Disclosure: This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosure for more info.
Frugal vs cheap – Is there really a difference? The answer is a resounding yes!
Being frugal is not the same as being cheap. Though the terms have similar connotations, the two have significant differences. Frugality is a way of approaching your finances. It’s a way of being mindful and strategic with your spending. A frugal person focuses on value and saving money for the essential things in life.
A cheap or stingy person avoids spending money and makes financial decisions based on price. Value over time, life satisfaction, and other people’s feelings do not influence the spending habits of a cheap person. The sections below will show where these two terms diverge and the nuances behind each meaning.
Frugal vs Cheap: The Difference
The critical difference between a frugal and cheap person is they have different attitudes and approaches to saving money. Being cheap is about spending as little money as possible and choosing the lowest price despite the consequences. A cheap person and a frugal person both aim to save money; however, their approach and mindset toward how to do so vary greatly.
Being frugal is about spending according to your priorities, getting the most value, and not being wasteful. A frugal person doesn’t hate spending money; instead, they try to get the most value for their money. Frugal people avoid buying things for status, attention, or self-esteem but are not afraid to spend. They consider long-term financial goals, quality of life, value, and how their behavior affects others.
Examples of Frugal vs. Cheap Behavior
Recognizing the dominant motivators driving a person’s decision-making process is the best way to understand their money mindset better. Read on for a few scenarios demonstrating the differences between a frugal vs. cheap approach to managing money.
For example, you could purchase the cheapest mattress possible. When you toss and turn all night and then wake up exhausted with back pain the next day, was it worth the money you saved? In contrast, a frugal person might spend additional money on a mattress that will provide a good night’s rest without fear, guilt, or resentment. Over the long run, the frugal person who made a slightly higher initial investment will likely save by upholding their productivity and avoiding unnecessary pain remedies or doctor visits for their back pain.
If you run or go for long walks to exercise, a cheaper pair of sneakers may be fine initially, but the effects of long miles will show not only in the shoe’s durability but also in your joints. A more frugal person might have no problem spending money on high-quality running shoes that will hold up longer and better support the feet to prevent ankle, knee, and hip injury. Spending more on higher-quality items, especially when they might impact your health, could save you far more money in the long run.
Cheap people want to save money above all else. They sacrifice quality and their time to squeeze out short-term savings. They’re driving to a store half an hour away to get the lowest price on scratchy, off-brand toilet paper while forgetting to consider the extra expense of gas and vehicle wear and tear to do so.
Is Being Frugal Bad?
Being frugal is not a bad thing. Frugality is being intentional with money, maximizing value, and making financially sound decisions. Being extremely frugal can hurt more than help, though. If you focus only on saving every dime instead of investing, being frugal can cost you money in the long run.
Frugal people look at cost in the context of the total value. The types of things a frugal person might think about before buying something might include:
- Longevity
- Service and maintenance fees
- Replacement cost
- Energy consumption
- Time savings
- Overall satisfaction
After considering value, it might be wiser to spend more upfront. Sometimes, the cheapest product offers the most value. But frugal people don’t immediately zero in on the lowest-cost option without considering the alternatives.
Is Being Called Frugal an Insult?
Being called frugal is not an insult. Being frugal means being smart and exercising good judgment when spending money. Frugality is about spending money wisely, considering value, and prioritizing long-term financial goals over unnecessary spending and small short-term savings.
Being called frugal is more of a compliment than an insult. When frugal means cheap, stingy, or greedy, it isn’t very kind. But you also know the person using the term in that way is misinformed.
Why Is Being Cheap Bad?
Here are five reasons why being cheap is terrible:
- Cheap people tend to place more value on money above all else, including relationships. They don’t recognize the signs that their relationships are affected or deteriorating because of their cheapness.
- Cheap people can be shortsighted and obsessive about money. They might display selfish behavior, show little gratitude, and lack generosity.
- Cheapskates can be cheap to their detriment. Avoiding the doctor to avoid paying the out-of-pocket costs is not smart. Saving a few bucks by skipping routine auto maintenance is dangerous but also something a cheap person might do.
- Cheap people make others uncomfortable. Cheap people routinely do offputting things like stiffing waitstaff on tips, criticizing others over how they spend their money, and mooching off others. Some of their behaviors are detestable and hard to be around.
- Cheap people sometimes place saving money over honesty. Some people are cheap enough to steal a neighbor’s Wi-Fi or crash a wedding for free food and drinks. Not all cheap people are dishonest, but the quest to save a dollar can lead people to lie, cheat, and steal.
Is Being Cheap Always Bad?
Being cheap does work for some people.
If you’re middle-aged, have raised your family already, are established in your career, and have a solid social life with friends who accept you as a cheap person, that’s great. Pinch a penny until it screams. Reuse paper towels, go miles out of your way to find the lowest prices, and raid thrift stores for incredible bargains.
Most of us aren’t there yet.
For me, being a cheap person costs too much. I’m unwilling to waste time, wreck relationships, and sabotage my happiness to save a bit of money.
How Being Cheap Is Expensive
Sometimes, focusing on cost and going with the cheapest option backfires. You’ll waste time and money paying for repairs and replacements you could’ve avoided if you spent a little more on quality.
For example, you could buy the cheap $20 brand you must replace yearly or the $50 brand, which lasts ten years. Cheap people immediately opt for the $20 version. They’re appalled at paying over twice as much for the same basic functionality of the more expensive item.
People tight with money and stuck in that cheap mindset only see the price. They don’t see the $50 option costs $150 less over ten years and requires only one trip to the store rather than ten. Someone who automatically buys a $20 product because it’s the cheapest item is not a thrifty person. They’re just cheap.
Can Being Frugal Make You Rich?
Being frugal alone won’t make you rich, but it tends to be a cornerstone practice of many people who do become wealthy. There is a limit to how much you can cut spending since some expenses are unavoidable. However, having a frugal mindset might be necessary in evaluating and planning ways to increase earning potential.
Being frugal frees up money to achieve a financial goal, such as paying off credit card debt or starting an emergency fund. Increasing income and investing offer more potential to build wealth than frugality alone.
The idea that you can bank on frugality to reach your financial goals is too simplistic. Skipping lattes isn’t the key to creating wealth, and cutting out avocado toast or other small, unnecessary things you buy won’t make you rich.
In the real world, housing costs, healthcare spending, inflation, and unemployment sometimes skyrocket. Unexpected events like car accidents, family emergencies, and layoffs happen. If you’re unprepared, these things hurt you financially more than saving $3 a day on coffee helps you.
Besides cutting out minor money leaks and adopting a frugal mindset, look at the big picture. Is there a way you can lower your housing costs, get out of debt faster, or spend less on transportation? Can you start investing or funnel more money into your existing investment accounts?
Most people will have to shift their focus to making more and investing money over time to build real wealth. Getting a raise, starting a side hustle, creating an aggressive saving strategy, and automating your investments help you build for the future.
There are no hard limits to how much you can make through investing or increasing your income. Reducing your expenses has a definite floor. You’ll always have some expenses like food, shelter, utilities, and clothing.
Is It Worth It to Be Frugal?
Being frugal is worth it. As part of a long-term financial plan, frugality will help you reach your financial goals.
Frugality is worth it when you use the money you save by being frugal to get out of debt, save for retirement, or build better money habits. Living a frugal life enables you to save for other major goals, such as a house or providing for your children’s education.
Being frugal will also help you live through tough times when they happen. A frugal lifestyle that includes living below your means, eliminating wasteful spending, and saving for the future is worth it in periods of uncertainty.
