Frugal vs. Cheap
Two of the most commonly used words we utter when describing someone who handles money carefully is "cheap" and frugal," yet many people often confuse the two words, which have completely different meanings! When we talk about someone who is thrifty, are we saying that person is cheap, or are they frugal? What is the difference between the two phrases?
What is "Frugal"?
Frugality, as defined by Wikipedia, is the "quality of being frugal, sparing, thrifty, prudent or economical in the use of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance."
Credit: http://www.prlog.org/10232782-how-to-buy-foreclosures-cheap-and-retire-early.html"Common strategies of frugality include the reduction of waste, curbing costly habits, suppressing instant gratification by means of fiscal self-restraint, seeking efficiency, avoiding traps, defying expensive social norms, embracing cost-free options, using barter, and staying well-informed about local circumstances and both market and product/service realities. Frugal living is practiced by those who aim to cut expenses, have more money, and get the most they possibly can from their money."
So now that we know what Frugal is, how does being cheap differ?
What is "Cheap"?
So you can see the obvious differences between the two now. Someone who is frugal spends money carefully, on things that they need or make them or their family happy. They do not like waste. A common example is legendary investor, Warren Buffett. He is frugal and re-invested his money over a period of years, living in the same house for 40 years! He doesn't chase a fast lifestyle and is happy because he spends money on what he enjoys doing.
Someone who is cheap, however, may not even spend money on things they enjoy!
Being frugal is not only fine and acceptable, I think it is an honorable trait! Being cheap, however... well, nobody likes a cheap skate. If you've got some money, you've got to spend it now and then on things you need and stuff that makes you and your family/friends happy. Go on vacation every year!
Don't settle for something with less VALUE, just because it COSTS less money. Value is everything.
You could be looking at two cars for example. One might be $2k cheaper than the other, but the one more expensive could be a better value, more reliable, etc.Being careful with extra expenses and saving your money is one thing, but pinching pennies is another!