Can You Be Too Frugal?

This can seem like a ridiculous question when you are struggling to pay your bills, pay off debt, or to save money. But it’s also an important question because there’s a difference between being frugal – and being cheap!

Cheap is the destructive second cousin of frugal. While frugality can bring about many positive changes in your life, cheap becomes a way of life that ironically can lead to spending more money in the long run. Cheap can also destroy personal relationships and send you into a kind of financial isolation. None of that will benefit you in the long run.

Where does frugal end and cheap begin?

Buying Stuff that Doesn’t Last

In the effort to be frugal, you can easily get caught up simply looking to pay the lowest price for everything you buy. This can lead to buying merchandise that doesn’t last, or even food that isn’t good for you or substitute products and services that don’t fill the immediate need in any meaningful way.

No matter how much money you save on a purchase, if the product is substandard or doesn’t perform as expected, you will have wasted money. It will mean that even more money will have to be spent to either remedy the deficient product, or to replace it completely with something that is legitimate. You will spend money twice for a single purchase. That isn’t being frugal, it’s being cheap.

Frugal is buying the best products and services for the lowest price available. Cheap is simply shopping for the lowest price – period.

If money is tight, or if there’s a pressing financial goal on the horizon, rather than searching for the lowest price, you can choose to buy good quality secondhand items for a fraction of what they would cost to buy them brand new. You’re looking to pay the lowest price with the strategy, but you are also looking for better quality. That’s frugal.

Spending Too Much Time Cutting Expenses

Frugal can turn into cheap when saving money becomes an obsession. This can happen more easily than you might imagine.

You might find yourself shopping at 10 different stores to make even a modest purchase. You can also overdose on do-it-yourself projects for your home and car that are costing you more in time than you’re saving in money. Some of those DIY projects might also be beyond your own areas of expertise. If they are, you may be exchanging safety for saving money. This is another example of the practice that ultimately will cost even more money than it saves at the beginning.

Being Frugal with Giving

Frugal becomes cheap when it begins to affect your charitable giving. Since frugality – or even being cheap – are actually mindsets, you can fall under this practice without even being aware of it. Since your entire approach to your finances is dominated by the need to save money, you may unconsciously – or even consciously – reduce your giving in favor of saving more money.

When charitable giving first becomes viewed as an expense, you’ve crossed the border from frugal into cheap. Giving has to do with generosity, with how much of yourself you are prepared to give to others. If your need to save money controls what you’re giving, this will have a far greater impact on your life and on how others will see you than you can ever imagine.

Overemphasizing Frugality When You Might Really Need More Income

We should all purposely avoid spending more money than we need to – that’s frugal. But sometimes saving money is an attempt to get around the need to earn more money.

In order to avoid taking the steps needed to earn more income, you can completely immerse yourself in money-saving efforts and strategies that soak up all of your spare time. Frugality is often a tradeoff of time for money, but you always have to ask yourself which is more practical: spending an hour to earn an extra $10, or spending that same hour to save $2. If you are spending too much time chasing the $2 saving, you may be stepping into cheap. Cheap is trying to save money when there may be better options.

Where do you think the dividing line is between frugal and cheap? It may be a line that can only be defined by examples. Leave a comment!

Why You Should Build Your Savings Before Paying Off Debt
7 Things to Do When Your Mortgage is Paid Off
How to Avoid Overusing Your Emergency Fund
5 Ways to Save Money on Prescription Medications
About Kevin
  • krantcents

    Frugal is trying to save money on purchases. Cheap people are unwilling to spend their money in all cases. I think I am a combination of both.

    • Kevin

      You’re an honest man my friend. And I agree with your definitions.

  • Thad

    “Cheap is the second cousin of frugal”. Love that! Well said.

    • Kevin

      Thanks Thad, every now and again I get lucky and come up with something simple and worth remembering. ;-)

  • Paula @ Afford Anything

    I’m so glad you wrote this — I agree completely. I see a lot of people in the personal finance world who “overdose on DIY projects” (well said!) and/or who exchange their safety for the sake of saving a few bucks. Neither is smart.

    Sustainable wealth means maintaining a balance. If you’re spending every weekend fixing up your house and chasing deals all over town, you don’t have time to spend with family and friends, or to exercise, or to cook healthy meals.

    • Kevin

      Well said, Paula. Balance is the key and we always have to consider the trade-offs we’re engaging, and not the least of which the opportunity costs.

  • Michelle

    I think you can definitely be too frugal or too cheap. Sometimes I am both but I am working on it!

    • Kevin

      Confession: ME TOO! I’m trying to find the right mix. Sometimes I’m genuinely frugal, and others I’m just plain cheap!

  • Fernando R

    I think that you if you are frugal to the point that you cannot enjoy your life, then that’s when you are being too frugal. You have to develop a plan and a way of life that allows you to have a safety amount of money and still be able to enjoy a few things every now and then.

    • Kevin

      Hi Fernando–That’s an excellent descripion, as long is it’s taken in moderation. When enjoying life is the standard, the risk of crossing over into spendthrift territory is more than a remote possibility!

  • Jason Clayton | frugal habits

    To Me, being cheap is when you hurt other people with your frugality. It usually means you have the money to be generous, but withhold it. Being frugal, is very different. You are cautious with your money, but don’t withhold being generous and what is rightfully someone else s.

    A good example is tipping. A frugal person may withhold from having desert in order to give the waitress a reasonable tip. A cheap person may or may not have the dessert, but will stiff the waitress.

    • Kevin

      Hi Jason–That’s another good definition. I’ve seen people refuse to leave a tip even for good service. My first thought is “cheap”.

      Another example might be refusing to help someone when you’re in a position to do so.

    • KC @ genxfinance

      Good definition and example there Jason. There a big difference between the two. Though I am frugal, I try not to be cheap.

  • Paula

    I can definitely be not too frugal. I mean I am saving money and always budget, but I never forget about things like tips for a good service. For me personally, being frugal means staying away from immediate cash loans, spend responsibly, put aside for am emergency fund and always keep a track of where all my money goes. With doing that I am still able to lead a normal life. This what it is about. I am not a greedy person and I do believe that in order to earn money you have to spend it from time to time…spend wisely of course!

  • Pingback: Lifestyle Carnival: Exxon Valdez Edition()

  • Pingback: Financial Carnival For Young Adults | PF Carny()

  • Tom Gorski

    Wonderful post. I think the thin line between frugality and cheapness has yet to be properly comprehended by many. Much has been said but little has been reflected in actions.