Frugal vs Cheap: What’s the difference?

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Many people think being frugal and being cheap means the exact same thing.  Before I adopted a more frugal lifestyle, I was one of those people who thought that.  

However, when I first discovered the FIRE (Financial Independence Retire Early)  movement, I very quickly learned that frugality and cheapness are two very different concepts.

Living a frugal lifestyle is one of the foundations of FIRE.  Frugal living helps you to live below your means so you can crush your savings goals and eventually be able to have the ability to choose how you spend your time (after achieving financial independence).  

So today I am going to explain the key differences between being frugal and being cheap and tell you some characteristics of both to help you differentiate between the two.

Frugal vs Cheap: What's the difference?

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Frugal vs Cheap: Definitions

According to dictionary.com, frugal means:

“Economical in use or expenditure; prudently saving or sparing; not wasteful”

And

“entailing little expense; requiring few resources”

Cheap means:

“Costing very little; relatively low in price; inexpensive”

And

“Of little account; of small value; mean; shoddy”

As you can see, the actual meanings are quite different.  So when someone’s spending habits are called “frugal” it means that the person uses their resources effectively and carefully in a way that benefits their money situation.  

When “cheap” is used to describe how someone spends their money, it is referring to the actual amount they spend, the cost of the items they buy, or refers to the inferior quality of an item purchased.  

Let’s dive in a little deeper into each meaning.

What does it mean when you are frugal?

We talked about the meaning of the word frugal, but what really does it mean to be frugal and live a frugal lifestyle?

A frugal person spends their money intentionally on the things that matter the most to them. They put their priorities first when deciding what to spend their money on.

A person’s priorities are based on their values.  And values are those things that are most important to a person.

Here’s a quick example:

Let’s say you put a high value on taking family vacations and traveling. But you know if you don’t watch what you spend on other things, there isn’t going to be enough money in your vacation fund to take a trip next year.  

So what do you do?  

You significantly cut back on other things you have been spending money on to save more in your vacation fund so your family doesn’t miss out on taking a trip next year.

Some things you might cut back on are eating out, going to movies, and expensive salon visits. 

You could also find ways to save on household expenses, like saving money on groceries, getting your cable bill lowered, and shopping around for cheaper insurances.  

You are spending your money carefully and intentionally based on your priorities and values.  

So your frugal lifestyle is going to look very different than my frugal lifestyle because everyone has different values.

There are lots of people on the internet sharing tons of different frugal living tips.  And it’s helpful to read about all of them.  

Do you want to know why?

Because then you can pick and choose the tips that are relevant to your situation.  Some tips I read seem downright crazy!  But that’s because I can’t apply them to my life.  

The key to making the transition to a more frugal lifestyle is developing an individualized plan of action that works for you.  

Obviously, if you live in an apartment in the middle of the city you aren’t going to be able to hang your clothes out to dry to save on electricity that a clothes dryer would use! 

But maybe you can ride a bike, walk, or carpool to work to save on transportation costs.  

A frugal lifestyle needs to be catered to your life.  You can’t adopt someone else’s!  

Frugal vs cheap: Definitions

Characteristics and signs of a frugal person

#1 Frugal people spend intentionally

The number one characteristic of a frugal person is the act of spending intentionally.  Frugal people tend to have decent self-control when it comes to making purchases.

There is very little room in a frugal lifestyle for impulsive spending.  Just about every dollar has a purpose and that purpose is generally well thought out and planned.  

Now, I am not saying frugal people do not splurge or deviate from the plan at all, it definitely happens.  But frugal people generally like to stick to their plan in order to reach their end goal. 

#2 Frugal people focus on value for the money

As I said earlier, living a frugal lifestyle is generally goal-driven.  There is a reason behind spending less on those things that aren’t valued.  

And when a frugal person does have to spend money on something that was not in the plan, say to replace an appliance, for example, frugal people tend to look for the best value for their money.

Let’s use the appliance example to dig deeper.  

One might think a frugal person that needs to replace a kitchen appliance would go pick out the most inexpensive one they can find.

Not so.   A frugal person would do research to find the best deal on a quality appliance in hopes of it lasting a long time so they don’t have to spend money on another one when it breaks.  

A frugal person would do research by reading customer reviews to ensure quality, checking prices at different stores, and searching for sales or discounts.  

#3 Frugal people are not wasteful

Since frugal people like to get the best value for their money, they do not waste the things they spend their money on.  

Frugal people think of waste as throwing money away.  

Whether it’s waste from buying more than you need and not being able to use it up or waste from buying something inexpensive that breaks right away, any kind of waste is avoided like the plague in a frugal lifestyle.  

#4 Frugal people love saving money, but not at the expense of others

Frugal people love saving money, but not if it means someone else will need to pay extra.  People that are frugal typically are in tune with proper etiquette involving money.  

#5 Frugal people do not have homes full of stuff

Since people that are frugal spend intentionally in order to help them achieve their money goals, they tend to have fewer material things.

Many frugal people even consider themselves minimalists because they prefer not to spend their money on stuff that will fill up their homes.  

Frugal vs Cheap: Is being frugal bad?

Is being frugal a bad thing?

After reading about the characteristics of frugal people, do you think being frugal is a bad thing?  

I may be biased since I am a frugal person, but I think being frugal is a very beneficial way to live.  

Living a frugal lifestyle has helped us get to where we are today, which is debt-free (except a small amount left on our mortgage) while raising 2 kids.  

If you are living with debt and struggling to make ends meet, I think converting to a frugal lifestyle could help you!

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What does it mean when you are cheap?

As I said earlier, the word cheap refers to things that are inexpensive.  It’s also used to describe the quality of an item.  

So when someone is being cheap, it means they try to spend the least amount of money possible on everything they buy.  

Cheap people prefer to buy inexpensive things because they don’t want to part with their money, even if it means the items are of inferior quality.  

Characteristics and signs of a cheap person

#1 Cheap people focus on price instead of quality

The main priority of people that are cheap is to not spend money.  When buying something, cheap people focus on the final cost of the item.  

If deciding between buying 2 things, someone that is cheap will typically choose the item that is less expensive, even if it is an inferior product.  

#2 Cheap people avoid spending money

Cheap people avoid spending money on anything and everything.  They tend to have what is referred to as a scarcity money mindset.  

A scarcity money mindset is when someone feels that they will never have enough money and they can’t do things or buy things because they feel they don’t have money to spend.

A scarcity mindset often begins from childhood experiences and is carried over into one’s adult life.  This type of mindset is often based on fear or anxiety.

#3 Cheap people save money at the expense of others

Ever split the bill with friends at a restaurant only to come up short because someone didn’t chip in enough to cover their part plus a tip?  

Yup, that’s what people that are cheap tend to do!  

#4 Cheap people constantly are replacing things that break

As I said before, cheap people tend to choose the least expensive products, even if the product is inferior.  This results in frequently replacing things that break or wear out.  

#5 Cheap people tend to be called cheapskates by people they know

Cheapness does not go unnoticed by others.  So if your friends tend to joke about how cheap you are or call you a cheapskate, it might be time to step back and reflect on your relationship and attitude about money.

Assess your money mindset.  Do you feel like you will never have enough money and that’s why you don’t want to spend it?  It might be time for some self-help to get into the right mindset.

Frugal vs cheap: Is being cheap bad?

Is being cheap a bad thing?

Being cheap definitely has a negative connotation.  And it is a bad thing when a person tries to save money at the expense of others.  

Is being stingy different than being frugal or cheap?

The definition of stingy is:

“Reluctant to give or spend; not generous”

And both frugal and cheap are listed as synonyms for stingy on thesaurus.com.  So one might argue that being stingy is the same as being cheap and being frugal.

However, being frugal is about carefully planning how you spend and use your money.  It is not about being reluctant to spend or give or about buying the most inexpensive things to save a buck. 

Nope. Being frugal is a lifestyle someone chooses to live so they can use their money in the most efficient way that allows them to enjoy life and do the things that matter the most to them.

How to be frugal without being cheap

So hopefully I provided enough of an explanation about frugal vs cheap that will help you to understand how they are different.  

So now maybe you would like to learn how to be more frugal instead of being cheap?

Or perhaps you were never cheap to begin with, but I sparked your interest in learning how to be more frugal so you can reap the rewards?

Here are some of my best tips for being frugal without being cheap.

Decide why you want to live frugally

The first thing to do when you decide you want to be more frugal is to determine your why.  Why do you want to start living more frugally? What is your goal?

Determining why you want to live more frugally will help you follow through with it.  Just saying you want to live frugally is much easier than actually living frugally.  

Since frugal living is about making intentional decisions with your money, you will need to make some lifestyle changes. And change is tough.

As I said earlier, your reasons for wanting to live frugally will be different from my reasons.  Here are some ideas on why someone would want to start being intentional with their spending and saving habits:

  • Save money for a big purchase
  • Feel less stressed about money
  • Decrease hours at work
  • Stay home with a new baby
  • Pay off debt
  • Plan more family vacations
  • Work toward financial wellness
  • Achieve financial independence

So think about your why and write it down.  Keep it handy and look at it often.  This will help you stay motivated as you begin your frugal lifestyle. 

Develop a frugal mindset

As you know, a money mindset is your feelings and beliefs about money that guide your actions and how you use your money.

So as I said earlier, a scarcity mindset is a belief that you will never have enough money.  This belief leads to holding on to your money and being cheap or stingy with your money.

A frugal mindset refers to the belief that spending intentionally will help you be happier and live the life you want to live.    

Getting in the right mindset will help you to live frugally instead of being cheap.

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Determine your priorities

Once you know your why and you got yourself in the right mindset to start living frugally, you have to decide what your priorities are.

This is where you should start thinking about the big picture.  What are the most important things to you?  What are your priorities?  What do you value most in life?

Once you figure those things out, the pieces of the puzzle will start to come together.

You will know what is important to spend your money on and what you could care less about spending money on.  

Find ways to save money on the unimportant things

Once you know your priorities, you can start to figure out ways to save money on the things that don’t matter to you.  

Or you could cut them out of your budget completely and stop spending any money on them.  

There might be things that you don’t care about but you have to spend money on them because they are necessary.  

This is where you can get creative to figure out how to save money on unimportant things.

Focus on value over price

Focusing on value instead of price is a sure way to be frugal instead of being cheap.  Frugal people like to get the most bang for their buck.  

Looking at an item’s quality will help you determine how long it will last and decrease the chance that it will break quickly or easily causing you to have to purchase another one.  

Give or donate money to charity or a good cause

Living a frugal lifestyle helps you live below your means, which frees up extra money.  Donating money to your favorite charity will not only help a good cause, it will help you feel good about yourself and the way that you are using your money.  

Frugal vs cheap quiz: Which are you?

Quiz:  Are you frugal or cheap?

Here is a fun and quick quiz I found to see if you are frugal or cheap! I scored a 30, so according to the quiz, I’m frugal! 

How did you do? Let me know in the comments below!

Final Thoughts on Frugal vs Cheap

There is a fine line between being frugal vs cheap.  If you are finding that you have been cheap instead of frugal, there are ways to change that!

Taking the time to think about why you have been cheap and assessing your current money mindset will help you determine the cause of your actions with your money.

After all, the first step to making changes to your situation is acknowledging the need to change.  

If you keep your goals and priorities in mind and focus on using your money intentionally, you can live a frugal lifestyle instead of being cheap.  

How have you been living, frugal or cheap?  How did you do on the frugal vs cheap quiz?  Let me know in the comments!

Frugal vs Cheap: Which are You?
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