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Frugal vs. Cheap: How to Detect the Difference

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Being careful with your money is the smartest way to live a relatively stress-free life. It also sets you up for financial security in the future. Wondering whether you can pay your bills because you spent too much money is a big reality check. 

Despite this risk of running out of cash, there are still times you should spend some of your well-earned money on items for yourself and your loved ones. The point of living fruitfully shouldn’t just be to survive but to also thrive. This means letting loose for special events and holidays.

We’ll talk about many different examples of saving money. Buying auto insurance on a budget, going to Starbucks every day for coffee, and buying your spouse a new car for Christmas are all different items requiring different financial decision-making. 

What is being cheap?

Calling someone cheap can be a pretty big insult. Very few people are going to welcome this term upon hearing it. Cheap people are associated with several negative qualities. If you are described as cheap, it usually means you are unwilling to go the extra mile to pay for quality products. 

The idea is the cost of something is equal to the quality of the item. This isn’t always true, but trying to buy the lowest-costing merchandise in every scenario you confront could mean you don’t care about the quality of products you own. In turn, if you are living with other people and providing for them, this low quality may hinder their lifestyle. 

This is especially true if you have the budget to afford more expensive products. Rich people who are unwilling to spend their large swaths of cash indicate selfishness. If you have the money to help others, think about being a little more selfless. You would want the same in return if the scenarios were flipped. 

Spend Money Wisely

Look at what is in your own personal budget. If you have the money to live in excess once in a while, absolutely do it. Take your family on that vacation golfing. Buy the newest game console and see your son’s face light up in delight. Being cheap is to deny yourself and others the chance to revel in all the moments of joy that money brings if you possess plenty of it. 

If you don’t have the budget to buy some of these extra entertainment items or pleasures, nobody is going to judge you for that. Everyone’s situation is different. Living within your means is smart. Still, living like you are poor when you are upper class is a potential sign you are being a cheap person. 

We spend all of our lives working to provide for our families. We spend a lot of our time trying to make money. That’s why we often measure salaries per hour. 

If you don’t spend extra money on things that will improve your or your children’s lives, you are wasting your time. Extra money can be spent on fun items or things to prepare your family for the future like college tuition and retirement savings. Don’t waste the opportunity to put funds toward these things if you have them. 

What is being frugal?

To be frugal is to be smart and savvy. It means finding a more efficient way to spend money no matter whether you are rich or poor. It is logical to find ways to buy things for cheaper when confronted with two different price points as long as you aren’t skimping on quality. 

One of the ways this can happen is through insurance. Buying auto and homeowners insurance is essential. You need these items to prevent you from paying for unforeseen disasters with out-of-pocket cash. That doesn’t mean you have to get the most expensive policy at the first company you go through. Compare average insurance bundle costs to get the best deal.

Get all the coverage you need to protect yourself and your family from accidents and danger. But compare the prices you’re getting from your insurance company with their competitors.

You may find they are tacking on extra things in the policy that you don’t need, or they are giving you more expensive rates than others in the area might provide. Make sure you know which are the best or worst car insurance companies in your area.

Go for Quality

This is where the quality argument comes back into play. If you find something you need to buy is not going to be sufficient for your needs, buy something of better quality. Examine your budget and decide whether you can afford what you want. You might have to skimp on quality if you are poor, but never be negligent.

If the purchase is going to help you live a safe and happy life, then you should go the extra mile no matter what you have in your bank account. Buying a reliable vehicle that will get you to work and saving some money for emergencies or college for kids is all worth going into debt for. 

Do you have to choose money over happiness?

You may think there is no difference between being cheap and frugal when it comes to your happiness. Spending may seem to result in less fun in the short term, but it can result in enjoyment later on.

Save big purchases for special occasions and for when you know you want to let loose. This is a great example of being frugal instead of being cheap. A frugal person is willing to spend when the time is right and the budget affords to do so. A cheap person will never spend money on gifts at any time or for any special occasion. 

If food makes your wife or husband happy, then plan to bring your loved one to a fancy steakhouse on Valentine’s Day. Go more simple in the months leading up to the event so that you can really go all out when it counts. 

Treat yourself to small things along the way. Evaluating what you find valuable in life is the best way to decide whether to spend your money on it. 

Shawn Laib AuthorShawn Laib writes and researches for the auto insurance comparison site, He enjoys helping people set their budgets and figure out how to live fruitful lives no matter what’s in their bank accounts.