4 Stark Differences Between Being Frugal and Cheap

by | BiggerPockets.com

I’ve been called “cheap” my whole life. I grew up in a small, lower-middle-class town of about 10,000 people. At first glance, I blended right in. Heck, amongst most places in the United States, I blend right in. However, given the small-town USA community I come from, I was the closest thing to Jewish many of the kids in my town had ever seen.

My Dad is Jewish, which makes me half Jewish—Jew-ish. Society tells us that you inherit your mother’s religion. While this is a subject for another time, I think that is an antiquated way of looking at things. I have just as much of my Dad’s genes as I do my Mom’s. Therefore, I will continue to be half Jewish.

Once word spread that I was part Jewish, the kids started to connect the dots. No wonder I brought my lunch every day, didn’t buy the yearbook every year, and didn’t buy the extra stuff the school was selling.

This opened Pandora’s box. Some of the bullies would occasionally throw quarters at me; even my friends would jest. Fortunately, I’m not offended easily, so I’d often just pick up the quarters and put them in my spare change collection. Over the course of a couple of years, it accumulated to over $200. Not bad for a 12-year-old kid.

To the newbie who has started the journey of frugality, you are likely going to be surrounded by hundreds (if not thousands) of people who do not know the concept of financial independence. They are going to call you cheap. They are not going to understand. So, it is important that you know the difference between being cheap and being frugal.

Thus, the subject of this post.

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The Difference Between Cheap and Frugal

Being frugal is saving money. Being cheap is saving money at the expense of others.

Here’s an example. It’s been my mother’s dream for years to have Christmas on the beach with just our family. When the opportunity to go to Aruba presented itself in 2017, it was $1,000+ per ticket, plus 17 hours of travel time (while carrying gifts). I booked it without hesitation.

Related: 10 Finance Experts Share Painless Ways to Save $1,000

A cheap person saves in any possible scenario, at any cost. A frugal person happily spends money on things of value.

When going out to restaurants, I get water. At night, I rest my head on a futon behind a curtain in my living room while some stranger sleeps in my bed (I Airbnb it). I rent my car out to complete strangers. At this point in my life, compared with the money I save, I don’t value the food at restaurants when the food I cook at home is almost as good. I don’t value the luxury of having my own bedroom or having my car at my disposal (I am sure I will soon). I like meeting people from around the world and enjoy biking to work.

What I do value more than anything is my health. I spend $200 a month on gym memberships. I do try to maximize my grocery-bill savings through some of Erin Chase’s tips (found in the BPMoneyshow podcast episode #3). I do eat mostly organic, fresh foods, so my grocery bill may be a tad more expensive than others’.

A frugal person values time, a cheap person values money.

Here’s a classic example I think most people can relate to (and a personal pet peeve of mine): You go out to dinner with a group of 7+ friends. You all order meals that are similar in value (within $2 or $3), but a few of your friends get a drink for $7. The range of orders is between $20 and $30. Because some people got drinks and more expensive meals, there is always that one person who tries to spend 15 minutes trying to allocate each item on the bill to the appropriate person. This person is being cheap. You win some, you lose some. Stop wasting everyone’s time. Split the bill down the middle and pony up the $2-$3 extra for your “friends.”

Related: 3 Simple Ways to Cut Back & Save Money without Feeling Deprived

A frugal person looks for value (bang for a buck). A cheap person looks for the cheapest possible thing at all costs.

When I think of frugality in this sense, I think of car shopping. You will rarely see a frugal person financing a brand new BMW. Why? Because they know cars are depreciating assets that suck money out of your pocket every single day. Especially the German cars that cost a fortune to fix.

Why not purchase used Japanese car (3-5 years old) for half the price with cash? No loan, cheaper repairs, it’s better on gas, and it will last you forever.

Personally, when I see people driving these fancy cars, I joke to myself about how much they are losing and how no one really gives a care what they drive. I like to think that most people like their friends for who they are, not what kind of car they drive.   


There are countless examples I could provide, but I think you get the idea. The stark difference between us Frugal Freddies and the Cheapskates of the world are that Frugal Freddies purchase things of value and save money in ways that do not impact others.

Being frugal is an essential element to achieving financial freedom and amassing vast amounts of wealth. Just ask Warren Buffett or Benjamin Franklin.

Despite Warren Buffet’s net worth being $85 billion, he is lives in a $650,000 house and is very happy. Check it out here.

Ben Franklin was quite frankly (pun intended) the founder of this financial independence movement. After working and being frugal for about 20 years, he was able to retire from full-time work and pursue his passions at age 40. Hence the discovery of electricity, the founding of the United States of America, and much more.

Despite his frugalness, Franklin is still one of the most influential figures in all of history. Plus, he’s seen as one of the nicest and most generous people of all time.

Let’s all be more like Ben Franklin.

We’re republishing this article to help out our newer readers.

Do you have tips for being frugal but not cheap?

Share them in the comments below!

About Author

Craig Curelop

Craig Curelop, aka thefiguy is an aggressive pursuer of financial independence. Starting with a net worth of negative $30K in 2016, he has aggressively saved and invested to become financially independent in 2019. From sleeping on the couch and renting out his car, he was able to invest in two house hacks in Denver and a BRRRR in Jacksonville. He plans to continue to investing in both Denver and Jacksonville for the years to come. Craig's story has caught the attention of several media outlets, including the Denver Post, BBC, and many other real estate/personal finance podcasts. He hopes to inspire the masses to grab hold of their finances and achieve financial independence. Follow his story on Instagram @thefiguy!


  1. John C.

    Great post. I’ve thought about this topic for a long time and had written a post on it for my FB etc. But, you put it better. Lol

    And, well done on all your frugal habits!

    Most people don’t know the difference between the 2. I used to always take pride in being called a “Jew/cheap,” because I knew they’d didn’t know the difference between being frugal and being cheap.

    But, my wife retired at 41, and I nearly retired a few months after her, because we know how to be frugal, not cheap;)

  2. Chester Lee


    Too bad you didn’t tell those punk kids they were being cheap (quarters only) in addition to being bullies and lower sphincter muscles. A less cheap, more generous bully would have thrown paper money.

    I applaud your think skin and wish you much success. My frugality has allowed my to own multiple properties across 2 states.

  3. Ryan Schroeder

    Just one item from your post that I will quibble with. I understand the one off example at the restaurant when splitting bills. However, when you get tired of ordering your $15 hamburger and water but end up paying $50 for your meal because the rest of your party orders appetizers and bottles of wine you will go back to each paying their own way. To do otherwise is allowing yourself to be taken advantage of

      • Craig Curelop

        Hey Ryan – thanks for the comment! Here’s what I think.

        It’s often a huge pain for waiters to split the bill. This typically take them A LOT longer, especially with a large group of people.

        When you eat with friends, you win some, and you lose some. You’ll end up about even in the end. I think the scenario you mentioned above is extreme and happens fairly infrequently. Usually, when people go out to eat the bill is roughly the same for everyone plus or minus a few bucks.

        In the event everyone is drinking, ordering steak, and dessert but you are satisfied with water and a burger it may make sense to have a friend grab your bill and just pay them back. Don’t think it’s necessary for the waiter to split the bill.

    • Shaun Reilly

      I get your point Ryan and I have had that situation in the past.
      What I have figured out is I know the group of friends that will want to itemize things and I will get my inexpensive sandwich and just some water those times.
      But when I am with the groups that will just want to split it I will share in the Apps and get a drink and get the more expensive entree rather than the sandwich. Now I won’t be a jerk and try to run up the bill to take advantage of my friends but I also realize I can eat like a king for just a couple bucks more than if I try to restrain myself.
      Frankly I don’t go out with the no thought to how much the bill will be crowds more than a few times a year so I just live with the bigger bill to have fun with my friends.

    • Jillian Skinner

      TOTALLY agree with Ryan. This is a huge pet peeve for me as I’m a small woman and usually order a small salad, often with water, which fills me up. If I’m with a bunch of guys, they order a $20 meal with several drinks, so I end up paying closer to $15 for my tiny salad. I get it…men typically eat more, which is why I’m a big believer in separate bills when eating out. Buy beers for friends another time.

  4. Vance Mattila

    Great post. There is a correlation behind being frugal and an earlier retirement age. I am glad I dedicated the past 3 years learning how to control my money. Craig, this is an awesome post and more people need to master their money, I appreciate you for writing this.

  5. I too agree with this. Not a big deal when it is a difference of a couple of bucks, totally different scenario when it is an expensive restaurant. Case in point is a situation I was in when my sister threw a girls getaway weekend in wine country. We went out to an expensive restaurant with 15 other gals. I ordered a $15 appetizer and water. Most of the other girls (trust fund babies) ordered bottles of wine, appetizers, steaks, and desert and then have the insensitivity to try to split the bill 15 ways, which would have cost me an additional $45 at a time when I still hadn’t made my first real estate investment. Allowing yourself to be taken advantage of is NOT frugal!

    • margie kohlhaas

      You’re exactly right. I can count the times when I had no money so I ordered inexpensively. I felt that it was insensitive for friends to order bottles of wine and try to split the cost when I never even had a glass. Now that I’m in a better situation I pick up the tab for people when they are less fortunate. I just think that if people are ordering extravagantly then they need to be aware of others who are only ordering minimally or not drinking.

      • Craig Curelop

        Hey Jessie/Margie,

        I agree with you here. However, I think those instances are few and far between. Usually the bill is pretty similar for everyone (plus or minus a few bucks). When there’s 15 other people ordering exorbitant amounts of food while you are nibbling on an appetizer. It make sense to have someone pay for your tab and you pay them back via Venmo, Paypal, or if your old school…. cash.

  6. Great article. Warren Buffet also had beach front house in one if the best cities in South Orange county. He sold it recently for sevetal million dollars. I guess a lot of people just iqnore this.

  7. Derek Abrams

    The distinction you make is clearly stated. Frugality is an appreciation of value – especially of time, which cannot be banked. Whereas being cheap is a love of money at the expensive of others.

    To be clear on Buffet — he lives in a home he paid $31,500 for, and lives on a salary of $100K/year. And according to video interviews I’ve seen, he primarily eats one of two McDonald’s breakfast when in his hometown, on his way to the office. And he knows the exact amount of cash he will need for the transaction when he will need, before he leaves the house.

  8. John C.

    We all have friends of different means. I’m sure my wealthier friends don’t mean to take advantage of me when they order wine at dinner. It’s just easier to split the checks equally. We still routinely say No to the more extravagant outings. I have no issues with telling people that I can’t afford to, or it’s not in this month’s budget.

    And, conversely, when I hang out with friends who make less money than me, I’m not trying to take advantage of them by ordering a few beers. If it’s just me and one or 2 others and I realize that one of them hasn’t ordered anything but a burger, I will make it a point to insist that he shouldn’t pay as much.

    But, that’s not very practical when you’re with a dozen people.

    So, I don’t think people are necessarily taking advantage of others when most of the table is ordering wine. They’re just all having a good time.

    And, if it happens more than once where I’m outspent, then I can simply say NO to hanging with that group. I can’t afford it.

  9. John C.

    I don’t know about modern systems, but as a server in my teens it was a pain to split checks for tables. Splitting it down the middle wasn’t too bad, but multiple ways? And then having one out of 5 paying a different amount? Or everybody paying their own individual share?

    I can’t imagjne that’s fun for the server. Lol

    The server would say that that’s cheap and taking advantage of him! Lol

  10. Cheapness is being stingly; it is pervasive. It’s really a selfish state of mind. Frugality means earning independence, being able to buy for yourself and others things that are meaningful. Cheap people see giving as having to be reciprocal – if they give something, they are looking for something back! They see money as an end as opposed to a means to an end.

  11. Joe Splitrock

    Some people reading this may want to call themselves frugal, but in reality they may be cheap.

    Are you the type who is always bartering on everything, trying to suck every last penny out?

    Are you they person who orders free water to drink with their meal, enjoying several free refills by your waitress then end up tipping just under 15% (even though they worked just as hard to fill your water as your friends beer)

    Are you always trying to bum a ride somewhere to avoid using gas, then don’t offer to chip in your fair share?

    Do you avoid doing simple repairs or improvements to your rental property to scrimp every penny? Like have you told a tenant to deal with something broken or do you buy used appliances? Do you nickel and dime tenants with fees?

    Just a few examples, but the point is many frugal people are also cheap. The lines are really blurred in this area. Some of the richest people got that way by being cheap / stingy. Generosity is not always a strong suit of frugal people.

    • Mary Ann Aulbur

      What is wrong with used appliances in a rental? What is wrong with fees for tenants -late fees, lockout fees, pet fees, etc.? It may depend on the type of rental you manage, but to say it is being stingy makes you sound like a renter not a business person. Landlords keep costs down. But if we are smart we fix things so our investment doesn’t deteriorate. And what is wrong with bartering? That can save a lot of money/time.

    • Craig Curelop

      Great additions here, Joe. I agree with all of your points. Though, I do not think used appliances are necessarily bad. If they are in good condition. Buying them in poor condition such that your tenants are impacted is a problem.

  12. Madeline P.

    Great post Craig! I’ve been called a “jew” most of life. I can live with that. I didn’t think twice about paying for my father’s medical bills, nor did I think twice about purchasing an apt for mom. However, I do pack my breakfast, lunch, snacks every day. I mostly drink water at restaurants. And yes, one bill when going out to dinner. 🙂

  13. Erika G.

    Great post. When I was younger, I was never frugal nor cheap – especially when I started working since I am earning my own money. But when I became a mom, it all changed. Well, not quite.. I still love spending money for my kid, just that I became frugal and cheap when it comes to myself.

  14. Jordan Lowe

    Good post! I’m going to get nitpicky and differ on the restaurant bill-splitting. If there’s going to be a vast difference in meal price, I’d suggest to let one person pay and then use one of the many cash apps to split the bill!

  15. ryan foote

    Warren Buffett is one of a kind, no doubt about it. He did not use the property in California very much from what I understand. (his first wife liked it there) Bill Gates by contrast, lives in one of the most expensive homes in the country… Everyone has to balance between their investment goals and a lifestyle that they can be comfortable with.

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