Cheap vs. Frugal

The most common misconception people have about being frugal is making it synonymous with being cheap. Being cheap is associated with being stingy, miserly, and generally not fun to be around. Think Scrooge McDuck meets George Castanza. Being frugal on the other hand does not necessarily (although it is a thin line) constitute these same characteristics. For further explanation, let's take a look at the definition of each (according to dictionary.com):

Frugal
1. economical in use or expenditure; prudently saving or sparing; not wasteful: a frugal manager.
2. entailing little expense; requiring few resources; meager; scanty: a frugal meal.

Cheap
1. costing very little; relatively low in price; inexpensive: a cheap dress.
2. charging low prices: a very cheap store.
3. of little account; of small value; mean; shoddy: cheap conduct; cheap workmanship.
4. stingy; miserly: He's too cheap to buy his own brother a cup of coffee.

For the sake of time, I left off a couple extraneous (to our discussion) definitions of "cheap," but the four listed above should suffice just fine. Notice the choice of words used in each definition. Words like economical, prudent, and meager are not nearly as caustic as shoddy, stingy, and miserly. In fact, with more and more emphasis being put on good stewardship of our resources (go green!), someone who is economical in the use of expenditures and not wasteful is highly praised by our society. Look no further than Hollywood to see how cool it is to be prudent and economical. And although Leonardo DiCaprio owning a Toyota Prius is not nearly as memorable as Will Ferrell driving a Dodge Stratus, the message is still clear...being frugal is cool.

Not only is being frugal cool, but it can also lead to satisfaction and happiness in life. The poster child for team frugal would have to be Warren Buffett, the richest man in the world. He lives in the same house he bought for $31,500 in 1958 even though his net worth exceeds the gross national product of many small countries. His favorite meal is just a cheeseburger and a Cherry Coke. In the biographical book on Warren Buffett's life entitled Buffett: The Making of An American Capitalist (highly recommended!), Buffett is quoted as saying the key to a happy life is contentment (a Frugal Franco paraphrase). Requiring few resources is part of finding contentment and being truly happy in life.

In my mind, the major difference between frugal and cheap is that the former emphasizes value per expenditure while the latter only looks at the absolute cost. For example, I've already written about how I love BMWs, golf, and tennis (not to mention skiing and vacationing in foreign countries), none of which are typically associated with frugality much less cheapness. But here is the difference, I would much rather pay $30 to play twilight golf at a nice course that charges $75 during prime time than $20 to play a rinky dink municipal course (as a side note, I grew up playing on the muni courses). Someone who is simply cheap would choose the muni course because it is $10 cheaper without any consideration of the value per dollar spent.

My advice, maximize your value in life by concentrating on being frugal and try not to be too cheap (I say "too" because some form of cheapness is inevitable). The next time the frugal tag is slapped on you, take it as a complement and know that somewhere Frugal Franco is smiling.

Ariva derche,
Franco