Imagine you’re walking down an abandoned street with no-one in sight. Enjoying the beautiful and peaceful day, you spot a penny on the ground. Would you bend down, pick up the penny and put it in your pocket? What if that penny was a nickel, a dime, a quarter … and so on, all the way up to Ben Franklin’s smiling face on a $100 bill. At what point do you pick up the free money at your feet?
Now imagine the same scenario but let’s morph the abandoned street into 5th avenue in Manhattan during lunch. I’m willing to bet that the amount of money you would bend over and pick up in the first scenario is different than in this one. Reason being of course that bending over and picking up a penny in private may be embarrassing for some in public. But no matter how much change (or currency for that matter) you decide to pick up, do any of them define you as being cheap, or is it being frugal?
Frugality and cheapness have long gone hand and hand and the line that separates the two is extremely unclear. Everyone knows of friends or family that save the wrapping paper on Christmas gifts and that save the condiments or utensils from fast food restaurants to reuse at later time but how would these people be classified?
I suppose the answer depends on their financial situation but even that might make the answer more complicated. A millionaire that exhibits these traits would most certainly be defined as cheap, whereas the single mother of three with two jobs would be classified as frugal. Perhaps the definition is different for different people in different circumstances.
Here in the personal finance world, no matter how you save money, it is defined as frugality, which I don’t believe to be accurate. Certainly, spending 10 minutes online, looking for a coupon code that can save you a few bucks on your next online purchase is a wise move, and a frugal one at that, but spending all day on the same coupon should be defined as cheapness don’t you think?
When Does Frugality Turn Into Being Cheap?
When you have money budgeted but refuse to spend it – For the last six months, I’ve been squirreling away money. In September, during the labor day sales season, I plan to go shopping for a much needed snowblower. Every winter, I spend 6-8 hours every single time there’s a snowstorm that drops 6 inches of snow or more. Beyond the time wasted, it’s backbreaking work and every year I promise myself I’m getting a snowblower. Then November rolls around and I say “ahhh, I’ll save the money and just shovel it.” Mistake.
My livelihood (and health) are much more important than the $800 or so I stand to save by not buying a snowblower. After bending over and picking up that heavy snow a thousand times, my back does me no favors. Admittedly, I’ve been cheap trying to avoid this much needed purchase so this year, I’m sticking to my guns and buying a good snowblower.
Using your valuable time to save pennies on the dollar – Snowblower exampled yet again. In 2013 and 2014, the winters in Connecticut were bad. Very bad. One snowstorm actually dropped 38 inches on our house, and we were literally snowed in for a week. In totality, it took me two 8 hour days to be able to dig a simple path from our house, to civilization. It took me another three to be able to clear the driveway well enough to get a car out. That single storm alone set me back 40 man hours. Had I owned a quality snowblower, I probably could have done the job in half that.
I lost 20 hours of my life that I could have spent doing something else. Not smart considering I can make good money working, or relaxing and spending quality time with my family. Add up all the storms from those two years and my hard work was worth ~$3 an hour.
Sacrificing quality – In my opinion, this is the most detrimental decision that is made when it comes to the debate of frugality vs. cheapness. When you own products that are not working properly, are unsafe, are a health hazard etc. and and are necessities it can get dangerous. A car that leaks oil, a toilet that leaks water … these are just a few examples of things that you can let go by and rationalize “I don’t need to fix that right now.”
Often times, these kinds of fixes will only lead to bigger, more expensive fixes so the justification may be to let them slide but that would be unwise. If you can find a way to save and pay for these expenses, do it. Spending a little bit early on the products and dwellings you depend on goes a long way saving big money later on.
Are You Frugal?
The bottom line is that for me, frugality is the act of saving money when money has to be spent. Shopping online using rebates or coupon codes is a perfect example, as is buying the grocery items that are on sale at the supermarket. You cross the line of frugality when your opportunity cost or future cost outweighs any gains you might save.
Take a few minutes before any purchase and think about how you might be able to save money without sacrificing time or quality. Online coupons, using a cash back credit card or waiting for discounted prices is a great place to start.