Don’t Confuse Frugal With Cheap.

I write a lot about saving money wherever possible, and being sole source of income for my family of 5 makes me more inclined to read articles about saving than I might otherwise be. But sometimes I come across the ridiculous extremes of frugality and I like to share those with my readers too. Take for example, this Yahoo! finance article.

Can you be too cheap?

The basic premise of the article is YES. However, I would like to point out that there is a difference between being frugal and being cheap.

The difference between frugal and cheap.

In a nutshell, the difference is this:

• Being frugal means always being conscious of where your money goes and how much you’re spending. It means never paying full price for what you can get on sale. It means working at saving – clipping coupons, delaying gratification and living simply.
• Being cheap by contrast is frugality taken to the extreme. It can mean failing to replace parts on your car and risking future injury to save a few (hundred) bucks today. It means always buying the least expense item regardless of quality even if that item precipitates greater spending in the future by means of repair or upkeep.

So, can you be too frugal? I don’t know. I suppose that’s open to debate, but here are 5 ways you can be too cheap – and it will cost you!

1. Neglecting Basic Maintenance

This, to me, is a no-brainer yet we’ve all been tempted and probably engaged in this sort of neglect at some point in our lives. Deciding not to spend that $100 on servicing your car can end up costing you $1,000 down the road. The trick of course is knowing which services are truly necessary and which are not. Another point to consider is when the maintenance is required. For example, no one would say that changing the oil in your car is unnecessary, but it may not need to changed every 3,000 mile either. Many cars will go for 6,000 or even 7,500 miles but many people are still having it done every 3,000. Check your car manual – you might be able to save money without risking early breakdown!

2. Doing Your Own Taxes

I honestly don’t see this as something that will cost you money. With the financial software available these days and the guarantee of help should the IRS audit you, there’s really little reason for most people to use a tax professional. The glaring exception to this is if you own your own business, or have a complicated tax situation. However, most people have a straightforward W-2, standard deduction type of tax return. I say, save the money and do it yourself.

3. Borrowing From Your Retirement

I agree that this is a bad idea in almost all cases, but is it really a “cheap” thing to do? I mean do cheap people have much in their retirement savings to dip into, and if they do are they really likely to do it?

For what it’s worth, the article does list some helpful means of alternative income:

• Pick up a side job or do some freelance work to make cash.

• Sell some of your belongings that you don’t need.

• Stop (or cutdown on) eating out and buying coffee or soda.

• Look for ways to cut costs in your regular expenses, such as dropping/reducing your cable and cell phone plans.

4. Not Saving Anything

I’d agree with this one 100%. It’s a bad idea, it will cost you in the long run and it’s something a “cheap person” might do. Especially if there are fees associated with the saving, like investing.

5. Skimping on Food

I suppose the true cost of buying the cheapest food is the cost to your overall health and well being. That of course translates to higher health costs down the road, but that to me is of secondary concern. Who wants to feel run-down and sick all the time? Yet I still here people complain about the price of food and buy the cheapest available product without consideration to health.

Final thoughts.

Saving money is great, but it is possible to go too far. In this blogger’s opinion, it’s better to be frugal than cheap.

Related Posts:

• 7 Things People Spend More Money on Than They Should (and Tips to Stop Doing it).
• It Pays to Bundle and Bargain!
• My Buyer’s Remorse; a Lesson in Frugality.
• How to Make a Cheap Vacation Expensive.
• 12 Costly Necessities That Aren’t.