How To Tell If You Are Cheap Or Frugal

2972269449_351abb905c_zFirst of all, the headline is not redundant. This post is designed to put to rest that the terms “frugal” and “cheap” are interchangeable. There is a difference between the two terms, and being called one thing is actually a bit more honorable than the other.

This article will help you determine whether you are more cheap or more frugal. There are very few people who fit one definition or the other in a perfectly neat package. Based on the items being purchased, people will often take on “cheap” attributes sometimes and “frugal” attributes other times.

There are very few purely cheap and purely frugal people, but if you understand the differences between the two, you can find the right situations to be one or the other when you are in a world of household budgeting, saving money and getting out of debt.

Being a little cheap and frugal can benefit your budget and help you save money so you can reach your financial goals, but knowing when to be both makes the difference between getting out of debt and just treading water.

The Definitions

Of course the first thing to understand is knowing the definitions that determine the difference between being cheap and frugal. As was mentioned, often people tend to conflate the terms and use them as synonyms, when they are really not, and in a couple prominent way.

To be cheap is to consider the cost of an item as being most important. A cheap person usually thinks in the short-term, about saving money right now, and their cheapness will often affect those around them.

To be frugal is to consider the value of an item as most important. A frugal person will understand spending money on things they love and then cutting in areas they don’t love or at least are not as passionate about. Frugal people think long-term and their frugalness applies only to them.

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Some Hints

Now that you have an idea of the differences between being cheap and being frugal, you can start to see situations in which a person is frugal in his spending versus a person who is cheap in his spending. Here are a few case studies that should help illuminate the differences a little further.

#1. Buying underwear and socks

Buying used socks and underwear is only taking the cost of items into consideration, not the quality of the item. Can you imagine wearing anyone else’s underwear or socks on your body? If you don’t care, that’s cheap.

A frugal person understands the value of new underwear and socks, and while he will look for the best price, he also knows that higher-quality items will last longer and thus will likely be a better value than what is bought at a thrift store (and a lot less gross, too).

#2. Eating out at restaurants

Here is a good way to know if you are frugal or cheap. A cheap person will order whatever he or she wants but will skimp on the tip (if offering a tip at all). A frugal person knows what his or her budget is, and will order wisely and give a reasonable tip.

Cheap diners think about themselves and have no problem hurting others, even if the waiter or waitress gives excellent service. A frugal person would rather make sure to take care of the waiter or waitress. He or she with a $50 Valentine’s Day dinner budget will account for the tip in the budget and thus won’t spend more than $40 on the dinner but will leave an excellent tip. And if you are trying to impress your date, being the frugal person will score more points. Trust me on this.

#3. Buying dishes and silverware

Plastic forks and knives and red Solo cups can often be seen as great for picnics or Super Bowl parties. But when it comes to frugality or cheapitude (yes, that is a word now), these can set the tone. If you rewash and reuse plasticware for everyday use only to eventually throw them away, that is cheap. A frugal person will buy permanent plastic plates and cups from Target or Ikea that will last much longer and thus be a better value.

#4. Buying a car

This is not about buying new over used. We would never encourage you to buy a new car when you are on a budget. What we talk about here is buying two different used cars. Both cheap and frugal people would not buy a new car, because they know they will drop precipitously in value in the first year that you drive them off the lot. In the long-term, they are not a value for your family.

What separates the cheap and frugal are the used cars they buy. A frugal person will buy a car that is only a couple years old, very low miles, and in fact may well have much of its original factory warranty in place. A cheap car buyer will buy something 15 years old, with tons of miles, just to have something to drive around in that can be paid for in cash with one month of savings.

Yes, there may be a time where you just need some wheels, and buying that junker may be wise in the short term until you can save money for a better, “less old” used car. But if you have the choice between paying $10,000 for a 2015 vehicle or paying $1,000 for a 1989 vehicle, the frugal one will by the 2015 car while the cheap person will buy from the 1980s.

#5. Buying food

Maybe you are part of a family, or maybe you live by yourself. Food can be tricky, because most food is the same in theory, so it would make sense for cheap and frugal people to buy the cheapest stuff, even if it’s a store brand.

But part of the definition of frugal is value, and there is value in having food that tastes good. But it also can come in the form of the foods you buy that make a dinner as opposed to having a ready-made dinner.

One example of the difference is that your family loves Honey Nut Cheerios, but won’t buy the cereal unless there is a coupon or special price. Frugal people won’t settle for the store brand cereal that is similar. A cheap person doesn’t care. If his family wants Honey Nut Cheerios, he or she will buy the store brand even if it isn’t the same.

A frugal person may only buy the cereal that he or she will eat and will wait for the sale to get the cereal the rest of the family wants. A frugal person will buy the name-brand pizza only when it‘s on sale, while the cheap person will say that frozen pizza is necessary, so will buy a cheaper brand just to have it in the house, even if it’s one that the family doesn’t like.

As another example, a frugal person will by fresh ingredients to make homemade pizza or salsa at home, while a cheap person will just buy the cheapest store-brand item. Creating your own meals with fresh ingredients is a better value in the long run than buying various frozen meals. Not just because the ingredients as a whole are often cheaper than the store equivalent, but often the homemade dinner will have leftovers. The store-bought dinner usually will not.

Final Thots

Keeping these ideas in mind as you shop for virtually anything, can help you understand what is frugal and what is cheap. As was mentioned before, cheap people tend to hurt others, while frugal people tend to only sacrifice themselves.

Jon blogs at Penny Thots, a personal finance site that helps readers improve their finances, one day at a time.