After reading the article on need vs want, you might think that suppressing the wants sounds very cheap. But there is a fine line of difference between frugal and cheap.
Frugal is all about valuing money by displaying good skill and judgment on the purchase. Unfortunately, today, people have the wrong notion about spending. They think that spending is directly proportional to the social status.
I have grown up in a middle-class family. We never had any debt and I always got whatever I desired. I still remember when I got my bike in 10th standard. Very few of my friends had a bike at that time. It was a black Honda Unicorn. It has been 13 years and I still use the same bike.
I can get a new bike and few of my friend even asked me to change my bike but I haven’t changed it.
There is mainly two reason:
The first reason is that it is in a very good condition. I have always maintained it. The second reason is that I have learned one very important aspect of life- Value Your Money. Now let’s understand the difference between frugal vs cheap with my own example-
Frugal does not mean owning crap
I wear branded clothes because I feel that branded clothes have better quality and are long lasting. However, I make sure that I purchase my clothes during the discount. I also ensure that I know my limits. For example, I don’t shop Armani just because it is branded. A Levi’s jeans worth Rs 3000/- is expensive for me. However, the same jeans on 40-50% discount is a good deal. I might have to wait for the sale or visit various stores to get the best deal. But I will not compromise with the quality and make a wise decision. This is being frugal.
But if you can afford good quality jeans and you end up buying the lowest price jeans irrespective of quality then it is cheap.
Frugal might not spend on themselves but don’t afraid to spend on others
When my friend visits my place, I make sure I pay the lunch/dinner bill. This is because I value friendship. I might not go out for dinner for next few weeks but at that point, I will pay the bill.
Frugal does not own fancy toys but don’t mind paying for quality stuff
I do not own an iPhone but I have a decent mobile phone which serves all my purpose. I make sure that I get all the features in the phone that I am looking for. It might require a lot of research but I make sure that I get the best value for money. I think iPhone is a bad financial decision. On the other side, a cheap person will go for the cheapest mobile phone.
Frugal does not embarrass people
I might not like the idea of gifting expensive stuff but if there is an occasion then I ensure that I gift a decent item and do not embarrass the person on the receiving side. A cheap person will find the best way to avoid gifting.
Frugal does not miss the fun
On weekends, I don’t frequently visit those fancy pubs to spend a bomb. But I make sure that I spend a good time by cooking delicious stuff at home. Occasionally I visit restaurants as well. I do not go for exotic vacation but I also don’t miss a bike trip on the long weekend. I also make sure that I save money to get a good vacation once a year.
Frugal care for environment
I make sure that I switch off the fan and lights if they are not in use. Not because I am cheap but because I care for nature. I make sure that I finish my food and do not waste it because I know the importance of food.
Frugal has a budget in mind
When I get my salary, I calculate the future expenses of the month and park the rest of money for my education loan and other investments. I keep a safety of margin in case of emergency or unplanned expenses. I also ensure that I spend after what is left of savings rather than saving after spending.
Frugal finds the best cost effective alternative
I love to watch movies in theatre but I make sure that I wait for a couple of weeks after the release. The reason is that initially, the movie tickets are costly and then the price decreases. I also try to book an early after noon show or weekday show to get the lowest price.
If I need to take a cab, I prefer to take a shared cab. This reduces my cost to half. If I want to travel, I book my tickets in advance which allows me to get the best price for the ticket. A cheap person would not watch a movie or take a cab. However, I enjoy my life by finding the best cost effective alternative.
Frugal loves discount but prefer quality over cost
From ordering Dominos pizza to booking a bus ticket, from applying cash back to redeeming reward points, I make sure that I do not miss that “extra” discount which I can easily get by spending few minutes of research on the internet. I also ensure that I order my favorite “cheese burst” pizza and book my tickets in the most comfortable multi tier AC bus. Therefore, I never compromise on quality.
What is the benefit of being frugal?
I always have “extra” money as I adjust my expenses accordingly. Therefore I never have to ask anyone for monetary help. This helps in saving myself from embarrassing situations. Since I have the tendency to make an informed purchase, I enjoy all the benefits of life without compromising on quality. I do not fall in “debt” trap and I can finance my bigger investments with my own money. In future, I will help people who are in need and donate a part to the charity. For me, being frugal is the best financial decision and unlike my generation, I think “Frugal is the new Fancy”.
Even after reading the post, are you not sure about living a frugal life? May be you can take inspiration from Warren Buffett.
Warren Buffett truly believes in a frugal life and look for opportunities to get more value at a lower price. In one of his interview he said, “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
Some of the examples of his frugal lifestyle are:
He still lives in his home in Omaha that he purchased in 1958. It’s a 5 bedroom home, but certainly not the type of home we see most billionaire in. Instead of driving around in multi million dollar car, he prefers to drive a basic car. He says that cars tend to depreciate quickly hence it’s better to keep your well-working car for as long as possible. Though he is the chairman of Berkshire Hathway which had a net profit of $ 24 Billion in 2016, he just takes a base salary of $1,00,000 and has not increased his salary for more than 30 years. If Warren Buffett, world’s greatest investor and one of the richest man on earth, can live a frugal life then why can’t we? Next time you are in doubt between being cheap or frugal, model your lifestyle after Buffett and you will get your answer.