
Alternatively, if you think you need a gym to work out in but don’t need the extra amenities like showers and fitness classes, look into some budget gyms near you. Places like XSport and Planet Fitness may offer membership fees for as little as $10 or $20. You can also look into your health insurance plan or your company’s employee benefits to see if there are any discounts on gyms in your area.
Going Overboard With Your Frugality
Of course, being frugal means getting the most value out of your money. If any of these tips will be too frustrating or time-consuming to follow, don’t stress yourself out by worrying about them. What’s important is that you’re cutting costs where you can and spending on the things that matter to you so that you can make the most out of what you have.
If ordering delivery four times a week makes you a lot happier than cooking, and you can afford it, it’s okay to splurge. Similarly, if you work a lot of hours and don’t have much time at home, paying extra money to hire a cleaning service might be worth it to you. As long as you’re thinking about maximizing the value you’re getting for the price you’re paying, you can be confident in your frugal habits.
It can be tricky to toe the line between cheap and frugal. Although you don’t want to be wasteful, you also don’t want to be too obsessive about your savings. To make sure you’re maintaining the right balance, remind yourself to think about long-term value every time you make a purchase.
You’ll also want to check in with yourself periodically to think about whether or not your money-saving habits are interfering with your relationships or your own happiness. If that’s the case, you’ll probably want to ease up a little bit.