Am I a Cheapskate or Just Frugal?
In an argument with my wife over our holiday spending on gifts, travel and entertainment, I got accused of being a cheapskate because I refused to put aside money/budget worries during the holiday season. “What’s the point of saving if we cannot spend the money on the ones we love?” she said, but the worst line was “If we die tomorrow, our money won’t go with us, so spend some now and have fun”. I responded that given that we are in a recession (and hopefully not dying anytime soon) it is even more important to be careful with spending now, and try to save as much as possible in the advent of a job loss or more dark days ahead. Further, I added that debt stops for no one and that just a few days of over indulgence can cause pain for many months ahead. Her retort was that I was over reacting and that as we had a decent amount of emergency funds, 2 jobs and little debt, a little over indulgence now is okay.
Perhaps she is right. Given the economic state of the nation, investment losses and job security concerns, I admit I am much more careful with my expenses and probably question purchases much more than I used to. Still, being called a cheapskate? That hurt. I like to think of myself as Frugal. I am well aware that hoarding money is unhealthy and have no issue spending money where needed. But unnecessary and impulse spending really frustrates me. For example why pay full price for a great purse, when most likely it will be on sale in a couple of weeks. Patience is a big money saver!
I have no issue spending money on gifts for family and friends. In fact gift giving/receiving is a big part of the holidays, and seeing the happiness you bring to someone with a nice gift is a joy. But surely the most expensive or commercial gift is not the best. As I get older I find it is the time I spend with the people I love that matters, not only the money I spend on them. The exception being my young nephews and nieces. whose loving seems to have a direct correlation with the number of toys I buy them (I put this down to age)!
Being frugal over the last few years has held our household finances in good stead; especially compared to friends who despite outward appearances of success (big house, expensive cars) seem to be living pay check to pay check, always complaining of how expensive things are and how little they have saved. However, I think my best frugal move was “paying myself first” through maxing out my 401K contributions and regularly putting 15% of my pay into various money market and funds. I also set up flexible spending accounts ahead of time to ensure our health care costs were covered. All these actions forced us to live on a lower after tax income, and as I explained to my wife some short term drop in purchasing power will set us up for a much more secure future.
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December 19, 2008 2:14 AM
Nice blog! It's nice to see fellow bloggers who are in the same niche as mine. :)
December 19, 2008 4:45 AM
I am also frugal like yourself and I also dislike the term cheapskate. Luckily my partner and I think alike on keeping our spending down, saving money and sticking to a budget.
We are also lucky in that we have some frugal friends, sometimes it's a really amusing conversation we have when we get together, talking about times we may have pushed the boundaries of frugality.
December 19, 2008 9:36 AM
To me, the main difference is this. Frugality is simply demanding good value for your money. You don't purchase the flashiest automobiles or the newest electronic gadgets because they simply aren't cost-effective. You're paying more for the image than anything else. However, a frugal person is more than willing to make big purchases if it represents a good value. A cheapskate, on the other hand, doesn't make purchases regardless of how much of a value the purchase may represent. They simply don't like spending money on anything and hoard money for money's sake.
December 19, 2008 9:40 AM
It's funny - I came upon your post this morning just after writing a post asking if I was being a Grinch and if I was being too frugal?
At least I am not the only one thinking this way.
Interesting topic.
December 19, 2008 6:10 PM
@ MA - Thanks for stopping by and likewise it is always good to discover new pf bloggers.
@ BW - Lucky for you. Mind you I do appreciated my wife's balance in that she does ensure I buy stuff and don't get "too" frugal. It was great to discover that "frguality" is quite popular in pf blogging space.
@ Kyle - You make a great distinction and I couldn't have said it better. I find being too frugal can end up costing you, because to save a few pennies you buy cheaper quality stuff, which has to either be replaced sooner or fixed for a higher cost.
@ Dustin - I think this topic has been brought up a number of times in the pf blogosphere. It's getting even more relevant now given current economic conditions. Frugality is definetly getting more in vouge now.
December 20, 2008 12:53 PM
This is a really interesting question. For years I thought I was frugal, but seeing a huge chunk of my net worth disappear in the stock market falls made me think of all the fun things I might have done with the money.
I'd literally never really considered what I was missing when saving 20-50% of my income (it varies - I work for myself). Perhaps I should have had 1-2 more hedonistic moments out of it.
Obviously I'm talking about saving say 5% off my saving per annum, not buying a Porsche tomorrow!
You could try taking out $100 a month (or whatever) as the 'frippery' budget. You can spend that on what you like, however silly. But after that you go into frugal mode.
December 20, 2008 2:00 PM
I have to say in the past two years a term has come up in a description my wife gives when referring to my money spending. Cheap is the first part but skate wasn’t/isn’t the end.
The fact is I am in the same boat being called cheap.
However it is I, at this time of year, wanting to spend the money on gifts for others. Then in the next breath I complain how expensive it is or would be then don’t buy.
I am sure it is equally frustrating to my wife.
So are we frugal or cheap?
This time of year I think this to be a very difficult question. After all this is the season for giving. Giving cost. Spending reduces or coffers. A low reserve could cause devastation in our life style.
To keep this from happening we as our own financial advisors/planners we have to be frugal and cheap, but at the same time be able to be lavish in our spending and hyper-consumption.
Impulse buying is also a part of this.
Balance it all. Give but not extravagantly.
Embrace the season but do so smartly.
Do what works for you.
December 20, 2008 3:46 PM
People who use the "if I die tomorrow" argument are generally telling you to think about the issue from your heart in addition to using pure intellect. In other words, "would it kill you to have a little more fun?" Of course, the answer is generally no, so let's have some fun then. However, you can also assess risks with your heart, and you bring up some very good points for why you may be unwilling to spend frivolously (economy, getting a bad deal, etc).
I am not a fan of being called cheap; however, it really depends on the source. If someone who doesn't share my values called me cheap, I would mostly be unaffected because I value financial security over stuff and the opinions of others about my purchases. I guess the biggest caveat is when the person calling you cheap is your partner. Although my gf is more frugal than I am, it really doesn’t matter. Your partner’s opinion always matters.
December 21, 2008 12:32 PM
Great article!
It took some time for my husband to see the real value of being frugal.
He really enjoys explaining to people now just how we manage to do the things we love and the freedom we have to pursue our dreams and for laying down the foundations of our future life now.
December 24, 2008 11:10 AM
If you have a will you could die tomorrow and the money would still go to the ones you love.
December 25, 2008 11:05 AM
Being frugal is the smart way to live, because it doesn't mean denying yourself.
On the contrary it means buying things that you really want/need, for a good and reasonable price, and not going into stupid consumer debt for it.
I think people just assume you're a cheapskate or that you are a penny pincher if you tell them that you're careful with your money.
Those are the ones who live cheque to cheque.
On the flip side, I also don't like being too frugal to the point where I refuse to treat myself when I know I can afford it.
I also don't like people who deny themselves their daily pleasurable latte just because they want to be frugal (not because they can't afford it).
It's a delicate balance.
Fabulously Broke in the City
Just a girl trying to find a balance between being a Shopaholic and a Saver...
December 25, 2008 2:39 PM
My husband and I have similar arguments in reverse; I want him to buy higher quality goods, sometimes for a few more dollars and he always wants to buy the cheapest thing. I keep trying to point out that being cheap-paying the least amount of money isn't cheap if you have to repurchase the item; plus the frustration, time and waste of gas to go out and get the thing again..... Then Christmas comes and he insists he has to buy gifts even when I say I don't want any...what gives??
I also save like crazy and insist we eat in to save the money when he wants to eat out so I don't get his cheap philosophy.
December 30, 2008 10:54 AM
I to are frugel i had come into some money not long ago and i paid off my credit cards with it so i can save the $300-$400 a month in payments. I think that is a good thing in the long run im not a shopper so thats a good thing also.
December 30, 2008 6:46 PM
Thanks for all the comments and stories folks, it was good to see this story resonated with a lot of people. I think at the end of the day it is importnant to have balance and perspective in your "frugal ways" and to ensure you and your signicant other are on the same page when it comes to your long term finanical goals. For long term finanical security frugality, or some degree of it, are a must to make it.
January 3, 2009 8:41 PM
To me, being a "cheapskate" is different than being "frugal".
Example of cheapskate: A boyfriend of mine who saved cups from every single fast food place in town so he could sneak it in and get a free drink. Come to think of it, that's an example of stealing.
Example of frugal: My husband, who doesn't buy me roses on Valentine's Day. He knows I would kill him if he spent $150 on stupid flowers that die in three days.
January 4, 2009 12:41 AM
Some comments from syndicated publishing of this post at other sites: :
I'm on your side. A few dollars over budget for this and that...and oh yeah, that item too all add up. If you charge it, you'll be paying more for the item if you don't/can't pay off the card in full. While you and your wife are both currently employed, the ax can fall on one or both of you without advance notice. It pays to be conservative will all expenditures.
Big difference between want and need. And the statement about spending spending on people you love...to me, what she is really saying has less to do with wanting to share with others as it is a very telling comment about what she wants from you...which is to spend money on her to show how much you love her. I'm not diminishing her desire to give gifts, but am pointing out that her comment may say more about how she views your frugal vs. cheapskate attitude in relation to how you spend money on her.
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I think its best to save as much as you can. If you can get everyone on your list at least one gift that they will enjoy, you are in good shape. By saving money, you can turn that little debt into zero debt in no time. I am a firm believer in saving as much and as often as possible. You aren't a cheapskape you're just smart enough to realize that life waits for no one and in an instant, your financial situation can change dramatically for the worst. Keep saving and good luck.
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went the frugal route this year and cut way back on spending for Christmas since I took 3 weeks off with no pay for surgery in November, and lost my job December 12 for basically being an honest person and refusing to commit fraud. Anywho, I was also off work with nearly full pay for foot surgery last winter for a total of 5 months (lots of ETO and LTD) and my position was filled while I was gone:(. So yes I got frugal this year. I also believe in the concept of the thought behind giving and sharing and not $$$. I give away a LOT of homemade cookies for Christmas, I like making them and people love eating them, I have always appreciated something somebody made for me much more than something baught in a 10 min trip to the store.
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You are frugal, not a cheapskate. The point of saving is not to impress the ones you love, it's to ensure that you have stability and security. "Spend now and have fun?" I say spend later so you don't have to live in a refrigerator box. Given the economy, you are making an incredibly wise move by battening down the hatches. Why risk worry later if you can avoid it by being fiscally responsible now?
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Now, eating at a restaurant and tipping two dollars = cheapskate.
Eating at a restaurant, making cheaper choice, and still tipping your 18% = frugal. Or better yet, skipping the restaurants to save moolah in the economic crisis we're in.
You're right to worry. We're not in a good place right now and more attention needs to be paid to every penny spent.
For future reference when dealing with your wife, ask that she shop around for the best prices instead of buying gifts on impulse. Tell her to write down everything she wants to get each person, and then start comparing online. Offer to do it with her (to discourage any selfish or cheapskate reputations from uprising.) This will save you both a lot of money especially in the economic crisis where deals are out there is you're willing to do a little hunting.
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during the holidays is the time to let lose a LITTLE bit, but don`t go over budget especially with the way the economy is.
Personally I think you were not frugal/cheapskate enough
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I am frugal, my husband is probably cheapskate. While the term 'cheapskate' may be hurtful to use on someone, to me, there is an obvious difference between the two.
I allocate a special 'shopping fund' from my monthly paycheck. The amount of this fund is a fixed percentage of the total sum. If I fancy buying something that costs more than this amount, I save up each month till I have enough, before buying and enjoying it. If it gets sold out before I manage to save enough, I look for something equivalent, keep the money till something else comes along or use the money for birthday and wedding gifts, etc. I don't die or lose sleep over it. That, to me, is being frugal.
My husband on the other hand, never buys anything expensive at all, but blows all his money away on cheap stuff without a care for quality. The result is: nothing he buys lasts, so he keeps having to replace them.
And of course, I receive that ten-dollar watch they have on sale at the petrol kiosk for my birthday. Cheapskate much? heck, yes!!!
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Andy, I have to agree with you and i don't care if I get called a cheapskate, I'm not rich and i dont care about keeping up with the joneses. Stuff is just stuff and buying things you dont really need right now is a bad idea. Everyone is afraid to say we are in a depression right now except me it seems. another thing people dont seem to know after someones unemployment benefits run out if they even get them in the first place That person is no longer counted as being unemployed by our government and those who didnt get the benefits arent counted at all as being unemployed. There are a lot more people doing really bad than you know about I know a guy that has been unemployed for more than 3 years now and he has no prospects. he is 59 years old and nobody wants to hire him because of that. I have been supportting him but I cant continue to much longer it is a big strain on my budget then he claims that if he cant stay here he will kill himself. I just dont know what to do.Like I said things are worse than people will admit.If you can put money back do it
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Andy, you need to plan her and your gift giving into the budget. You need to talk with her and see what she thinks is the amount she will need for Christmas next year, and probably the birthdays during the year, see how that amount would fit into your budget. If it adds up with you regular expenses to be more than you make, explain to her that it would be dangerous to incure debt like that each year and you could lose your home and have your car reposessed when things like that happen. So, ask her to cut her desired spending down to an amount that fits in the budget. then keep a separate bank account, putting money in it each month, so that the desired amount she wants to spend is reached by October. That way she takes from this account all year the mony she needs for her gifts. If she is running low by Sept, she can see she needs to skip stops at the coffee shop, lunches out, etc, and put that money into her account to buy her Christmas presents. She is then free to cut the cost of the presents as she sees fit. No more arguments. Now you can also give her a clothing budget she takes from, and you need to have a gift budget for her gifts from you. That way you are prepared to buy the gifts she needs to show your love to her. Budget together, reasonably setting amounts, filling her needs and your own. End of arguments.
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God if only my husband was like you! It's the opposite in our family. We set aside money every month the entire year for the holidays and even have a prep talk before the holidays as to what we want to do/spend this year and get the kids but he always ends up impulse buying and it drives me crazy. I love a good sale...why buy now if you can wait a couple of weeks and get it cheaper? Why not want to make your dollar go farther? We like to have a good time too, and we don't have much debt but your right, a little spending here and there really does add up! If I were to let him be and spend as he wished we would be living paycheck to paycheck. Tell your wife to get a grip, really. The economy sucks, buy what you need/have been needing since the prices are good right now. Maybe tell her she should splurge on one item and commit to that for both of you. If you guys can't come to a resolution, this will be an everlasting fight you don't want to be a part of.
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Excellent blog, Andy. I am somewhat frugal too and glad I was, even when I was making money. My husband and I both lost our jobs just weeks apart (I am working again), but if it wasn't for me saving for a rainy day....well, we wouldn't have a roof over our heads. We decided not to exchange gifts with any family and friends which actually made for a nice and simple Christmas. We just bought gifts for the kids. When I do go on the occasional shopping spree, I only go with a debit card or cash. It's the only way to live right now. I have a friend who has her house in forclosure. I can't imagine....