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The Differences Between Being Cheap vs Being Frugal

Our culture is sometimes a little confused about the virtue of saving money. On one hand, we praise people who get great deals, but if the people in question hunt for the deals too hard, they are dismissed as being cheap and told that they should live a little. The truth is that there are always two sides to every story, and therein lies the important difference between being frugal and being cheap. While these two words can technically describe the same behaviors (i.e. checking deals, looking for bargains, or making comparisons), there is a world of difference between them regarding the attitude that is expressed. Understanding the difference between frugality and being cheap is a good way to develop a mature and nuanced attitude towards money. 

Value vs. Price

The value of a thing is the importance it has in the owner's life. On the other hand, the price of a thing is only the amount of money it takes to buy it. When put in this way, it is very easy to see one of the primary differences between being frugal and being cheap. A frugal person is one who looks at the value of a thing or service. For example, a frugal person will see a deal on a laptop that they can use for work. While purchasing the laptop will set them back a little, they realize that the value of the laptop is very high, as it will open them up to more work and better jobs. On the other hand, a cheap person buys the cheapest laptop that they can, even if they may be better off with a model that is a little pricier. 

Cost to Self vs. Cost to Others

One of the reasons why there are so many jokes about people who are cheap is because of the fact that they make other people uncomfortable. A frugal person never decides that a savings is worth the dignity or the discomfort of others, while a cheap person is unconcerned about how other people are doing as long as they get their needs taken care of for the least amount of money. For example, a cheap person understands that going into a store and loudly and angrily demanding a refund will result in attention and a store credit, even if the refund is unwarranted. On the other hand, a frugal person goes through the proper channels, and they will not seek to make the price of their discount someone else's discomfort. In another example, a frugal person might suggest a potluck party, while a cheap person will go out and expect others to pay for the food that they eat or the drinks that they have. 

Strategy vs. Impulse

A frugal person is far more likely to make a budget and stick with it than a cheap person is. A frugal person understands that simply pinching pennies all the time is a classic way to lose control and to splurge. This person will have a bit of money in the budget that is designed for entertainment, even if it is a relatively small amount. Instead of making a strategy, a cheap person will spend time simply saving money wherever they can. They cut corners without realizing the consequences that might result, and they are actually more inclined to suddenly splurge without warning on something if they have been holding themselves to a very tight budget for a long period of time. 

Prioritizing vs. Scattershot Savings

A frugal person makes a plan and decides on what their priorities will be when it comes to savings. They decide that they want to save towards a certain goal, whether it is a trip, schooling, training, to pay off a debt or something else. Because they have a plan, they decide where they are going to save. This might mean sticking with one store where they have a discount card or passing up on eating out more than once a week. On the other hand, a cheap person simply makes random choices about their money. They pinch pennies everywhere, and because of this, they do not have a plan to stick with. They will simply choose the cheapest option no matter where they are, without realizing that this can cost them more money in the long run. 

Resource Allocation vs. Hoarding

Someone who is frugal makes decisions about what to keep. They might stock up on dried pasta or cans of green beans because they know that they go through large amounts of this food, or they might buy printer paper in bulk because they print things up frequently for their home business. On the other hand, someone who is cheap will be prone to hoarding. Everything that might be useful or required some day will be kept, regardless of whether it is worth the space that it is taking up. A frugal person has a clear idea of what is valuable and what is not, and they take the time and the effort to sort it. A cheap person is much more indiscriminate in the things that they keep. 

Us vs. Me

A frugal person realizes that savings can be shared out. They look for group deals that will allow them to take trips, they get their friends in on great savings, and they do things like hold parties where clothes and other things can be swapped around. Instead, a cheap person believes that everyone who has something good means that they themselves have less. A frugal person understands the savings that come from acting as a group, while a cheap person is far more inclined to decide that the only way to save is to keep resources from others. 

Hope vs. Fear

At the end of the day, the difference between being frugal and being cheap rests on the emotion behind each one. A person who is frugal is looking ahead. They may see a point when things get harder or they may be preparing for something fun and enjoyable. They know that working hard today will have pay-offs in the future, and they are looking forward to a time when their efforts pay off. On the other hand, a person who is cheap is afraid. Instead of looking forward to the future, they are looking backwards, perhaps to a time when they did not have as much, or even to a time when they had more and lost it all. A frugal person is hopeful, while a cheap person is much more fearful. 
For many people, the difference between being cheap and frugal is an important one. We all want to save money, but it is important to remember that there is a cost for all things. Being frugal identifies the cost and the benefit, while being cheap only identifies the benefit without heeding the cost, either to oneself or to others. Frugality is a virtue that benefits the bearer and everyone around them, while being cheap not only drags others down, it is actually quite bad for the bearer as well. Understanding the difference is an important part of moving towards responsible finance.
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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