The Difference Between Cheap Versus Thrifty

I used to have a hatred of spending money. Why buy lunch? It might not be very good and now I’m out $10. I’ll bring my own, thanks. Bad service? Too bad, little or no tip for you (I rarely didn’t tip, though).  I would travel 12 blocks out of the way to find my bank’s ATM so I wouldn’t have to pay a withdrawal fee. If I could get something for free, why not? I’ll take it. Or worse still, continue to expect it after it had been offered to me once. Why spend the money? It just wasn’t worth it.

On a trip to Manhattan during my college years, a bagel shop double-charged me for a sandwich, an amount in the neighborhood of seven dollars. Seeing this on my statement a few days later, I argued with them over the phone for three days to get a refund. A friend gently tried explaining to me that the time and energy I spent was not worth it, but I refused to listen. I wanted those seven dollars back, because it meant a drink or meal somewhere else.

In short, I was cheap. But I thought I was frugal.

The differences between cheap and frugal tread a fine line: after all, both types love to save money and what one person construes as cheap is another person’s version of thrifty.

There are key characteristics, though, that separate the two:

• A cheap person doesn’t want to spend money even though she has it. A frugal person also has money, but understands a meal with friends or a new pair of running sneakers extends beyond their value in dollars and cents. However, they’ll look for a bargain or won’t eat out all the time.
• A frugal person factors in time and value when deciding whether to pursue a bargain; a cheap person wants to save money every time, regardless of the item or of time and energy spent chasing said bargain.
• A cheap person feels entitled to getting something for free or at the lowest price possible; a thrifty person will shoot for a bargain but understands she isn’t entitled to a deal.
• A cheap person is inconsiderate of others. The most common example is leaving only $7 for her portion of a restaurant bill, when tax and tip means it’s closer to $9.

I engaged in all these behaviors – to varying degrees – well into my 20s. What I thought of as being financially smart – refusing to spend a few bucks here or scrimping there because it all added up in the long run – was, in truth, a form of penny-pinching that put me on par with Scrooge.

Living in an expensive city requires money-saving strategies, and as a freelancer, it’s a life of feast or famine. I did spend – eating out, getting drinks with friends, shopping. But Cheap Micaela was always present, warning me to look over the bill and make sure I didn’t pay more than I was supposed to, or she drove hard for that bargain. Living on a unreliable salary made me acutely aware of how much each dollar was worth, down to the last dime; I wanted to enjoy life, and genuinely thought I was, but it was at the expense of everyone else’s patience and my own time and energy.

While riding the subway one day, I was reading a book on personal finance and the author listed the characteristics of cheap versus thrifty. With horror and complete embarrassment, I realized I possessed all the traits of a cheap person. I looked up to see if anyone could tell, as if a neon sign was hanging around my neck, flashing on and off: CHEAP CHEAP CHEAP. I felt my cheeks growing hot as memories of being a miser flashed by, and I decided then and there, to stop being such a tightfisted bastard.

A mental overhaul was called for, a total psychological switch that meant undoing years of how I grew up, fighting ingrained cultural differences and changing what I perceived as normal spending habits. I had to learn to let go, unclench, and it was hard.

This entailed compromises that pushed me outside of my financial comfort zone but led to incredible personal growth and enjoyment. I ate out more; instead of dinner, however, I went to the restaurant for lunch, when the same entrée costs less. When it was for dinner, I spent only what I could afford and sweated through that lingering unease and discomfort until I came out on the other side. I continued to shop only sales, but spent more if it was a well-made item because it lasted, making it a better deal in the long run. I paid full-price for good quality running sneakers, but bought my workout clothes from TJ Maxx and Marshall’s. I bought a nice piece of furniture while also salvaging a street find.

It was painful in the beginning – those few extra bucks here and there made me cringe because I reflexively calculated where the money could have gone. Three or four times over the course of a month, and the sum added up to the cost of a cocktail or one-third of my weekly grocery bill.  It would have driven me to drink, except I wasn’t yet ready to spend money on a bottle of whiskey.