Frugal or Cheap? Let's Be Real.

Through my own financial journey I have made some missteps and some milestones. One of the evolutions that I go through all the time is making a choice on whether my purchasing and saving decisions are an example of being frugal or being cheap. The best way to measure this, in my opinion, is to use common sense (well, perhaps uncommon sense now).

For instance:

If you buy quality store brands instead of the national brand when shopping, then this would be an example of being frugal.

However, if you buy substandard store brands just to “save money,” that’s being cheap. The idea of being fiscally responsible is to increase sound purchasing decisions and reduce silly ones. The idea is to get decent, quality products for the best price for you.

One more thing--if the money you save is actually saved, rather than being spent on frivolous purchases you wouldn’t have made if you didn’t have the savings. (Because the chances of you actually depositing the saved money in your bank account are minimal). Perhaps you can start a “money storage envelope” and put the savings in there when you get home—then put the envelope in an out-of-sight out of mind place like a home safe or between the books on your bookshelf (Chris Rock may be right), or just somewhere where you won’t be inclined to grab the cash and go. Many of you probably have a loose change jug/jar already, so an envelope may not be a far reach for you.

Bottom line: If you are budgeting correctly (meaning you are spending less than what you make rather than spending at or above your income), and you are regularly contributing to retirement and have no need to free up cash flow, then you most likely know what is a “being cheap” purchase versus being fiscally responsible. But there are extremes in both directions—if you plan to make decisions based on “saving money,” then make sure you actually save it.

See you next week!