Everybody knows a cheap person, and probably hates them. But I think we often mislabel frugal people cheap. These are just my opinions, but here’s what I think differentiates the two:
Cheap people care about the cost of something.
Frugal people care about the value of something.
Cheap people try to get the lowest price on everything.
Frugal people try to get the lowest price on most things, but spend a lot on items they really care about.
Cheap people are inconsiderate. For example, when getting a meal with other people, if their food costs $7.95, they’ll put in $8.00, knowing very well that tax and tip mean it’s closer to $11.
Frugal people won’t order a Coke if they’re on a budget, so that when the bill comes, they don’t look cheap.
Yes, being cheap and/or frugal can be a cultural quality. I won’t spend much more time on this one, but it is an important topic in personal finance.
Cheap people keep a running tally with their friends, family, and co-workers. Some frugal people do this, too, but certainly not all.
Because of the fear of even one person suggesting they spent too much on something, cheap people are not always honest about what they spent on something. Neither are frugal people.
Cheap people are unreasonable and cannot understand why they can’t get something for free. Sometimes this is an act, but sometimes it’s not.
Frugal people will try as hard as cheap people to get a deal, but they understand that it’s a dance and, in the end, they don’t intrinsically deserve a special deal.
Cheap people’s cheapness affects those around them. Frugal people’s frugality affects themselves.
Both cheap and frugal people will be more assertive than most people when trying to get a deal. Over the long term, they’ll both save more money. But one has a cost, while the other pays dividends.
Cheap people think short term. Frugal people think long term.