﻿I have a confession to make. I have a problem. I have excessive cheap disorder Haha.
No… I’m just kidding. I’m not that bad. Or am I… But in all seriousness, for many of us who are
working hard to save money so we can one day enjoy the freedom of being financially independent,
we could at times struggle with being little too cheap versus being smartly frugal. Hi, if you are
new to the channel, my name is Tae from Financial Tortoise - a channel dedicated to helping the
Sandwich Generation Master Money and achieve Financial Security. And before I go on, if you
have yet to download your free copy of “Sandwich Generation’s Guide to Financial Security - 10
Steps to Securing Your Family’s Financial Future!” please go to my website at financialtortoise.com
and do so. I send out weekly newsletters with other great tips on mastering your money and I
wouldn’t want you to miss them. Being frugal with money is something to be commended for.
In a world filled with extreme consumption, you should be commended for not following the herd.
However, in the spirit of being frugal, we could easily cross over into the world of being too
cheap. And I personally don’t think this is a healthy place to be at with our money.
Being extremely cheap can not only damage our emotional health, but damage our relationship with
others and most shockingly, doesn’t make that much of a difference in our overall finances. So, first
how are being frugal and being cheap different? We often use these two terms interchangeably. We
have a friend not wanting to spend money on that $5 coffee and we call him or her frugal and cheap
at the same time. But to bucket these two words together really is a disservice. There is a clear
line between being frugal and being cheap. Yes. Both frugal and cheap people aim to save money.
But the way each person goes about that is quite different. A frugal person doesn’t hate spending
money. They just don’t like to spend it on things that doesn’t matter to him or her - things such as
for status, prestige or ego. On the other hand, a cheap person just doesn't like the idea of
spending money. No matter what. They are focused on spending the least amount of money possible.
At all times. A cheap person is focused on buying the cheapest option every time.
A frugal person is focused on getting the most value for his or her money. Growing up,
I of course didn’t know the difference. I was ingrained with the idea that spending less
always trumped spending more. I don’t think I even know what the word value meant. So whenever
we went shopping for new shoes, my mom would take us to a Payless Shoesource. God bless them because
without them, I don’t think my mom would have even considered buying new shoes for us. They always
had deals and you could walk out with a decent looking pair of shoes for sometimes under $15.
And this habit carried over to my college days even when my mom wasn’t the one taking us to
Payless. I was running more often in college and these $15 shoes would just wear down after a few
months, which really frustrated me. At the recommendation of a friend that ran with me,
I one day decided that I would invest in a nice running shoe from Nike. Close to $100 for a brand
new pair of running shoes. I had never spent that much money on anything at the time and was
quite nervous. But I was tired of my cheap shoes constantly falling apart so I made the purchase.
And man. Was this a great purchase or what. Not only did this pair of running shoes last me the
rest of college, it was literally the lightest shoes I had ever had. It was made specifically for
runners and I knew I could never go back. And the best part was because I wasn’t shelling out $15
every few months for a new pair of cheap shoes, in total it actually saved me money. Cheap people
want to save money above all else. They willingly sacrifice quality and their time to squeeze out
every dollar they can from a purchase. In the case of my $15 shoes, because I was being cheap,
I was willingly driving to a store half an hour away every few months to save what I thought was a
lot of money in the long run. Where in actuality, I wasn’t only sacrificing time and quality,
but money as well. And before you think I was able to cure myself of the cheapness disease,
you’d be happy to know this is something I’m constantly struggling with today.
My kids often wear their shoes way beyond their life expectancy.
And don’t even mention their clothes. My son, who is 8 now, still wears the same
pajamas from when he was 5 years old. If my wife didn’t slap some sense into me at times
My kids might still be sleeping in their baby cribs. Frugal people look at cost in the context
of total value. They factor in important considerations like quality, longevity, and
time savings. Not just the cost alone. Sometimes, yes. The cheapest item can offer the most value.
But really wise frugal people don’t just focus on the price. They consider cost as one of the
factors to consider together with quality and satisfaction when looking to purchase an item.
And frugality is a crucial habit you want to develop if you want to accumulate real wealth.
Benjamin Franklin is known for many things, but not many people realize that he is also known
for his frugality. He wrote “Beware of little expenses; a small leak will sink a great ship,”
In today’s consumer oriented society, finding someone who is frugal is rarer than finding
a middle aged man at a BTS concert. It is estimated that less than 3% of the US population
will become first generation millionaires. And the common trait among these self made
millionaires is their frugality. Most live in middle-class neighborhoods and drive used cars.
They don’t like to display wealth. Friends and family usually have little clue that
they are rich. And the key to their financial success is based on a foundation of strong
defense - frugality. Frugality requires modesty, humility and discipline. Because you have to
delay gratification and not think of yourself as being entitled to status, comforts or showy
extravagance. Rich people stay rich by living like they are broke and broke people unfortunately stay
broke by living like they are rich. Millionaires have mastered the art of controlling expenses.
But in the spirit of being frugal, we can quickly cross over into the world of being cheap.
And that I mentioned earlier is not a healthy place to be with your money. Frugality will help
you grow your wealth, but ultimately, the more you accumulate many of you will realize that
money isn’t everything. Most wealthy people I’ve met actually spend less time thinking about money
as their bank account grows. They’d rather focus on enjoying life rather than counting every penny
they have. But a cheap person, who might have accumulated the same level of wealth won’t know
how to enjoy life. They only think in terms of having money, thus naturally hoard it. They can
also make other people extremely uncomfortable because they dwell so much on how much something
costs constantly and they are afraid of spending. And the most damaging of all is that when they are
so embedded in the mindset of being cheap, they don’t know how to be generous with it. I firmly
believe that wealth, once it has reached a point of providing you the basics of what you need,
can serve our world better when it is generously shared. But a cheap person will never share his
or her money. Not with anyone or to any cause. And if you do consider yourself to be a generous
person, if you could do me a small favor and hit that like button, I would much appreciate it. It
really helps with the YouTube algorithm and allows videos like this to be shared with more people.
So if you think you’ve been teetering on the line of being cheap, how can you learn to become more
frugal? Let’s talk about a few anchoring principles. One is to think of value. When
shopping, don’t just look at the price, but assess the overall value of what you are purchasing. In
my example of my running shoes. When I was buying $15 running shoes at Payless every few months,
I was looking only at the price, not value. But when I stepped back to assess the overall
value of my running shoes, the $100 Nike shoes made much better sense because it was of a much
higher quality - improving my running and reducing the potential for injury. Don’t use price as the
bottom line. Use value as the bottom line. Another way to rid ourselves of the cheap disease is to
consider time. Most often when we are looking to save money, we don’t consider time as a valuable
asset we must preserve. In TLC’s reality TV show “Extreme Cheapskates,” there is one episode where
a man spends hours searching for change around his home and around town. By the end of the search,
he comes up with little over $7. Now the question we should all be asking is, is hours of your time
worth $7? What else could you have been doing with your time? Cheap people are driven by saving money
regardless of time. They are happy if they can save $1 after 10 hours of work. Frugal people on
the other hand value their time more. They would rather spend that dollar and spend the extra time
doing more valuable and productive activities. A third principle to being frugal vs. cheap
is to not be afraid to spend money. I know, this sounds a bit counterintuitive to building wealth,
but hear me out. Those who are cheap are very afraid of spending money. They willingly sacrifice
quality, value and time in order to gain some short-term savings. But this comes at the cost
of really never enjoying life. Ramit Sethi, the author of “I Will Teach You To Be Rich”
has a famous saying “Spend extravagantly on the things you love, and cut costs mercilessly on the
things you don't.” I really love this statement. When it comes to saving money, ironically saving
money isn’t the final end state. We save so it can provide us a sense of security and comfort.
And we save so we can enjoy life with the money that we saved. Those who are frugal
have mastered the art of saving money. But they also know how to resourcefully spend their money.
Maximizing their dollar so they can fund big picture wants and dreams. For me, the biggest,
yet the most satisfying purchase I made recently has been buying back time. If I was still stuck in
the cheap mindset, I could never have considered willingly taking lesser pay because that meant
I couldn’t save more. But because I was able to recondition my mind towards a more frugal mindset,
I saw the true value of time and was willing to pay for it. If you want to learn more about the
true value of buying back time in your life, check out my video here on “Money Can Buy Happiness.”
Thank you guys for watching and I’ll see you in my next one.