Are you that boy or that girl who would wait a few months after the release of a new product before buying because you are hoping for a reduction in price? Or the one who will bargain until the seller gets angry? Perhaps you do extensive research online, read customers’ reviews, and compare prices before you eventually buy.
Have you been called cheap? Or the more attractive cousin, Frugal? The burning question you would like answered is, which am I really? Care to find out? Consider the answer below, based on an adaptation of a similar article by Tim Parker of investopedia.com
1. Frugal People Know When They Must Pay More
Cheap people only look at price. They believe that the only way to achieve value is to pay less, failing to take into account other factors. Frugal people know that sometimes paying more isn’t necessarily bad.
Let’s assume that a cheap person and a frugal person head into a phone store to purchase a smartphone. The cheap person would look for the lowest priced model, while the frugal person would evaluate features like battery life, storage space, and other such things. He or she may research the model and read customer reviews. Before buying, frugal shoppers will look for discounts and sales offers at other stores, and conclude that their money will be better spent going for the higher-priced model, but cheap people may not see a need to research when the lowest price, basic model is right in front of them.
2. Cheap People Don’t Buy Necessities
Cheap people may even find it difficult to pay for the basics of life, such things like good food, decent and elegant clothing; whereas frugal people know the importance of living well, but only look to get the best price they can.
3. Frugal People See the Higher Purpose
Frugal people love to save wherever they can, but that doesn’t mean that they aren’t generous with their money. They will however do their research to make sure they are giving to a worthy cause, and will even give to family and friends with a real need.
Warren Buffett for example is the second richest man in the world, and is well-known for his frugal lifestyle. He believes that giving kids too much money does more harm than good, and for this reason has promised to give most of his fortune to the Bill and Melinda Gates Foundation instead of his children. That’s certainly not a cheap person!
Cheap people instead have a different mindset. They see their money as theirs and they may hold it for the rest of their life. They are often remembered by family, friends, and acquaintances as people who rarely gave a gift or helped when it was needed. To these people, money appears to mean more than relationship with others.
Though there is no scientific way to distinguish between cheap and frugal people, we should understand that the best distinction comes from understanding value. Just because something is less expensive in price doesn’t necessarily make it cheaper once other costs are included.
And there you have it, so which do you think you are?