Thrifty Vs. Cheap: How to Really Tell the Difference

People often use the words thrifty and frugal interchangeably with cheap. However, though they relate to saving money and their differences seem small, the attitudes behind them are unique. When does trying to save money cross the line between thrifty and cheap? The answer is subjective, but to get an idea, we asked some financial and etiquette experts.

Price Versus Value

Saving money has a lot to do with price tags, but the true cost of a purchase often goes beyond what you pay for it. Car shopping is one good example: If someone buys an inexpensive used car because it costs less upfront than a newer one, they could end up spending a lot on maintenance, said David Rae, a certified financial planner with Trilogy Financial in Los Angeles.

Here’s another example: It may be less expensive to make a monthly lease payment instead of a car payment, but you could wind up paying fees if you go over the mileage limit. Putting off car maintenance can also be a big hassle. A frugal person uses a coupon to change her car’s oil, Rae said, while a cheap person doesn’t change it at all.

The difference between being frugal and cheap also applies to air travel. “Getting to my destination early and spending an extra day with my family is worth $100,” Rae said. Values aren’t universal — some people don’t care about layovers, for instance — but focusing on the sticker price rather than the big picture is where you’d draw the distinction.

“Just being cheap would often lead a person to not spend money or only consider price instead of considering what they’re getting for that price, and that’s what I think a frugal person does really well,” said Carlos Sava, a portfolio manager at Clarendon Capital Management in Arlington, Va. “They not only consider price but they consider the value that they’re getting for that price.”

Why Being Cheap Can Be Selfish

How you manage money is nobody’s business, but being stingy can affect your relationships. Jodi R.R. Smith, who owns the etiquette service Mannersmith near Boston, said it’s important to be thoughtful when your spending involves others. “A cheap person finds something they don’t have to spend a lot of money on and gives it to you with no relationship to your likes or dislikes,” she said. “A thrifty person looks for a bargain on what’s appropriate for that person.”

And yes, you can be cheap even when you’re spending. Let’s say you invite someone out who expects you to treat. Smith says it’s reasonable to expect them to reciprocate eventually, but expecting them to spend as much as you did before isn’t realistic. The cliché “it’s the thought that counts” really applies here. “‘If [you’re thinking] I spent this much on you, so you have to spend this much on me,’ that would be a cheap mindset,” Smith said.

Of course, frugality can have its downsides. Smith gave the example of declining a night out with friends because you’re saving for a trip. You might need to plan to make sure you’re only spending on things that are really important, and there’s the possibility your friends won’t understand. That said, spending beyond your means and going into debt for the sake of a social life isn’t sustainable.

“I want to make sure that people understand that being thrifty or frugal is not negative from an etiquette perspective,” Smith said. “For someone to be careful about where they spend their money is a very commendable thing.” Just remember: “You can be thrifty and frugal and you can still be social and thoughtful,” Smith said. This holiday, strive to be all of those.

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