Monday, May 27, 2024

4 Stark Differences Between Being Frugal and Cheap

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I’ve been called “cheap” my whole life. I grew up in a small, lower-middle-class town of about 10,000 people. At first glance, I blended right in. Heck, amongst most places in the United States, I blend right in. However, given the small-town USA community I come from, I was the closest thing to Jewish many of the kids in my town had ever seen.

My Dad is Jewish, which makes me half Jewish—Jew-ish. Society tells us that you inherit your mother’s religion. While this is a subject for another time, I think that is an antiquated way of looking at things. I have just as much of my Dad’s genes as I do my Mom’s. Therefore, I will continue to be half Jewish.

Once word spread that I was part Jewish, the kids started to connect the dots. No wonder I brought my lunch every day, didn’t buy the yearbook every year, and didn’t buy the extra stuff the school was selling.

This opened Pandora’s box. Some of the bullies would occasionally throw quarters at me; even my friends would jest. Fortunately, I’m not offended easily, so I’d often just pick up the quarters and put them in my spare change collection. Over the course of a couple of years, it accumulated to over $200. Not bad for a 12-year-old kid.

To the newbie who has started the journey of frugality, you are likely going to be surrounded by hundreds (if not thousands) of people who do not know the concept of financial independence. They are going to call you cheap. They are not going to understand. So, it is important that you know the difference between being cheap and being frugal.

Thus, the subject of this post.

The Difference Between Cheap and Frugal

Being frugal is saving money. Being cheap is saving money at the expense of others.

Here’s an example. It’s been my mother’s dream for years to have Christmas on the beach with just our family. When the opportunity to go to Aruba presented itself in 2017, it was $1,000+ per ticket, plus 17 hours of travel time (while carrying gifts). I booked it without hesitation.

Related: 10 Finance Experts Share Painless Ways to Save $1,000


A cheap person saves in any possible scenario, at any cost. A frugal person happily spends money on things of value.

When going out to restaurants, I get water. At night, I rest my head on a futon behind a curtain in my living room while some stranger sleeps in my bed (I Airbnb it). I rent my car out to complete strangers. At this point in my life, compared with the money I save, I don’t value the food at restaurants when the food I cook at home is almost as good. I don’t value the luxury of having my own bedroom or having my car at my disposal (I am sure I will soon). I like meeting people from around the world and enjoy biking to work.

What I do value more than anything is my health. I spend $200 a month on gym memberships. I do try to maximize my grocery-bill savings through some of Erin Chase’s tips (found in the BPMoneyshow podcast episode #3). I do eat mostly organic, fresh foods, so my grocery bill may be a tad more expensive than others’.

A frugal person values time, a cheap person values money.

Here’s a classic example I think most people can relate to (and a personal pet peeve of mine): You go out to dinner with a group of 7+ friends. You all order meals that are similar in value (within $2 or $3), but a few of your friends get a drink for $7. The range of orders is between $20 and $30. Because some people got drinks and more expensive meals, there is always that one person who tries to spend 15 minutes trying to allocate each item on the bill to the appropriate person. This person is being cheap. You win some, you lose some. Stop wasting everyone’s time. Split the bill down the middle and pony up the $2-$3 extra for your “friends.”

Related: 3 Simple Ways to Cut Back & Save Money without Feeling Deprived

A frugal person looks for value (bang for a buck). A cheap person looks for the cheapest possible thing at all costs.

When I think of frugality in this sense, I think of car shopping. You will rarely see a frugal person financing a brand new BMW. Why? Because they know cars are depreciating assets that suck money out of your pocket every single day. Especially the German cars that cost a fortune to fix.

Why not purchase used Japanese car (3-5 years old) for half the price with cash? No loan, cheaper repairs, it’s better on gas, and it will last you forever.

Personally, when I see people driving these fancy cars, I joke to myself about how much they are losing and how no one really gives a care what they drive. I like to think that most people like their friends for who they are, not what kind of car they drive.   


There are countless examples I could provide, but I think you get the idea. The stark difference between us Frugal Freddies and the Cheapskates of the world are that Frugal Freddies purchase things of value and save money in ways that do not impact others.

Being frugal is an essential element to achieving financial freedom and amassing vast amounts of wealth. Just ask Warren Buffett or Benjamin Franklin.

Despite Warren Buffet’s net worth being $85 billion, he is lives in a $650,000 house and is very happy. Check it out here.

Ben Franklin was quite frankly (pun intended) the founder of this financial independence movement. After working and being frugal for about 20 years, he was able to retire from full-time work and pursue his passions at age 40. Hence the discovery of electricity, the founding of the United States of America, and much more.

Despite his frugalness, Franklin is still one of the most influential figures in all of history. Plus, he’s seen as one of the nicest and most generous people of all time.

Let’s all be more like Ben Franklin.

We’re republishing this article to help out our newer readers.

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Do you have tips for being frugal but not cheap?

Share them in the comments below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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