Difference Between Being Frugal and Plain Cheap

Found some of these points on the difference between being frugal and cheap interesting and may also help us in our lives by knowing where to draw the line between being frugal and just cheap, which would help us in managing our own daily expenses.

(Image source:http://www.pennilessparenting.com/2010/06/frugal-vs-stingy.html)

Frugal People look at value, Cheap People look at price

People who are frugal aim to get the largest value for the cost. This includes the cost of time, money, energy, etc. On the other hand, cheap people use price as a bottom line, regardless of quality, effort needed and time taken to acquire it. Being cheap in a way leads to tunnel vision as you start focusing only on one metric, the price. Being frugal is about using your available resources to their fullest potential to get the greatest value in return.

Spending extra money for a quality item instead is a hallmark of a frugal person while the cheap person would just go with the cheaper option.

Being Cheap affects your quality of life, being Frugal does not

By looking only at the price of an object/service, Cheap people tend to overlook the other factors, such as quality, comfort, etc. This will greatly affect your quality of life as they try to get the lowest price instead of the best quality.

Being Cheap affects those around you, being Frugal does not

Cheap people tend to save money at the expense of others while frugal people would not do so. When splitting a bill at a restaurant and you just pay the amount of your meal, well knowing that GST and service charge add up to 17%, you are cheap. While saving money is a good and respectable goal, do not tread on other people to do so.

Cheap people focus on short-term savings, Frugal people focus on long term gain

Cheap people will focus on saving money and may skimp on higher-level training or buying books that will help them possibly advance their careers. They will either look for a cheaper, sub-par alternative or put it off altogether. Frugal people will see the long-term value that attending these courses or reading books that will help increase their skill and advance their careers at a faster pace.

The same principles can also apply to investing, where we look for the value of the share instead of the price and the price trend. One prominent example of a frugal person finding success in investing is Warren Buffett who has stayed in the same house that he bought in 1958. By being frugal, we are increasing the value that we get for our dollar while being cheap only reduces the amount of dollars that we use.

Hope this post is helpful to you and may guide you in your future decisions, feel free to share any other thoughts that you may have in the comments :)

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