Home > Personal Finance > Thrifty Vs. Cheap: How to Really Tell the Difference

Comments 0 Comments
Advertiser Disclosure


People often use the words thrifty and frugal interchangeably with cheap. However, though they relate to saving money and their differences seem small, the attitudes behind them are unique. When does trying to save money cross the line between thrifty and cheap? The answer is subjective, but to get an idea, we asked some financial and etiquette experts.

Price Versus Value

Saving money has a lot to do with price tags, but the true cost of a purchase often goes beyond what you pay for it. Car shopping is one good example: If someone buys an inexpensive used car because it costs less upfront than a newer one, they could end up spending a lot on maintenance, said David Rae, a certified financial planner with Trilogy Financial in Los Angeles.

Here’s another example: It may be less expensive to make a monthly lease payment instead of a car payment, but you could wind up paying fees if you go over the mileage limit. Putting off car maintenance can also be a big hassle. A frugal person uses a coupon to change her car’s oil, Rae said, while a cheap person doesn’t change it at all.

The difference between being frugal and cheap also applies to air travel. “Getting to my destination early and spending an extra day with my family is worth $100,” Rae said. Values aren’t universal — some people don’t care about layovers, for instance — but focusing on the sticker price rather than the big picture is where you’d draw the distinction.

“Just being cheap would often lead a person to not spend money or only consider price instead of considering what they’re getting for that price, and that’s what I think a frugal person does really well,” said Carlos Sava, a portfolio manager at Clarendon Capital Management in Arlington, Va. “They not only consider price but they consider the value that they’re getting for that price.”

Why Being Cheap Can Be Selfish

How you manage money is nobody’s business, but being stingy can affect your relationships. Jodi R.R. Smith, who owns the etiquette service Mannersmith near Boston, said it’s important to be thoughtful when your spending involves others. “A cheap person finds something they don’t have to spend a lot of money on and gives it to you with no relationship to your likes or dislikes,” she said. “A thrifty person looks for a bargain on what’s appropriate for that person.”

And yes, you can be cheap even when you’re spending. Let’s say you invite someone out who expects you to treat. Smith says it’s reasonable to expect them to reciprocate eventually, but expecting them to spend as much as you did before isn’t realistic. The cliché “it’s the thought that counts” really applies here. “‘If [you’re thinking] I spent this much on you, so you have to spend this much on me,’ that would be a cheap mindset,” Smith said.

Of course, frugality can have its downsides. Smith gave the example of declining a night out with friends because you’re saving for a trip. You might need to plan to make sure you’re only spending on things that are really important, and there’s the possibility your friends won’t understand. That said, spending beyond your means and going into debt for the sake of a social life isn’t sustainable.

“I want to make sure that people understand that being thrifty or frugal is not negative from an etiquette perspective,” Smith said. “For someone to be careful about where they spend their money is a very commendable thing.” Just remember: “You can be thrifty and frugal and you can still be social and thoughtful,” Smith said. This holiday, strive to be all of those.

More Money-Saving Reads:

Image: monkeybusinessimages

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team