Frugal or Cheap: Which are you?

The terms cheap and frugal are frequently used interchangeably. The terms are similar, but there are several differences between being cheap and frugal.

Many spenders who believe themselves to be frugal may be displaying characteristics of being cheap, which is commonly seen as the less favorable trait. When you are cheap, your spending decisions often has impacts on other people besides yourself, which you may not initially realize. When you are frugal, you are making sound financial decisions without sacrificing the well-being of others in the process.

Once you determine if you are cheap or if you are frugal, you can take the steps necessary to reconcile any issues you have with either categorization. While there is nothing wrong with being cheap, you may be displaying off-putting behavior to families and friends through this trait. Use this article to help you determine whether you are frugal or if you have developed a sense of being cheap.

What does it mean to be frugal?

There are several characteristics shared by individuals who are frugal. When you are frugal, you are mindful of the amount of money you spend, but you are not willing to save money at the expense of others to achieve this goal. For example, if you go out to dinner with your friends and you choose to tip between 18 and 20 percent for your portion of the bill, you are being frugal without disrespecting the waitstaff who assisted you during your meal. You may opt for only grabbing a water and a meal in lieu of drinks, appetizers and a meal to save money, which shows your frugal nature. By choosing to still pay a high tip for quality service, you are remaining frugal without causing others to lose out because of your financial restraints.

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Being frugal means you are careful with your finances, but not to the extent where you obsess over your budget or limit yourself to only purchasing items you absolutely need. You are not going to spend several hours combing your home for loose change or forgotten dollars in jacket pockets to save yourself the trouble of taking money out at the ATM. You may budget yourself accordingly to ensure you always have what you need for added expenses, such as purchasing a new Blu-Ray or new boots for winter. Frugal spenders tend to be more resourceful when it comes to making their purchases, as they do not want to sacrifice quality to save a few dollars. You may opt for buying your new boots on sale or in a less-than-trendy style to save yourself money without skimping on the quality of your items. This shows you are frugal because you are calculating how much you are spending but you are not sacrificing time, quality or value to do so.

What does it mean to be cheap?

When you are cheap, you go above and beyond to save as much money as you can. This can involve any number of tactics, many of which prove isolating to your friends and family members because you are willing to save money at the expense of others in your life. For example, if you are going out to lunch, you insist your friends drive to save on your gas costs. When you receive the bill, you may choose to leave a small tip or even opt to not leave a tip at all if you want to save yourself a few dollars. This behavior is detrimental to others, as the waiter or waitress who served you is making considerably less money now without your tip.

People who are cheap often do not care about the negative effects associated with this behavior because they are solely focused on what can be done to save money. When you are cheap, you are not mindful of the value of your items, which can lead you to purchase lower quality items to save money. However, these items do not last long or do poorly for the task you purchased them for, ultimately making you go out to purchase something new.

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For example, if you choose to only buy second-hand clothes or consistently cheap clothing, you run the risk of having your items fall apart within a few months. It may seem like the better strategy at the time, but in the long-run you are paying more money because you are consistently spending on cheap items instead of investing in a higher quality.

How do I determine if I am frugal or cheap?

You may be unsure of where you fall on the cheap to frugal spectrum. There are ways you can determine whether you carry traits of one option more than the other. If the price for any purchase you make is ultimately the bottom line for you no matter what, you are edging closer to being cheap than you are to being frugal. If you say you are only going to spend $20 on your meal regardless of what you feel like eating at a restaurant and then sacrifice the idea of paying a tip to achieve this goal, you are considered a cheap individual. Sacrificing value equates to being cheap, which is a habit you can pull yourself out of if you feel you are isolating your loved ones by consistently displaying this behavior.

To become frugal, your mindset must be focused on saving money in the most manageable ways. You can choose to make your coffee at home every morning instead of stopping at your local coffee shop on the way to work. This helps you to save money without worrying about how it negatively affects others when doing so. When your priority is to maximize the total value of what you are receiving, you are considered to have more of a frugal personality. Everyone wants to save money, but the way you approach this ideology can drastically alter how you are perceived by others. Remaining mindful of your money-saving tactics is the key to establishing a frugal mindset instead of a cheap one.

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