It’s been longer than planned since my last post, having been knocked down by illness for the past week and a half, but thankfully I’m past the worst of it. So it’s time to get back to business.
Frugal vs Cheap
Being cheap is solely about spending less. Frugality on the other hand is about prioritisation of spending to get more of the things you value.
With finite monetary resources we all have choices over how we spend.
A cheap person will seek to spend less often sacrificing quality and time in order to do so. The bottom line when being cheap is the price.
A frugal person will seek to spend less on the things that don’t matter so that they can spend on the things that bring value to their life. An example of this could be choosing to go for runs rather than paying for gym membership. Or foregoing coffee-shop purchases in favour of free facilities at work or alternatives brought in from home. The bottom line when it comes to frugality is value.
What does that even mean? In summary the frugal person will use these small habitual savings (if you consider the total spend per year you’ll see that these easily add up) to fund bigger things that matter to them – e.g. travel, saving towards early retirement, the deposit for their first home. Ultimately a frugal person’s spend is prioritised for those things that move them towards their goals.
Accusations of being Cheap
I’ve been accused of being cheap for a number of reasons from the size of my Christmas present budget to a lack of expensive jewellery/watches. This is all despite the fact that I go on at least one holiday abroad (a definite luxury and not one funded by debt).
With the commercialisation of major celebrations such as Christmas, it’s easy to feel that you should be breaking the bank to show your loved ones that you care. However, you still have to put some thought into what you are buying. Just because you spent £300 on a present doesn’t mean it will be better received than one that costs £50 – all comes down to what you know the recipient of the gift cares about. For me the highlight of Christmas is the time spent with family, it is probably one of the few times that everyone actually switches off.
As for the expensive jewellery/watches, I think they are nice, but it’s never really been something I’ve really felt I needed. I could spend on such things but would rather spend on things that add more value to my life. I’m definitely not an accumulator of material items as I’ve managed to get through most of my life without them. From the basics (food, shelter, clothing) are met I’m pretty easy going as everything else is essentially a nice to have.
There was a time I was cheap…
…it was a time where things were tighter and in my mind I was operating from a position of lack. Growing up there were times that money was scarce and I carried the same approach to spending when I first started earning my own money. There was this fear of spending money, thinking that if I did somehow there wouldn’t be enough going forward. I can remember not going to the local beauty shop because they charged £5 for threading because I knew somewhere that did it for £2 (although at least an hour away). Surely my time is worth more than £3 per hour!!!
Thankfully I am no longer blind to this fact, (it didn’t happen overnight but involved boosting my earnings, a change in mindset and some financial education). I value my time, it’s the most precious resource we have!
So how did you become frugal?
Let me be honest and admit that there was a period of wastefulness in between. I had got to a point where I was earning more than ever, but spending more than ever. From daily hot chocolates and lunches to the extortionate London rent – money was gone pretty quickly. Friends and I often half joked that we felt better-off during our student days (most likely due to the fact that we walked everywhere, split bills and shopping, oh and we cooked more). Fast forward a few years, add in the pressure of professional life (long hours and convenience everything), there we were in full rat-race mode.
To say I wasn’t a fan of the long hours is probably an understatement, particularly as it meant minimal time to do the things you actually cared about. I got to the point where I actually stopped to ponder what was important to me. It’s so easy for us to continue the routine of work – home-weekend-repeat without taking stock of where we are going. Spending a chunk of my pay on rent to remain in London was no longer appealing; especially if I wanted a financially stable home should I have children. I wanted to travel more, spend more time with family and get back to doing some of the things I loved before the rat race took over. This meant some changes including relocation so I could spend more time and money on these things. It also was the start of my Financial Education journey. Not only could I focus on the things that I value, but I could get my money working harder generating more money.
Now you have seen what being frugal or cheap represents – which one are you?
PIN IT FOR LATER