Frugal vs. Cheap Mindset: What’s The Difference?

The comparison of a frugal vs. cheap lifestyle is in order as there tend to be some misconceptions.

You may have wondered to yourself – “Am I exhibiting frugal or cheap behaviors?” and want to investigate further.

You have come to the right place.  

Get ready for these quick points: 

  • common view on frugality
  • distinct differences between being frugal and cheap
  • overall mindset of both ideas

frugal vs. cheap

Frugal vs. Cheap Mindset: What’s The Difference?

Common View Of Frugality

In my view, the term frugality describes living below your means, practicing purposeful spending, and prioritizing savings.

Although I don’t agree with everything Dave Ramsey has to say.

I do agree wholeheartedly that every dollar should have a name.

By name, I mean the money gets allocated to different categories to get the most use out of your hard-earned money.

Every paycheck provides a finite amount of money.

Each time payday arrives and the funds hit your bank account, it gets put to work in a number of ways.

This can include: 

  • paying bills
  • infusing cash into an emergency fund
  • funneling contributions to long-term investments
  • donating to charities

…and so on.

The key to frugality is that it lends itself to the process of saving money.

When you live below your means, you’re being more mindful of how that money can be put to good use

This process of increasing savings necessitates reducing elsewhere, namely expenses.

In order to reduce expenses, oftentimes, one has to make a decision on how to cut those costs.

Some methods may be more drastic than others.

Frugal vs. Cheap

Frugality is NOT the same as being cheap.

You may have witnessed the terms frugal and cheap being used interchangeably.

Other than sharing some of the same characteristics, they differ in many ways. 

Let’s explore a few situational examples to provide a clearer view of the two terms.

Cheap Behaviors

routinely going to dinner with a friend and expecting them to pay

expecting to get a deal on almost everything and settling for subpar items for a good price

seeking the lowest price – always

shamelessly re-gifting or gifting used items

showing up at the potluck without a dish 

worrying about how you are going to stretch each and every dollar to an unnatural extent


Frugal Behaviors

eating out with friends less often or inviting friends over for home-cooked meals

willing to pay a premium for items that are of good quality

seeking value for the moneymostly

purchasing gifts well ahead of time to avoid going over budget or crafting do-it-yourself (DIY) gifts, if you have a creative side

bringing a yummy cost-effective dish to the potluck, like Hearty Crockpot Beef and Veggie Soup or Shepherd’s Pie Deluxe which can be adjusted in size and cost depending on the size of the group

allowing for money to be spent in areas that are important to you by putting a name to your dollars

The Frugal vs. Cheap Mindset

The distinction between frugal and cheap is the underlying mindset that drives each of the approaches.

The cheap mindset emphasizes the intrinsic value of money in and of itself.

This approach would have one believe that money is to be collected and that great pains should be taken to keep it.

This displays a short-term mindset as there is no end goal.

money, money bag, giftAlternatively, the frugal mindset emphasizes the money as a means to an end.

It’s not the money itself that is valuable, but rather the items or experiences that it makes possible.

From this perspective, it’s not a “crime” to spend money as long as there is value behind the expenditure.

This is a long-term, goal-oriented mindset as frivolous expenses of the present are sacrificed for the more valuable expenses of the future.

Related frugal articles:

Final Thoughts

This discussion is certainly not a one-size-fits-all approach.

There may be a time in one’s life in which being cheap is a necessity to survive.

I know, I’ve been there.

In time, these views may shift, and enhance the ability to live a more fulfilling life.

Implement what works the best in your life at the current time, because this is a very personal decision that only you can make for yourself.

Read more about my mission HERE.

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What are your thoughts on my take on frugal vs. cheap?  Share your input in the comments below!

Photo cred: Pixabay


  • Gabe @ The Shiny Dollar

    I struggled with this for a while lol! It was hard because even from a young age, I didn’t feel I should ‘eat’ all my money away. I got older and I remember a friend wanting to go to a nightclub and to buy a liquor bottle was about $1000, which I said ‘hell no’. I always called it being smart with my money. Of course I spent money, But like you mentioned, I like experiences. I love to travel and never had a problem including that in my budget, but would I spend hundreds on dollar on liquor I could purchase for less than a tenth of the price? Nope!

    Great article I really liked it!

    • Full-time Dollars

      Wow, $1,000 for a liquor bottle, now that’s something! I agree with you, at some point in time most of us FI people have cheap tendencies, but I have evolved since that time. I like to see it as working towards a goal but also being able to “live” while you get there. It makes my day that you liked my article. Thanks for sharing, Gabe.

      • Gabe @ The Shiny Dollar

        Yeah South Florida night clubs are insane…

        I agree about evolving as well. I don’t want to ruin too much because I plan on writing about it, but I believe the best way to reach Financial Independence is consistency, and the only way to stay consistent is by being realistic.

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