What is the difference between being Cheap and being Frugal?

Everybody knows a cheap person and probably hates them. But I think we often mislabel frugal people as being cheap. I started thinking about this the other night after listening to a “lecture” from my dad about how to manage our phone service.

The topic came up because periodically during our phone conversation he was not able to hear me. I explained that we have had this problem several times since switching our phone service to Comcast, several months ago.

He went on to explain that they only use basic phone service with no additional features. Yes, that means no call waiting and no caller ID! He then went on to tell me that during the week they only call me and my brother using their cell phone minutes, and calls everyone else that he needs to talk to either at night or on the weekend from his cell phone, since those minutes are free.

Now this is a man who had money saved for his kids to go to college, lives in a beautiful home and drives nice cars, has no credit card debt and never makes us pay for dinner when he is in town, but he is worried about minimal charges on his phone bill.

My father is not cheap, he just enjoys saving money, when he can. Saving money and being cheap are two totally different concepts. So different that, well, maybe another couple examples will help.

I like to buy decent clothing. It’s not always cheap, but I like to make sure I buy it on sale. The more on sale an item is, the better I like it. In fact, if two dresses are on sale, I can buy two good dresses instead of one expensive one. Does that qualify as being cheap?

I just have a hard time buying things at regular price when in a few weeks it will be on sale (which is the price it should’ve been in the first place, in my opinion).

Here’s another example…

Let’s say you need to put gas in your car and on the way to going somewhere you were going anyway you pass two gas stations right next to one another. Gas is $3.45 a gallon at one and at least $3.55 a gallon at the other.

All other factors being equal, you’d have to be a total idiot not to buy the$3.45 a gallon gas…
That’s managing your money well.

On the other hand…

To kill a half an hour of your time driving clear across town, way out of your way, just to “save” a buck or two would be “being cheap”.

Yes, that would be me sometimes! I hate to admit this, but I have driven to Costco for gas, which is a good 20 minutes from our house.

Although there is sometimes a fine line between the two, there’s a distinct difference between “being cheap” and managing your money well and it is important for us to know and understand the difference between the two.

Knowing and understanding this difference and applying this principle to our lives can make the difference between us having money or being poor.

Substance vs Flash

The shop was small, crowded, spider-webby and downright scary. And loaded with charm and history. I spent a little extra money for my new bike – probably $50-60 more than I had to. But what I got in return was priceless.

My first stop was to a big box store, Dick’s Sporting Goods, because of a promotional ad I found in the newspaper. They had several bikes on sale; so it was a good place to start. My daughter was lured into the 2-story rock climbing apparatus and the trampolines and tents on display. It was practically a playground. I stood in Dick’s for about 30 minutes and not a soul came by to say hello or lend me any help at all. (Even if they had, I doubt they’d know any more about the bikes than I did. Still, a little help would’ve been nice.) I tried my best to decipher between the bikes in stock on my own and left without buying a bike that night. My experience at Dick’s was all flash and no substance.

From the beginning I was uncomfortable making a big purchase at a big box shop, but my experience at Dick’s confirmed it. I wanted to spend my money at a local shop and support a local small business. The big box stores, being run by big corporations far away from my home town, could really care less if I get the right bike. They only want one thing – my money - as much of it as they can possibly get.

The next night I dragged went to a little bike shop downtown in my home town. In the end I spent more than I might’ve at Dick’s. But I’m sure I bought the right bike for me because the shop owner clearly had a passion for bikes and 40 years of experience. You’d be hard pressed to find 40 years of experience at Dick’s!

The Geneva Cycle Shop has been in existence since the mid 1970s. The owner, Ellis G, first opened the shop selling motorcycles. His shop looks virtually unchanged since 1970. Before I entered the shop, Mr. G had already greeted me and asked how he could help. He quickly located two bikes that might meet my needs and told my why, all the while, serving two other customers. A few minutes later he had the tires pumped and ready for me to ride around the parking lot. (Where would I have tried out the bike at Dick’s?)

I selected a bike and promised to return a few hours later to give him time to prepare the bike (adjust the gears; tune up the brakes – would Dick’s have done this?) We returned later and while we waited, we chatted about service at big box shops, politics, the history of his shop. He told me about some great bike trails nearby. And when he was finished he promised to take care of any problems concerning the bike – just bring it back if I need help.

We also talked about technology – Mr G’s technology consists of a telephone and mailbox. That’s the way he likes it and that’s the way he plans to keep it. He takes cash and checks only. Simple. And fabulous.

In the end what I got was all substance and no flash. The extra money I spent bought me an interaction with a new character in my town; a bike that truly fits my needs; info about some great bike trails and a promise to fix minor repairs if I have any problems with it. Priceless.