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Being frugal or just plain cheap?

Started by Hayden, September 24, 2018, 12:00:19 PM

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Hayden

FS Community-

All of us on here have some level of financial intellect to want to grow either our portfolio's or to simply grow our level of knowledge. With that being said, a lot of long term strategies to building wealth require some level of frugality and saving.

However, when does being frugal start to just become being cheap and stingy? What are the difference's in connotations to both being frugal versus being cheap. Is there a difference? Can you act frugal without coming across as cheap? Do we even care what people think? What are some practical ways one can ensure they are working their long term financial strategy without being the guy that always has to split the check at dinner to ensure he doesn't end up paying for someone else's iced tea?

I would love some discussion and any examples would be awesome.
Very Respectfully,
Hayden

Bonsai

One way to determine a distinction is a "needs" versus "wants" analysis.  This is still pretty subjective but an easier analysis for me.

Hayden

Quote from: Bonsai on September 24, 2018, 12:07:18 PM
One way to determine a distinction is a "needs" versus "wants" analysis.  This is still pretty subjective but an easier analysis for me.

I find that analysis to be ineffective when you want to spend some money on yourself and you have to go on the basis of it not being a need. We buy things all the time that are wants and not needs. How does that analysis help you break the difference between being frugal or cheap?
Very Respectfully,
Hayden

nycrite

I'll try.

Frugal tries to get the lowest price possible, but it does so with an eye for long term quality, durability, or value.

Cheap tries to get the lowest price possible, but it does so with little consideration for quality and can often fall victim to buying disposable goods.

Bonsai

Quote from: Hayden on September 24, 2018, 01:16:38 PM
Quote from: Bonsai on September 24, 2018, 12:07:18 PM
One way to determine a distinction is a "needs" versus "wants" analysis.  This is still pretty subjective but an easier analysis for me.

I find that analysis to be ineffective when you want to spend some money on yourself and you have to go on the basis of it not being a need. We buy things all the time that are wants and not needs. How does that analysis help you break the difference between being frugal or cheap?

It is easy to drop down the rabbit hole when the central concept is definitional.  For now, conceptually, need/want are ends points of a continuum where frugality is a place somewhere in between.  The end points (need/want) are unique to each circumstance/individual.  One's ability to obtain the want is presumed.  Examples, only intended to demonstrate the concept, might include:

Case 1:  need, a child's education.  Cheap, sending the child public school.  Ability - resources to pay for the best private school in the land.  Frugality - only paying for gas to take the child a magnet school across town versus paying for a tutor or piano lessons versus sending the child to a reputable religious based private school versus the best private school in the land.

Case 2:  need, a person needs dental care to correct for lost and broken teeth (as an aside, the medical community suggests that improper dentation is a major contributor to malnutrition and chronic disease).  Cheap, not getting any dental care.  Ability - resources to pay for the best dental implants in the land.  Frugality - getting a dental check up and cleaning versus getting all the decayed teeth pulled and allowing the gums to heal versus dentures versus the best dental implants in the land.

As you indicated, not all situations are need/want situations, they are mostly determined by individual circumstances.  But I think a need/want analysis is helpful to save us from some of our potentially bad choices, e.g., do I need to fully fund my retirement or do I want that new car or vacation and works fine for me.  I try not to over think it.  For an interesting take on your topic look at Sam's dilemma in "Is frugality an incurable disease?" found in the Financial advice section. 

Jbinjville

I know I'm late in this post but I just signed up this morning. I like the subject and I  like the need / want analysis. I was raised in big poor family so I know frugal, it's still my friend and my family's  fortunate not to be poor.  I just asked my 13 year old and he says I'm frugal, not cheap.  the kids always want to stop for a smoothie or waste money at the grocery store or hardware store and my ready answer is 'No'. they expect that answer from me.  If there is a special occasion, like after a track meet - Dairy queen is great. 

but let's talk about clothes. This is my wife's department and she is neither frugal or cheap.  why do the kids need so many pairs of shoes and so many clothes and jackets.  I tell them one pair of tennis shoes and one pair of dress shoes and 2 pair of jeans. nobody listens to me.

and what about the dogs. they have more toys than I ever had and they are spendy not to mention the vet bills.  this is where I'd like to be cheap. but we're not and at this time it's not worth the battle, it's only money.

I say that a lot, it's only money. and that may be a problem. If I had a different attitude ... well I'd have more money but I may not have a life.  So we have a Ying Yang in my family. I'm frugal and my wife really isn't, she doesn't throw money down the drain but we get stuff. it's my price for having a life. yippee.

Jbinjville

I didn't mention but should have. We don't borrow (my rule) for anything other than real estate and currently our house is paid off so zero debt. always (other than your house) don't borrow money. we use credit cards but pay them off 100% monthly at due date. I've never and will never have a car payment. I feel that if you can't save 100% for a car, then you can't afford it. (thank you Dad). I know this is weird now, but I think it's smart. buy used, with cash. go functionality, not style. at least until you're really rich, which I am not at this time.  Kids and college may be a different story for debt. Our worst case scenario is my wife and I pay 1/3, each kid pays 1/3, and they can borrow 1/3.  we have 5 years before the 1st kid enters college - we'll see.  good grades are essential.
I'd call this all frugal, not cheap.

Orphan

Quote from: Jbinjville on October 24, 2018, 06:24:34 PM
I didn't mention but should have. We don't borrow (my rule) for anything other than real estate and currently our house is paid off so zero debt. always (other than your house) don't borrow money. we use credit cards but pay them off 100% monthly at due date. I've never and will never have a car payment. I feel that if you can't save 100% for a car, then you can't afford it. (thank you Dad). I know this is weird now, but I think it's smart. buy used, with cash. go functionality, not style. at least until you're really rich, which I am not at this time.  Kids and college may be a different story for debt. Our worst case scenario is my wife and I pay 1/3, each kid pays 1/3, and they can borrow 1/3.  we have 5 years before the 1st kid enters college - we'll see.  good grades are essential.
I'd call this all frugal, not cheap.

Definitely not cheap. I would say smart.

jekamom

My mother's rule:  Frugal is withholding something you want  in order to economize.  Cheap is withholding from someone else to improve your own finances. 
So eating at home is frugal.  Going out to eat and not tipping is cheap. Carefully considering an expense and figuring out how to get the best job possible done is frugal if you pay the workman or babysitter or professional you hire when agreed.  You are cheap if you negotiate after he has done the work and is ready to be paid and force him to take less because he needs the money.   It doesn't matter your tax bracket. 
You can be cheap on yourself.   Putting off your kids necessary dental work (when you have options) is cheap.  Putting off replacing the dryer and hanging out the clothes to dry is frugal IF you are the one doing the laundry.