What is the difference between a cheap and frugal person. A cheap person is focused on maximizing retention of money. Frugal person is focused on getting the best value for its money.
Cheap people are unfortunate because they often have the means to fulfill their needs and desires but are incapable of spending using their money to fulfill their needs and desires. They fail to spend money when it is prudent to spend money. For example, it is foolish to not buy good winter gear in most parts of Canada. The risk to personal health from using cheap winter gear is obvious. Cheap people tend to ignore or not spend enough on maintenance. This could include personal well-being, nutrition, vehicle maintenance, or house maintenance. If you don’t spend money of essential maintenance, you will end up paying a lot more in repairs later on.
Frugal person is focused on maximizing value. They want focus on quality, durability, reliability, and long-term impact of their decisions. A frugal person will buy a reliable used car but maintain it very well to avoid breakdowns and costly repairs.
Frugal Frank and cheap Chuck go shopping for furniture separately. Frank is looking for a high quality sofa at a deep discount. He is happy to buy display model or even gently used sofas as long as they are of good quality. Chuck is looking for the cheapest sofa he can find. He is willing to overlook defects and low quality to minimize his expense. Frank’s spends more money but he bought a comfortable sofa that meets his requirements and will last for years to come. Chuck spent much less but his purchase barely meets the requirements and would probably need to be replaced in a few years.
Recently, we wanted to replace our coffee table. We went online and searched for the table that best meets our needs. Then we searched to find where we can get it for the best price. Someone was selling it used for a third of the original price. It was well taken care of and like new. We enjoy the table and don’t regret purchasing is a used one. In the future, if we decide to change the table, we probably will be able to sell if for the same price we paid to purchase it. Since spent less on the table than we budgeted, the remaining money could go into our investment account and grow over time. A brand new table would not have offered better value and its price would have halved once we opened the box.
Be frugal. Don’t be cheap. Seek to maximize value.
