Cheap vs frugal. Both common terms used in the world of finance, but with very different meanings. What does each term mean, and why is it important?
There is a more obvious difference between cheap and frugal as opposed to being thrifty versus frugal. Let’s get into the meaning of being cheap vs frugal and learn about the difference between both words. When you learn how to be frugal but not cheap, you’ll become more educated and will be able to plan and make better financial decisions.
Read on to learn about cheap vs frugal.
The Word ‘Cheap’
Cheap is an interesting word. This word has more than one meaning – one one hand, an item can be ‘cheap,’ which means that the cost is quite low. This isn’t necessarily a bad thing. Some items are cheap and aren’t necessarily poor quality. For example, think of the last time you went to a dollar store.
Dollar stores are great places to find both low-priced, decent quality items and low-priced, low quality items. I’m sure you can think of the hundreds of cheap, subpar plastic and glass products like mop buckets and cups that line the walls of stores in your local discount mall. However, dollar stores sometimes carry decent items at a low cost – even if the cost per unit is higher, which we’ll get into a big later.
Additionally, sometimes the cheapest item isn’t the worst. For example, there are a lot of high-quality electronics in the lower price point, such as bluetooth headphones and speakers that work just fine. When you choose the lowest or lower-priced item, you’re usually still getting a product that does the job you need it to do.
What Defines a ‘Cheap’ Product?
On the other hand, when something looks or ‘is cheap,’ it’s obvious that the item is of low quality. Items don’t always need to be the lowest price to look cheap. For example, think of the tacky dresses on the runway or designer bags with logos printed on them versus classic pieces that never go out of style, like black blazers, dark jeans and leather handbags.
Simple and structured pieces with neutral colors look like they’re made with higher-quality materials, even if the item isn’t considered ‘designer.’ There are lots of articles discussing how to avoid looking cheap.
In summary, cheap doesn’t always mean the lowest quality – but depending on the product, it often can mean this.
On the other hand, a cheap person or group of people has an entirely different meaning and a negative connotation. Let’s get into what being ‘cheap’ means and how it can harm your long-term finances, waste your time and even contribute to harming the environment.
What is Being Cheap vs Frugal?
What’s the difference between frugal and cheap? Let’s start with the phrase ‘being cheap.’ This means that a person is only concerned about getting the lowest-priced item regardless of the quality. This person will compare prices and simply buy an item that is the cheapest in terms of the price. In the short-term, this person’s poor stingy living practices save them a few dollars here and there, but in the long run, it’s costing them time, money and negatively impacting the environment. Being cheap is the antonym for frugal – the complete opposite. A cheap person is often afraid of spending money because they have a scarcity mindset – the mentality that there is never enough.
When a person needs to keep repurchasing and replacing an item (like the pair of boots mentioned in the previous section), they are wasting money and time as they’ll need to keep going to the store to purchase the item.
Examples of Being Cheap vs Frugal
Here are some of the telltale signs of a cheap person:
- Never agreeing to split the bill
- Always looking at the price tag before purchasing an item
- Going to the cheapest restaurant and always ordering the cheapest food or drink item on the menu
- Reusing disposable cutlery
- Failing to tip a proper amount or even tip at all
- Buying the lowest-priced (cheapest) item with no regard towards quality
- Always complaining about the price of something
- Taking advantage of free samples at the supermarket by taking multiple handfuls
- Taking handfuls of condiments from the restaurant to use at home
- Overloading laundry loads to save on detergent and electricity
There are many other ways that someone might be cheap. Can you think of any? There’s nothing wrong with trying different frugal hacks to save money, but don’t pinch pennies. Life is too short to live in a constant state of anxiety and worry about money.
One important note to keep in mind – there are billions of people around the world who don’t have access to the same resources that many of us do – even money to simply buy the basic necessities of life. They may need to engage in one or many of the ‘cheap’ practices listed above out of necessity. However, if you’re in a decent financial situation and can afford it, don’t spend your life trying to save as much money as possible. It’s emotionally draining and contributes to the scarcity mentality – the idea that there is never enough time, money or resources.
Like This Article? Pin It!
Being Frugal
We’ve discussed how to be cheap, but let’s focus on the positive side of saving money: being frugal.
What is the difference between frugal and cheap? Simple. A frugal person focuses on the cost per unit of each item, quality and the price per unit. Frugal people try out different hacks and strategies to get the most value for their dollar. They aren’t afraid of spending money on quality items. However, this doesn’t mean that he or she will buy expensive items just because they’re costly. A frugal person will decide whether or not an item brings him or her value in the long run. In short, being frugal focuses on saving money and time long-term, and being cheap focuses on saving money in the short-term.
Let’s look at a few different ways a person can be frugal.
Cost Per Unit and Cost Per Use Method
One major way someone can be frugal is to assess the cost per unit of each item and the cost per use method.
Let’s dive into each method and explore how they show how someone can be frugal vs. cheap.
Cost Per Unit Method
After comparing 3-4 prices of each item, a frugal person will determine how much each unit costs. It’s quite common for food items to vary in price and size, so it isn’t always easy to determine the cost of an item just by looking at the price tag.
For example, let’s say a brand-name bag of flour costs $5.00 for 5lbs and a 10lb bag costs $9.00. While it may initially seem cheaper to buy the smaller bag of flour for $5.00, $5/5lbs = $1.00 per pound for the smaller bag of flour. On the other hand, the larger bag of flour costs $0.90 per pound ($9/10lbs).
While this may not seem like a huge difference, if you stick to good habits and continually compare the cost per unit of items, you’ll save money. Additionally, since larger items are generally cheaper, you won’t need to restock on items as much, so you’re helping the planet by reducing waste. If you don’t want to do manual math all the time, use a cost per unit calculator.
Determining If You’re Cheap vs Frugal – Cost Per Use Method
The cost per use method calculates how much you spend per wear, given the price of an item. It’s quite complicated – practically impossible, actually – to determine exactly how many times you’ll wear something until it breaks. As an alternative to the cost per use method, we can calculate the cost per season or year. For example, let’s say you are comparing a cheaper winter jacket you found at a discount store that cost you $50, and a pricier jacket from a department store that costs you $200. The cheaper winter jacket is much lower quality, while the more expensive jacket is significantly better quality.
On average, the cheap jacket will break and you’ll have to replace it every year. However, the costlier jacket will last you five years.
The cost per use of the cheap jacket is $50. $50 x 5 years is $250. The cost per use of the department store jacket is $200. $200 / 5 = $40 per season.
While there is only a $50 difference between how much less you’ll spend by investing in the more expensive jacket, you are also saving the environment and time needed to go to the store. Additionally, the more expensive jacket will look better, and you’ll feel better wearing it!
In short, investing in the more expensive jacket saves you time, money and helps out the environment, too!
Living Below Your Means
What does ‘living below your means’ mean? It might sound complex, but it really isn’t. Living below your means simply entails spending less than you earn and being intentional about where your money goes.
As human beings, we are wired for competition and comparisons. In this day and age, we are bombarded with temptations from advertisers and even our family and friends. It’s completely natural and understandable to compare yourself to your neighbor. When your friend or the person across the street gets a new car or designer handbag, do you experience any jealousy? I know that for me, I at least spend time admiring the person’s shiny new toy and my mind begins to fantasize about owning something new.
There’s nothing wrong with splurging every once in a while, but if you aren’t careful, it won’t be too long before you’re spending to keep up with society and aren’t saving any money at the end of the month. Finding a balance between the cheapest way to live and spending far too much takes practice, but it’s worth the effort.
What can you do to help you live below your means? There are a few different strategies you can use. Let’s go over a few of them here.
Printable 52 Week Money Challenge
The printable 52 week money challenge is a fun way to save money and live below your means.
Choose something you want to buy and save up for this year – anything from a vacation, designer dress or new pair of sneakers. If you don’t know what to save up for, take 15-20 minutes to brainstorm as many ideas as possible in a journal. Set a timer and write as many ideas as possible. When time is up, choose the most important item to you.
Next, determine how much the item will cost. It’s a good idea to add about 10% to the cost to account for any tax or inflation – or inaccuracies in calculations. For example, if I want to go to an all inclusive resort in Cancun next January (one year from now) that’ll cost me $1500, I’ll add an extra $150 ($1500 x 0.10) to the total goal. So, I’ll need to save a total of $1650 over the next year if I want to go to Mexico. Over 12 months, I’ll want to save $138 a month ($1650/12 = $137.50) towards my goal.
Once you’ve figured out your goal, you can choose a template to help motivate you. The printable 52 week money challenge is a great way to be frugal as you’re forced to save money and live below your means.
30 30 30 10 Budget
The 30 30 30 10 budgeting method is a frugal way to allocate expenses to certain parts of your life. 90% of your income goes towards the necessities of life, and the last 10% goes towards discretionary purchases – things you don’t need to survive but are an enjoyable part of life.
Here is the recommended way you should break down your money according to 30 30 30 10:
- 30% for housing (rent, mortgage payment)
- 30% for gas, groceries, utilities and other mandatory bills
- 30% to invest and save
- 10% – other – entertainment, travel etc.
Depending on where you live, rent and mortgage payments may vary greatly. If you live in a bigger, more expensive metropolitan area, your rent may be closer to 40% of your income. If this is the case, take 10% out of investing and saving for now. The other categories may vary depending on your lifestyle, but this strategy is a general guide you can use. If the 30 30 30 10 budget method doesn’t appeal to you, you can check out other methods like using a zero based budgeting template. Use a digital budget planner or journal to track savings.
No Spend Month
Another way to kickstart your frugal journey is embarking on a no spend month challenge – cutting out any unnecessary purchases. Yes, this includes your twice-a-week, $15 lunch from the food court around the corner from work! Just 30 days of completely cutting out unnecessary purchases and engaging in frugal eating can help you build good habits. However, don’t do this challenge too long – extreme frugal living will cause you frustration and you may lose progress with your goals by splurging on too many items since you’ve deprived yourself for too long.
Another benefit of the no spend month? You will become more intentional about spending. Why? Every time you get out your wallet, you’ll have to determine whether the purchase you’re about to make is necessary (groceries, gas, parking fee) or if you can live without it (store-bought coffee or lunch vs. one brought from home).
If an entire month of no spending is too daunting, start with one single day. Why not do a Frugal Friday challenge, where once a week, you forgo any luxuries? Start small, then add another day or two per week where you practice mindful living by only spending on essentials. Before you know it, you’ll be well on your way to healthier spending habits!
Additionally, you can try going frugal extreme for a short period of time. You’ll forgo any unnecessary purchases and only spend on what’s necessary to survive. This is a good short-term solution if you’re looking for save money. However, don’t do it too long. Otherwise, you’ll be a lot more likely to go on a spending binge. Additionally, it’s no fun to give up everything. Being frugal is all about enjoying life and finding balance!
Mending Clothes
Do you know how to sew? Learning how to mend your clothes is a great life skill to have. Rather than throwing out clothing and repurchasing new items, you can fix your clothing and re-wear them again and again.
Additionally, learning how to mend clothes could serve as a great side hustle. Want to make some money online? You can easily set up an online clothing store on Etsy and sell your hand-sewn clothes. Get creative with making and saving money and have fun.
At the very least, learning how to sew and mend clothes will save you time and money in the long run. Additionally, by repairing old clothes rather than throwing them out, there will be less items in the landfill. Being frugal and thrifty by learning a new skill has so many benefits!
Cheap vs Frugal – Is Frugal Living Worth It?
We’ve touched on many reasons why frugal living is worth it and the distinct difference between frugal vs cheap. Living a frugal lifestyle is a lot of work – however, is frugal living worth it? Absolutely! While you may not see a huge difference in your savings in the short-term, once you build positive, long-term habits, you’ll see some great results. You’ll have a fatter wallet and you’ll enjoy higher quality items at a higher price, but you’ll use them longer.
Conclusion – Cheap vs Frugal
The terms ‘cheap’ and ‘frugal,’ are similar, but have very different meanings. Being frugal is just fine – don’t be cheap. There is a clear difference between being cheap vs frugal. While it’s easy to pinch pennies and live as cheaply as possible for a short-term period, it isn’t sustainable long-term. Are you frugal or cheap? If you’re practicing being cheap all the time, you may save money in the short-term, but in the long run, you’re losing money and time. Focus on frugal fun living and enjoy your life!
Like This Article? Pin It!
Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
