A friend of mine used to brag all the time about how little he spent on everything. In fact, it was a point of honor that he spent so little money on things. Mind you, he was talking to me who rarely buys things at all. But I was always happy to hear where he got things, the prices he got them for, and why he got them.

There was only one problem. He was constantly buying new things because his old things broke so often. He’d buy cheap toasters that would break in less than a year. He’s buy cheap frying pans that started flaking in a few months. And he bought clothes that were constantly getting ruined.

The heart of the problem was that my friend was not frugal. He was cheap. And being cheap cost him A LOT of money over the years.

What’s the Difference Between Being Frugal and Being Cheap?

I have been accused on more than one occasion of being cheap. I’ve gotten this reputation not by what I have bought but what I haven’t bought. To most people, I don’t buy things fast enough. When new things come out, I don’t rush to buy them.

I am not “proactive” in this regard. I don’t buy a car because I am tired of my old one. I buy a new car when the situation calls for it—not before.

But what exactly do I buy? My lack of possessions might have other people calling me cheap but when it comes to the things I buy, believe it or not, price is NOT my number-one concern. It’s dead last.

I only needed to get burned a couple of times by “Wal-Mart” brands to know that the cheapest thing is cheap for a reason. When I look at products I want to buy, I consider the following:

l Durability: will this thing last me for years or months. One way to check this is to read online reviews but another way is to go with brands that are known for quality. For example, for electronics, I typically buy Sony products. And the Sony products I had over the years lasted me until the product itself was obsolete (as when I traded in my cassette walkman for an iPod).

l Specs: I look for products that have what I want. Typically, I avoid the higher-priced items with added bells and whistles that I could care less about. How many times has a salesperson upsold you to a more expensive gadget that did a million different things but you never used any of those bells and whistles?

l Warranty: How long will the manufacturer back up their product. If a product is an el-cheapo with a 3-6 month warranty, then I don’t even bother. But if a company is willing to put some teeth in its warranty, I will consider it. Think about how years ago people would not buy Hyundais because they were considered cheap, but once they introduced their 10-year warranty, sales jumped. Companies that stand behind their products are more likely to build better and longer-lasting products.

l Price: Yes, I do look at price. But it is the last thing I consider. Usually I spend more on better products. My Sony camcorder was about $75 more than a comparable competitor’s item. But I do pay for quality, and I have had no problems with my camcorder. One exception to this is with items I need but rarely use. For example, I will buy a cheap wine bottle opener because I hardly ever open up any wine. But I do use it about once every 6 months or so. Though my frugal nature had me buy a corkscrew with a bottle opener on the other end. Now, I use THAT a lot.

So, there you have it. Being cheap is ONLY considering price. But being cheap can cost you a lot of money over the years. Being frugal is getting the most value for your money while minimizing the things you buy.

It might seem obvious. But you’d be surprised at how many people confuse the two.

Topics: Financial Freedom, Frugal Living |

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