Cheap vs. Frugal
TLDR: Are they same, what is the difference. Which is better
Lot of people use these words interchangeably including me in various context. But are they really same? Is one better than the other. The fundamental difference between the two is the interpretation of money and the use of it.
Both types of people want to save money, but the way approach the same problem is completely different, let us look at some examples for differences
Shopping during a sale
What! Yes, everyone shops even cheap and frugal people. It depends on the how often and what they shop for.
A cheap person looks a smallest cost outlay for a thing he/she wants not focused on quality
A Frugal person looks an item with the best value for the lowest price. He/she is focused on quality more than just price alone.
Going out with Friends
A cheap person is happy to go out with friends as long as they foot the bill. This is being miserly rather than cheap, but I feel that they generally go hand in hand
A Frugal person is happy to go out with friends with a few conditions
Happy to share the bill without burning a hole in the pocket
If the group plans to go to a fancier place, he/she might suggest a cheaper but equally good alternative
Values to company more than the location
Spend patterns
A cheap person wants to minimise spend so that they can horde money
A Frugal person prioritises spending on items, some items might not make the list but the others that do make the list because they are a good value either because of company, utility and/or quality
Short term vs. long term
A cheap person is focused on the short term, reduce the current spend so they see more money in the bank against their name.
A Frugal person is focused on the long term, focus on quality items be it dresses, shoes, electronics, computers, furniture, appliances. Buy a quality product that would last long instead of buying a cheap product that needs to be replaced regularly.
Clearly being Frugal beats being cheap any day of the week and twice on Sundays. I am sure there are more examples that come to your mind. Leave your comments below.
Happy investing - #MyFatFIRE
