Be Frugal, Not Cheap

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A key method for spending less than you earn is to cut your costs on the things you buy every day. Reducing expenses and paying less than retail for the items you normally buy is commonly referred to as being frugal. Frugality is often confused with being cheap and in many cases the two terms converge and the line between them becomes blurred. I personally feel the big difference between being frugal and being cheap is that cheap people are just inconsiderate. When you start to pinch every penny and cut out all fun you have started to cross the line. If you start passing on the office envelope every time someone retires you have crossed the line.

The key to frugality is to look for the best value in what you are buying. I like to buy store brand black beans because the price is lower and to me the flavor and quality is the same. I won’t buy store brand peanut butter because the flavor isn’t what I want out of it. When you are being frugal you want to maximize your dollar with costing you in opportunity or productivity costs. You could spend your entire Sunday comparing ads and driving back and forth across town to get the best deals on everything you buy, or you could find the lowest cost for the majority of your purchases and shop at one place.

Simple Ways to be Frugal Without Being Cheap

Cook at home: I am not saying to don’t go out to eat, but cook at home more often and cut back on going to out to eat. If you want to save more on eating at home try to plan your ingredients to maximize their usage. For instance you could make three meals out of one chicken. Another great way to cut back on the costs in the kitchen is to make at least one meal per week without any meat.

Bring a bagged lunch to work: There are a lot of people who eat out for lunch almost every day at the office. I am one of those people. I work from home though so I am not in the office that much, if I were I would probably be broke. If you are in this boat than you are probably costing yourself a lot more than you really need to. I am not saying never go out to eat, just cut back or even just start drinking water when you go out.

Hit the local library: a while back I decided I was going to test out our local library system here, after I did it I realized I was insane for not doing it earlier. With a little bit of patience I can read any book I want without having to pay for it. Of course the key here is to make sure you return the book on time but I have been lucky so far.

Watch your utilities usage: There are a ton of ways you can save on your utility bills like switching from incandescent to fluorescent light bulbs, installing a programmable thermostat, cutting down on vampire power, and washing your clothes with cold water can all save you a lot more than you would initially think.

Start a garden: While I am not completely convinced you will save money by growing a garden like I did I see the potential. Next year I am going to focus on vegetables I can can myself and save for later. Another great thing you could grow is fruit. Fruit can get expensive so if you can get your own berry bushes and fruit trees going you can really maximize your return on investment.

If you get a raise hide it: This isn’t exactly a frugal tip but it works great. If you don’t need the money don’t ever let it hit your bank account. The last time I got a raise at my office I increased the amount of my 401k contributions to match my raise. I didn’t need the money at the time and by taking it out before it hits my bank account I am never going to miss it.

Adopting a frugal, or moderately frugal lifestyle in conjunction with working to increase your income will increase your positive cash flow and allow you to reach your goals of financial freedom quicker.

Photo: (coneslayer)

This article is part of the Suburban Dollar Back to the Basics series. I plan to cover remedial personal finance topics which aren’t as sexy, or typically covered, in the personal finance blogosphere. My hope is for people to get a better understanding of basic personal finance without boring you to death, hopefully you will be able to share these posts with family and friends to get them into personal finance and have a good foundation of knowledge.

{ 3 comments… read them below or add one }

1 a.b. August 25, 2009 at 9:41 am

I would have to add that a big difference between frugal and cheap is saving yourself money with an intentional cost to others, i.e. shoplifting because “some loss is built into the price.”

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2 Jason R Fisher August 25, 2009 at 9:53 am

Good job on hitting up the basics, we can all use a reminder even if we have been working on these things for some time. I still need to get over my lunch time habit.

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3 CheapGuy August 26, 2009 at 11:42 am

Thanks for the tips! You can also check out http://www.ueatcheap.com for cheap eats

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