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?
For me, frugality is the act of saving money but only 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. Cheapness on the other hand, is the prevention of money being spent and most commonly, that is accomplished by the reuse of products that would normally just be thrown away. It really doesn’t matter in the long-run but the negative connotation the word “cheap” has always can put some people off.
No matter if you’re frugal or cheap, saving money on everyday purchases, simply by spending a few minutes online, or by planning a little bit ahead is always a smart idea. If you still haven’t done your Holiday shopping, take a deep breath, grab a pen and paper and start planning your attack for next week and Black Friday.