Cheap vs Frugal

Have you ever met someone who wears cheap like a badge of honor? Every time you compliment them on something they’re wearing they proudly say, “Thanks! I got it at <fill in the blank> for <fill in the blank with some amazingly low amount>!“ They’re so excited they got their purchase for a bargain. Don’t get me wrong, I’m the first one to appreciate a good deal. However, there’s a difference between being cheap and being frugal.

 

I used to be one of those “cheap” people. I still love a good bargain. However, after lots of money mindset work, I see the difference between being cheap and being frugal. Being cheap means that you care most about minimizing cost. Being frugal means that you care most about maximizing value.

 

My Cheap Date

Several years ago I was set up on a date. This young man who was a Marine from Tennessee picked me up and took me to a local diner. During dinner he proceeded to tell me (very proudly, I might add) how cheap he was. He brought me a flower; a single carnation. I thought that was sweet. Then during dinner he told me that he got it for free at a football game a week ago and kept it in the refrigerator that week so he could bring it to me on our first date. Still sweet in my opinion, because he was thinking about me. Then he started telling me where he got his clothing. He started with the shoes, because he was most proud of those. He found them in a garbage can “back home” and they were his size and not worn “too badly”, so he proudly collected them from the garbage can and wore them often. That’s the point where frugal crosses the line to cheap.

 

What Was I Thinking?

When my son turned 18 he wanted to go Skydiving. So for his 18th birthday I found two local Skydive jumps on Groupon. (Because of course I needed to go with him.) As we were ascending to 5,000 feet, and I had a parachute and an adorable jump instructor from Spain strapped to my back, I remember looking around at the inside of the tiny airplane. It only fit four people in the back and one pilot, and I remember seeing a rag stuffed inside a hole in the plane and duct tape in a few other places The thought crossed my mind that maybe Groupon wasn’t the best place to find a Skydiving experience. Maybe jumping out of an airplane isn’t where one should cut corners.

Millionaire Mindset

If you're constantly looking for “cheap” it's usually because you have some money mindset blocks that are either conscious or subconscious. Constantly looking for the cheapest items usually stems from scarcity mentality - a feeling that your money is limited and there's only a finite amount. However, if you read the many books out there on the mindset of Millionaires, you will see that Millionaires live in a place of abundance mindset. They know that money comes and goes and there is always more to be made. You will also see that most Millionaires are frugal. They don’t buy real estate at market value. They negotiate big purchases, therefore saving money on the initial cost, but maximizing value. By paying cash for things like cars and bigger ticket items, they’re saving money by not paying interest. Or, they will get low interest car loans because they can make more return on their cash investment by investing it elsewhere.

 

So remember, being cheap means you care most about minimizing cost. (Think Walmart). However, being frugal means that you care most about maximizing value. (Think getting that house you want for 70% of market value.)

 

Little shifts in your money mindset will make a big difference in your life. This is a good place to start.

 

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