While thinking the other day about personal finances, the question dawned on me, why do we use frugal and cheap so interchangeably? Often when one is described as frugal we usually associate that with being cheap. But is that necessarily the case? If not, then what is the difference between being frugal and being cheap?
Simply put, being frugal means being resourceful with your money and not spending it on wasteful things. It is maximizing the money you have, but still spending it on things you enjoy.
Being cheap on the other hand is handling your money stingily or miserly. Often I see cheap people as being hoarders and not givers of their money. They also make bad financial purchases simply because, “it was a good deal,” which in the long run costs them more money. Cheap people often look solely at the purchase price and do not look at the sacrifice of time and money they might have to make to travel further to make the purchase.
So what is the difference between a frugal and a cheap person? The main difference is the attitude with which you view money. Frugal people do what is best in the long run and don’t just look in the short-term at the purchase price. Frugality might also mean paying a little bit more for an item initially that will last longer than its cheaper counterpart. Associating being frugal with being cheap is really an indicator of our culture that says the people who are doing well with money are the ones who are spending it all, or spending money they do not actually have, on new shiny items. So if you are being disciplined and thinking long-term with money you must then be cheap.
Overall, I think it is time to step back and start to think differently about what it means to be frugal and what it means to be cheap. That will start to make being frugal a positive thing instead of being a negative.
Is there any difference that I forgot to include? What do you think the difference between being frugal and being cheap is?