Personal Finance

Frugal Or Cheap?

I have asked myself several times in different scenarios whether I am being frugal or being cheap.

Being frugal is often confused with being cheap because they appear to be very similar on the surface.

However, there is a very subtle line between them.

While the differences between being frugal and cheap are subtle, the way people see and treat you as a person can differ extremely depending on which side of the line you’re on.

In this post, I’m going to talk about 4 ways that frugal people differ from cheap people.


The first major difference between cheap people and frugal people is intention.

Cheap people are always trying to save money simply for the sake of having more money.

This means that they tend to make decisions based on dollar value alone and almost always opt for the cheapest option available so that they can maximise their savings.

Meanwhile, frugal people are intentional in the ways that they spend and save money.

Instead of just looking at the dollar value of an expense or purchase, they also consider how much intangible value it will bring to them such as convenience, time or happiness.

Frugal people know what they value and are willing to splurge on things that can bring them that value.

On the flip side, they are willing to cut back and save mercilessly on things they don’t value.

For example, if a cheap person is looking for a pair of wireless earbuds, he would probably try to look for the cheapest option that works decently well.

If a frugal person who enjoys listening to music is also looking for a pair of wireless earbuds, chances are that he will consider premium brands such as Sennheiser, Jabra or Bose.

This is because he values the superior sound quality and features of premium earbuds that will give him a more enjoyable experience when he listens to music, and he will intentionally but gladly pay for it.

However, this same person may not see much value in having new clothes.

So he intentionally chooses not to buy new clothes as long as he doesn’t need to, and often wears the same few pairs of clothes that he already owns.

On the other hand, the cheap person may buy new clothes whenever he finds a good deal even if he wasn’t originally intending to buy them.

It is the clear intention to spend money on things when they bring value that outweighs its price tag and to save money on other things that fail to add value that differentiates frugal people from cheap people.


Another difference between frugal people and cheap people is what fuels their desire to save money.

In general, cheap people save money in order to have more money, but don’t have a particular reason for wanting to have more money.

To them, it’s a classic case of “more is better”.

Frugal people often have clear goals for wanting to save money, and saving money is merely an intermediate but necessary step in their effort to achieve their actual goal.

This may include starting their own business, making a down payment for a house or being able to retire comfortably.

As subtle of a difference this is, it translates into very different mindsets and psychologies that frugal people and cheap people adopt towards money, and this affects their relationship with money.


Frugal people tend to have a healthier relationship with money than cheap people.

This is because frugal people are not afraid to spend money.

Since frugal people often save money in order to achieve a goal, what they are pursuing at the end of the day is the goal, not money.

However, they recognise that money is the vehicle that will allow them to accomplish their goal.

Furthermore, frugal people place value on the things that money can bring rather on money itself.

At the same time, by having a goal, there is an end in mind.

There doesn’t have to be stress when it comes to saving money because as long as they save money, they will eventually be able to reach their goal.

In contrast, since cheap people save money simply to have more money, they will never be able to “finish” saving money because there is no end point that exists.

Stress and anxiety may arise from feeling like they need to keep saving money and not knowing how much is ever going to be enough.

In addition, since cheap people are actively pursuing money, they may develop an unhealthy obsession with money and become afraid or unwilling to spend money.

This can cause them to feel unhappy or uncomfortable when they need to spend money, especially in large amounts such as paying for medical bills.

They may also be reluctant to spend money on things that can improve their quality of life – which can lead to long-term physical and mental health problems and ultimately end up costing them more money in future.


The final difference between frugal people and cheap people is what cost they are willing to pay to save money.

Ironically, cheap people are often willing to pay a higher price in order to save money.

This is because they are focused on short-term savings rather than long-term value when it comes to making a purchase or an expense.

For example, if their mattress is old and no longer providing the support it should, it can lead to long-term back and neck problems if they continue to sleep on the mattress and not change it.

However, as mattresses are often expensive (they cost a few thousand dollars), they may be unwilling to spend that kind of money because they believe that their mattress is still usable.

If they do develop back and neck problems in the future, this will end up costing them a lot more – both tangibly and intangibly.

If they require treatment, their medical fees are likely going to cost more than a new mattress.

And even if they don’t require treatment, the discomfort they would experience may impede them from doing things in their every day lives and affect their livelihood and job.

So while they do manage to save money by not buying a new mattress, they end up paying a higher price for that decision many years later.

Frugal people are the opposite.

Frugal people often have their sights set on the big picture; the long-term.

And this shapes the things that they value and which they are willing to pay for.

If saving money results in potentially paying a higher price for it in future, they will choose to spend the money instead.

For example, cheap people may choose not to buy travel insurance when they go overseas because they think that they never use it, so they might as well save a few hundred dollars.

However, frugal people will choose to buy travel insurance every time because while they hope to never need it, they understand that if they ever do, it will be well worth it.

Instead of choosing to forego travel insurance to save on travel expenses, frugal people will find other ways like choosing a cheaper lodging that may not have the best location.

To summarise,

These are the differences between frugal people and cheap people.

Frugal Cheap
Spend & save intentionally Spend on cheap things to maximise savings
Save to achieve an end goal Save to accumulate money
Place value on the things money can bring Place value on money
Not afraid to spend money Unwilling to spend money
Focus on long-term value and savings Focus on short-term savings

While there is a line that separates frugal people from cheap people,  there is room for some overlap of behaviours.

Focusing on short-term savings isn’t bad in and of itself, nor is choosing to spend on cheap things to maximise savings.

The problem arises when you do these exclusively and don’t allow yourself to be intentional with your money or look at the bigger picture when making money-related decisions.

Understandably, the line between being frugal or cheap can get blurry at times – and being aware of their differences can help guide you to make the best decision for yourself.

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