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Are You Frugal or Cheap?

There is a big difference between being frugal and being cheap!


Sometimes we treat these terms like they are synonyms. I’ve heard people claim “Well, I’m a frugal person”. But in reality, I know they’re just cheap.


I’ve also heard people being unfairly accused of being cheap when they were actually just being frugal.


What’s the difference?


Well, a cheap person tries to save money at all costs – often at the expense of someone else. On the other hand, a frugal person tries to get the maximum amount of value for their money. Frugality is an admirable quality, but nobody likes a cheapskate. It may seem like a subtle difference, but its affect is profound.


How can you tell if you (or anyone for that matter) are cheap or frugal? Here are four tell-tale signs that set apart cheap people from frugal people.


1. Everything is too expensive to a cheap person


Now, listen, I understand some things are actually overpriced: college textbooks, snacks at the amusement park, flowers right before Valentine’s Day (though I don’t recommend using that as an excuse, guys), etc. But to a cheap person, everything is overpriced.


This is the reason why a cheap person can’t bring themselves to spend money on anything - even if it’s something they need - even if it’s something they know is important.


A cheap person will sleep on a bad mattress for years because he can't bear the thought of paying a few hundred dollars to get a better night's sleep. He will miss out on time with friends and family because he doesn’t want to pay money for a plane ticket, or a ballgame, or a meal at a restaurant. He will stifle his kids' interests because he doesn't want to pay money for a music lesson or a sports program.


A cheap person will deprive himself of meaningful experiences, relationships, and opportunities because he is too concerned with how "expensive" everything is.


2. A cheap person is happy to save money at the expense of someone else


A cheap person is inherently selfish. It doesn't matter to him if someone else has to pay the cost of his actions as long as he saves money. For example...


A cheap person will buy a TV, have a Super Bowl watching party, and then return the TV the next day and ask for a refund. He will tell the ticket agent that his 12-year-old is 10 so that he can save $3 by paying the child rate. He will put pressure on his family and friends to do work for him for free and then justify it by promising that they’ll get a lot of “exposure” for their business. *deep sigh*


He is so dead-set on saving money that he is unconcerned about the casualties of his stinginess. If you leave a lousy tip or no tip at all because the restaurant bill was higher than you expected. You are not being frugal. You are being cheap!


3. A cheap person doesn’t understand the difference between price and value


Price is what you pay. Value is what you get for what you pay. To a cheap person, they are one and the same.


A frugal person understands that sometimes it is a better use of his money to pay more than the cheapest option available. If the $50 pair of jeans are better quality and will last 3x longer than the $25 pair of jeans, then the frugal person is happy to pay a higher price to get more value.


But a cheap person automatically assumes that the lowest-priced option is always the best value.


Because the cheap person doesn’t want to pay for labor, he will spend his entire Saturday working on a small home project, make multiple trips to Home Depot, and end up doing a mediocre job. By contrast, the frugal person understands the value of having his Saturday free to relax, spend time with family, or work on projects he is better at. So, he will pay a handyman $150 to do an excellent job, and he has the job done in less than 2 hours.


A cheap person will drive 15 minutes out of their way because they can get a loyalty discount of $0.10/gal of gas. What they probably don’t realize is that this 30-minute round-trip saved them a maximum of $1.50! Is $1.50 in savings really worth 30 minutes of your time (not to mention the extra gas it took to drive there and back)?


Remember the difference between price and value. Sometimes, the more expensive option can actually be the smartest financial decision.


4. A cheap person views their money as a collectible, not a resource


Like Smaug the dragon guarding his stolen treasure under the Lonely Mountain, a cheap person views his money as something to be hoarded. No matter how much he has, he doesn’t feel that it’s quite enough. And he especially cannot bear the thought of losing any of it - no matter how small the sum.


A cheap person’s financial decisions prove that he is only worried about himself. He doesn’t want to be without money and will go to great lengths to ensure that doesn’t happen. What he may not realize is that being cheap is an indication of his skewed priorities. Money should not and cannot be our end goal in life. If someone is unwilling to part with their money, then that is an indication that their money is what is most important to them.


This is a terrible way to walk through life. And at the end, what will really matter? Certainly not how much money you had. Instead, what will matter is what you did with what you had. In the Parable of the Talents, Jesus taught us that we are to use our resources wisely because they don’t belong to us. God has given us different amounts of time, abilities, and financial resources. It’s our job to embrace that responsibility, be good stewards of those resources, and use them to the best of our ability.


Ultimately, our money is not our own. We just have it for a short amount of time and then it will be passed on to someone else. Instead of clenching it with a closed fist, we should hold it with an open hand.


Be frugal. Don’t be cheap!


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