Frugality is all about living below your means. Cheap is living by the price of everything. Are they really the same? Do you want to be cheap or frugal?
Recently I was described by an associate as cheap!
“All you care about is money, all you care about is what something costs”
Annoying mate
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Honestly, am I cheap or frugal?
While that is partially true, because I am very focussed on how I spend my money, I didn’t appreciate the inference that I had nothing going on in my life other than bean counting.
I didn’t enjoy the implication that my idea of a party is totalling up numbers on a budget planner, while all the time trying to hoard all my resources away like Scrooge McDuck. Tell me in the comments below if you think Scrooge McDuck is cheap or frugal.
However, when you listen to the words of that sentence “all you care about is money” you are left with the idea that the only thing that matters to me is the financial cost of everything in terms of pounds, dollars, or euros, and that it matters above all else.
I refuse to accept I’m cheap
Many people will say that cheap or frugal is pretty much the same thing.
However, I would absolutely refute that claim in the strongest possible terms. In fact, I would almost put myself at the opposite end of the cheapskate spectrum right at the top of the frugal scale, and that is what we are going to get into today.
The cost in terms of pounds and pence – the financial cost – is the only thing that cheap people care about. But! The value one can get from handing over their hard earned is what frugal people like you and I are all about.
Extreme Cheapskates
I saw an example quoted on a reality TV show called “Extreme Cheapskates” and in this one particular episode, a man spends several hours looking for spare change in his own house and around his local town. By the end of his search, he’s come up with $7.
It took him a couple of hours to come up with this total and it really begs the question, “Is your time really worth less $3.50 an hour?”
Cheap is all about the bottom line
A cheap person can’t see past the bank balance increase by $7 and have no regard whatsoever about the effort on time and resources it took to get that.
Never mind that time is the one thing you can’t get more of, the bottom line has increased and that’s all that matters.
They can’t see the opportunity cost of their time and the time lost that they spent looking for that few dollars.
Frugality is intensely resourceful
A frugal person would never do that. A frugal person is intensely resourceful, and seeks value in all aspects of life, not just money. A frugal person knows there is little point in hunting for spare change for two hours just to marginally improve their financial position. The money actually isn’t the issue in all honesty, but rather it’s a total waste of time. There isn’t a big enough reward for the task.
So going back to the original conversation about me being cheap – this came up because usually I bring my own lunch on my travels along with my own drinks and snacks rather than stop at garages and stock up on expensive food that you get at services stops.
“Why do you bother making stuff and carrying it around”? I get asked…
Well, I have already invested in a half decent coffee maker, because I like decent coffee, so I make my own with that. I’ll make my own sandwiches and meals I can stick in a container and go, because I know what’s going into my meals then and I know I can put together good food for a sensible price. Further the tap water in our area is good, so why bother buying another plastic bottle of cloud juice at crazy prices?
Some of my friends don’t mind paying for the convenience of a slapped together pre-pack sandwich full of ingredients you can’t pronounce… but I do.
They would appear to find value in that convenience versus the cost and taste of the product, but I don’t.
I’d much rather find value somewhere else.
Enjoy a frugal life
Now don’t get me wrong, I enjoy a nice relaxing cup of coffee and a sandwich in a cafe or restaurant as much as the next guy, and that’s how I will spend my money in that context.
I’d rather pay for a fresh drink and fresh sandwich in a local cafe and enjoy the atmosphere of the setting than force a grotty old pre-pack for the same price down my throat.
If I’m going to be travelling in the car – I might as well just bring my own stuff and keep going. Save my money and get my value when the driving is done.
None of that is being cheap. That’s getting good value as far as I’m concerned.
Does any of this strike a chord with you? What do you do that your friends don’t? How do you find value where others can’t see it? Definitely leave your thoughts in the comments below.
I carry this value based approach, pretty much through every aspect of my life.
Value based approach is better than being cheap
I’m not cheap, far from it. When I spend money it’s generally on expensive stuff.
I just don’t spend my money on stuff that lots of people do. Take for example a pint of the black stuff… Guinness – probably Ireland’s most well known export. You are certain to pay more that £5 for a pint in Belfast now.
Pricey, to say the least. Am I being cheap by not wanting to pay that price? Maybe, in some people eyes, but again it’s just I don’t see the value in that as a regular expense.
A computer on the other hand, I’d gleefully pay £1500 for when it comes to buying time.
I spend so much time on my computer working with videos, code, and so on, that anything but a really good one, would frustrate and annoy me. This is the difference between being cheap or frugal.
The time I save by having a powerful computer is worth so much more than the pounds that pay for it.
My dad however, wouldn’t get the benefit of having such a machine. Is he cheap because he won’t buy a big beefy computer? Of course not.
He wouldn’t get the value out of a high end machine when all he wants to do is get his email, browse the web, and watch his favourite youtube channel!
Being cheap very much limits your choices – if hoarding your money and not wanting to part with it under any circumstances is your thing, then you are probably going to live a fairly unfulfilled life.
Frugal life is great!
Frugal people are very much the opposite.
As I mentioned numerous times, frugal people are very much focused on value. They likely have a budget, framing their choices, prioritising spending and making sure they set aside money to enjoy the things they like to do. Hobbies keep us interested in life, they are good for our mental well being and frankly anything constructive that is to be enjoyed should be embraced. Don’t forget, hobbies don’t have to be expensive, they can be totally free!
Cheap people are likely to be intense savers of their income. Nothing wrong with that on the face of it, but this desire to hold what they have rather than using those resources and deploying their money in worthwhile ways is likely the overriding driving force here.
… but the biggest difference, the single biggest difference between being cheap and behaving in a frugal manner is intention.
Cheap isn’t in control
Do you think cheap or frugal people are best in command of their finances?
Cheap people are likely slaves to the bottom line. They will take shortcuts, they buy the least expensive options when it comes to food, tools, maintenance costs, all kinds of items… even to their own detriment down the line. For example, buying a cheap screwdriver that will shred within a few uses, just means buying another in a few months again. Or the cheapest possible tomato sauce, that might taste awful to them or actually is pretty awful, but they put up with it anyway. Even if they aren’t struggling for money, these would be the choices that define them. They will know the cost of everything and the value of nothing, or at least will ignore the value in the main.
Frugal people will spend with intention. They know where they find value. They are organised and focussed on goals. They are patient enough to wait for the right product for the right job. They avoid lifestyle creep. They value their time and money. They are likely to be investing spare money in some way, or giving any extra they have to help those who need it. Frugal people understand how to live within their means in a disciplined way.
There is no shame in opting to spend your money differently than the masses. I think lockdown has sharpened the minds of people in many respects with regard to how they have historically spent their money and there does seem to be a bit of a change in attitude around long term thinking, what things really bring us happiness and what we hope to achieve in terms of finances and happiness in life. I think there is slowly becoming a greater awareness as to how we use all kinds of resources available to us and there is a bit of a shift towards being more careful with those resources.
As far as I’m concerned I don’t want to have to work until I’m 70. If I’m really lucky, by then I might have 10 years left and that isn’t a lot of time when put in the context of your life. I want to enjoy all that life has to offer. So personally my intention is not to spend my money on things I don’t want to but rather all the time focus on spending on what I enjoy and investing my money into assets that are going to grow over time.
No more waste
Once your money is spent it’s gone, so you can be sure I’m not going to waste it on stuff I don’t want to spend it on. I don’t care how many times you call me cheap! I have intention for my money – to enjoy it, and to make sure I’m still working towards my future goals. That’s good enough for me and I don’t have to justify that to anyone.
Be comfortable in your own frugal habits everyone, and leave a comment to let me know where you find value… Be sure to check out my YouTube channel if you aren’t a subscriber there and on Twitter and Instagram too.
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