Being Cheap vs. Being Frugal (aka Smart)

(Today’s guest post comes from my new friend, Ashley, over at The Frugal Model. A real life model promoting real life finance! How sexy is that? (Answer: Very))

I’ve always gotten offended when people use the word “cheap” to describe my spending and savings habits. When I hear cheap, I think women with blue eyeshadow in bedazzled skirts that are three sizes too small. I picture products that fall apart after one use. I always cringe, and then politely correct them – “I am not cheap! I’m frugal. There’s a big difference.”

I suppose that it’s a common misunderstanding of words, but I personally feel that it’s important to straighten this whole misconception out. Why? Because since no one ever wants to feel as though they are being judged as “cheap”, they spend money they don’t have on things they don’t need all because they simply weren’t being referred to as “smart” instead.

So let me break down the difference. When it comes to describing spending habits, cheap is appropriately used in instances where people hold out on doing things for others because they don’t want to spend money. In this case, cheap can be interchangeably used with the word selfish. For example, a man can refuse to pay for his date’s meal because he claims to believe in sharing all costs, but if she can’t really afford it (and he absolutely can) – the dude is being cheap.

Another example – we all have that friend who always “forgets” your birthday gift at home when they get to your party, but it never materializes. You know damn well they didn’t get you a gift – because they’re that cheap friend of yours.

On the other hand, being smart with your money (also known as being frugal), is when you are getting yourself out of debt or creating a savings by being mindful of how you spend your money. It’s politely declining offers to go places that you can’t afford instead of pulling a “lost wallet” trick. It’s letting your friends know your situation so they understand where you’re coming from when you want to split off your portion of the bill and pay separately from everyone else who’s boozing it up. If you can’t afford to go on an expensive date – plan a thoughtful picnic in the park. This is respectable, and more importantly it’s smart behavior that will get you to the position where you no longer have to worry about saving every dollar.

I hope this clears up the confusion a little. More than worrying about what other people are thinking, it is especially important to be mindful of how you’ve defined money-saving habits in your own mind. Labeling certain behaviors as being cheap will make you less willing to do them – even though you’re fully aware that it’s in your best interest.

Remember, even millionaires – especially millionaires – still practice frugal behavior once they’ve reached where they want to be financially. Keeping modest homes and cars, not spending foolishly on big nights out, etc, all help get you to those end goals. And trust me, they’re definitely not worried about people labeling them as cheap.

When you have real money, you don’t really care what people think of you at all.

Ashley is a model living in NYC who loves sharing her money saving tips and advice on living luxe for less. Check out how she keeps frugality sexy over on her site The Frugal Model, and follow her @thefrugalmodel for daily inspiration.

PS: Check out this post over on the realities of being a model too – pretty crazy. I know I linked to it already last week, but it’s worth repeating :) Thanks for sharing, Ashley!

[Photo by coneslayer]

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  1. Tony@YouOnlyDoThisOnce August 29, 2013 at 7:27 AM

    Ashley, you nailed it on the head. Even cooler, you are in a business that promotes spending! Way to stay above the fray….love your writing, too.

    1. Ashley August 29, 2013 at 10:08 AM

      Thanks Tony! I appreciate that :)

  2. Financial Independence August 29, 2013 at 8:06 AM

    I think the difference is that someone frugal aims to not spend money on things they don’t value – so they have the funds to spend on what is truly important to them. Those who are cheap don’t want to spend money at all.

    1. Ashley August 29, 2013 at 10:10 AM

      That’s a good differentiation too. People who are cheap won’t spend money even if they really should or have to. Frugal people know what’s worthwhile.

  3. Stuart@DailyMoneyBucket August 29, 2013 at 8:27 AM

    Frugality is about getting value for your money. It’s about meeting your needs and priorities without spending vast sums of money.

    In contrast, someone who is cheap never wants to spend any money. But even worse, they can’t be honest about it. They make up pathetic excuses about leaving their wallet at the office etc etc.

    1. Ashley August 29, 2013 at 2:28 PM

      I know that’s the worst!! When you’re frugal you can be upfront about the fact that you’re saving money. It’s definitely nothing to be embarrassed about – having the will power to save money is a respectable thing (and you won’t have to keep pinching pennies which is a nice upside too).

  4. Brian August 29, 2013 at 9:16 AM

    Great post Ashley. Totally agree. My family and I are in the processes of repaying over $100k in debt. We are not being “cheap” with our money just smarter!

  5. Debt Blag August 29, 2013 at 9:52 AM

    In terms of definition, I think the difference is pretty small, but the way that each word’s connotations have developed are more significant.

    To me, “frugal” implies that someone prioritizes and spends less on certain things to spend more on things they value (Whether that thing they value is retirement, a house, college for kids, or just paying off debt). On the other hand, “cheap” people only value the money they aren’t spending.

  6. John S @ Frugal Rules August 29, 2013 at 9:57 AM

    Spot on Ashley! I think many confuse the two when they really are completely opposite. I think being frugal means getting value for your money and making it work for you as opposed to a miser who’ll drive 10 extra miles to save $.02 per gallon on their gas.

    1. Ashley August 29, 2013 at 2:29 PM

      Ha my dad was a cheap-o like that. He would go to three different grocery stores to get all the different sales. I’m sure he spent the savings on gas.

  7. Alicia @ Financial Diffraction August 29, 2013 at 10:24 AM

    I definitely agree with what Debt Blag said above about the connotation of the words.

    I’ve been called both, and I do something similar as mentioned in the article and just correct the wording. The other person might think I am a little particular, but it works for me.

  8. Martin August 29, 2013 at 11:06 AM

    I laugh when someone calls me cheap because I’m far from it. I’m sorry if I don’t like to get ripped off.

    Actually, come to think of it, every girl I dated complained about my saving. They just wanted to do ridiculous things that cost a lot of money.

    The next girl I date is going to have to be frugal.

    1. J. Money August 31, 2013 at 9:39 AM

      You gotta stop picking them up at strip clubs ;)

  9. christie August 29, 2013 at 11:39 AM

    I love the comment about millionaires staying frugal! So true!

  10. Retire By 40 August 29, 2013 at 11:59 AM

    I feel like I’m in between. Sometime I’m cheap and sometime I’m frugal.
    It’s easy to be cheap now though because I don’t make much money anymore.

  11. Ann August 29, 2013 at 12:21 PM

    I agree, there is definitely a difference between being cheap and being frugal. I can’t help but laugh at people when they refer to me as cheap just because I don’t waste my money on expensive meals or fancy things, but chose to save my money instead.

    1. J. Money August 31, 2013 at 9:39 AM

      We’ll see who’s laughing when you hit your first million :)

  12. Marissa @ Thirty Six Months August 29, 2013 at 1:15 PM

    “When you have real money, you don’t really care what people think of you at all.” — Exactly. Only insecure people do.

  13. Marissa @ Finance Triggers August 29, 2013 at 1:18 PM

    The “real” wealthy people in the society are those that are not ostentatious. Those that don’t want to display their material possessions to the public.

    1. Ashley August 29, 2013 at 2:31 PM

      Exactly. When you’re really wealthy, you got there by not feeling like you had to show off or keep up with anyone else. Those are the people who will keep their money long term.

      1. Marissa @ Finance Triggers August 31, 2013 at 12:35 AM

        You’re absolutely correct, Ashley.

        1. J. Money August 31, 2013 at 9:41 AM

          That, or they choose to spend their money on fancy cars/houses and not anywhere else ;) But overall that’s probably true – most truly wealthy don’t show it off every other second.

          1. Marissa @ Finance Triggers September 1, 2013 at 1:30 AM

            That’s right. Hope you’re having a great weekend.

  14. Britnee August 29, 2013 at 3:13 PM

    Sometime when I am cheap I end up paying more. Stupid vacuum! :)

  15. Lisa E. @ Lisa Vs. The Loans August 29, 2013 at 4:55 PM

    YES! I absolutely hate being called ‘cheap’. Frugal/smart are way better terms!

  16. Mark Ross August 29, 2013 at 10:01 PM

    There is really a difference between being cheap and frugal. And you said it very well there, for me, frugality is knowing how to value money and how to use it properly.

  17. Anton Ivanov August 29, 2013 at 10:12 PM

    I think there is a line between cheap and frugal, but it’s a fine line. What one may think is selfish, another may think it’s actually being smart with your money. We all have to pick and choose our financial battles and ultimately it doesn’t matter if I saved $100 with grocery coupons or because I bought a cheap present for my aunt.

  18. Mike Carlson August 29, 2013 at 11:27 PM

    I don’t mind being called “cheap” as long as I know that I am not. I am just spending my money wisely on things worth spending for and not actually taking advantage of someone else’s money.

  19. Christine @ ThePursuitofGreen August 30, 2013 at 9:43 PM

    Great article! There definitely is a big different between cheap and frugal. I don’t like to spend my money unless it’s something worth it! I love buying gifts for other people and I spend tons of money on that. Mostly my nieces.

  20. Tahnya Kristina August 31, 2013 at 12:29 PM

    I don’t think that I am cheap but I am definitely frugal. I rarely pay full price for anything, including food, but I just think that is being smart with my money. Why should I pay full price for something that I can get for half price?

    Being cheap means that you don’t want to spend money…every. Being frugal means that you are just always looking for the best deal.

    Love it Ashley and Jay!

  21. Survive The Valley August 31, 2013 at 2:01 PM

    Well said, Ashley. There are relatives in my own family who have the reputation of “having to always urgently go to the bathroom” after a meal is over and the bill arrives… which is another example of being cheap, selfish, and slimy. You don’t want to get that kind of a reputation among family and friends!

    1. J. Money September 3, 2013 at 1:47 PM

      You should bring along a “restroom closed” sign with you and place it on the door right before you know they’ll go, haha…

  22. Fawn November 22, 2013 at 9:44 PM

    From the Simple Living Forums 15+ years ago–
    Frugal–You find some new ugly-orange towels that fell off a truck and use them for 20+ years and then give them to the animal shelter when they get too worn for human use.

    Cheap–You find some new ugly-orange towels that fell off a truck and you give them to your sister for a wedding gift. :)

    1. J. Money November 26, 2013 at 1:28 PM

      Hahahahahaa…. Love. That.

    1. J. Money June 8, 2014 at 3:17 PM

      That’s a good way to look at it :)