As the economy continues its struggle to emerge from its seemingly never-ending malaise, many folks are working hard to find additional and more creative ways to save a buck or two.
I recently had lunch with a friend of mine who called me a cheapskate because I dared to take home a healthy handful of extra napkins that an overzealous fast-food server had placed on the tray with my meal.
“I’m not cheap,” I told him.
“Oh, yes, you are!”
I just stared at him for a couple of seconds with that “WTF?” look before I finally broke the silence between us. “I forgive you.”
“You forgive me?” my friend said. “For what?”
“For being a moron who doesn’t know the difference between cheap and frugal.” (And, no, I didn’t use the term “moron.”)
Of course, my buddy and I were just having a little good-natured fun with each other but, still, that little episode got me to thinking: “What is the difference between cheap and frugal?”
Oh, sure, there are the usual examples of a typical cheapskate, like purposely grabbing hundreds of ketchup packets — or, um, napkins — from a restaurant to avoid having to buy them. But there are other, subtler, differences too.
Frugal folk have a long-term, pragmatic approach to saving money. Most wealthy people, including your typical millionaire next-door neighbor, are naturally frugal. On the other hand, short-term thinking plagues the cheapskates among us. For example: deciding to save a little money upfront by not buying a business suit to wear for job interviews.
Unlike cheapskates, frugal people not only understand that a penny saved is worth more than a penny earned, but that those saved pennies are meant to be eventually spent in the pursuit of happiness. Cheapskates tend to save money simply for the sake of, well, saving money.
There are other indicators. The frugalistas of the world are concerned about getting value for their money. Cheapskates usually aren’t willing to pay more for quality. For them, the only thing that matters is the number on the price tag.
And while frugal people can be generous, cheapskates find it difficult to be so. I’m frugal, but I’m not afraid to occasionally pick up the entire tab for dinner when I’m out with friends. I know many other frugal folks who are the same way too. That would never happen with a cheapskate.
Here’s another “tell.” The next time you’re out dining or shopping and want to know whether a decision you make is a sign of healthy frugality or distasteful cheapness, ask yourself whether your action is affecting you alone — or those around you too.
Frugalistas tend to make decisions that only affect themselves. On the other hand, money decisions made by typical cheapskates usually affect those around them. For example, a frugal person would never shortchange a waiter on a well-deserved tip just to save a couple bucks; the cheapskate, however, wouldn’t think twice.
While being frugal has an almost heroic quality to it nowadays, the term “cheap” has always come with a stigma. Nobody likes to be thought of as a tightwad. After all, striving to spend less than you earn and to save money are noble endeavors, but, like anything else in life, pinching pennies can be taken way too far — which is why many people end up being characterized by others as selfish and stingy.
As for whether disparaging labels like that are really warranted, that ultimately depends upon whether you’re cheap or frugal.
Which one are you?