The keyboard I’m clacking away on sits atop a mid-century Heywood-Wakefield kneehole desk. I bought it for a frugal $252.63 in 2018 at a local auction. It exemplifies my personal experience with the difference between frugal and cheap. At the time, I’d been shopping for an office desk, on and off, since 2013. Let’s take a look at this anecdote to explore the question: “cheap vs frugal: what’s the difference?”
In the meantime, I was struggling with a cheap multi-level black pressed particle board and glass wobbling monstrosity from a big box office supply store. I’d purchased it only a few years earlier. The plastic “wood grain” veneer was already peeling up off the particle board in spots. The hefty 30″ LCD I used with my workstation caused the upper-level platform to wobble so badly when moving the desk whatsoever—naturally, on plastic wheels. I was afraid the monitor would topple over and crush more than a toe one day.
I got a cheap desk—for cheap. On sale, I managed to snap it up for $50. After an hour of putting it together from the flatpack it came in, it worked just fine for a year. That’s before mild wear and tear loosened the numerous screws. Little movements were enough to start stripping the particleboard drill holes and kick off the wobbly desk dance.
I’d suffered the lure of cheap due to still being in an early step to financial freedom. I didn’t yet understand the value of quality over cheapness.
Once that Heywood-Wakefield desk made itself at home under my keyboard, the old black wobbler found its way to a new owner. I let it go for a tenner on Craigslist. I’d suffered a $40 net loss and a frustrating handful of years with wobbly desk syndrome. Sure, it held my workstation off the ground during that time. That’s about all it did. A couple of cinder blocks and a board wouldn’t have made me think we actually lived atop California’s Big One epicenter every time I dared breath in the general direction of my desk. But, hey—it was cheap.
What’s the Difference Between Frugal and Cheap?
You may be thinking: “Well, okay, one is a cheap desk that falls apart after some years. The other is an expensive desk that will last longer. But you paid six times the price for it!”
You’d be right. Let us set aside the fact that there’s a tragedy of the commons when it comes to mass-produced throwaway junk polluting landfills. We’ll ignore the irritation I had with the wobbling wonder, minor as it may be in the grand scheme of things. There is one key aspect that sets the two purchases apart which has been ignored so far, though. That is the market value of the Heywood-Wakefield Kneehole desk that’s decades old.
As the embedded Antiques Roadshow clip above shows, whenever I decide to sell the desk, it should return a multiple of what I paid for it. I just need to keep it in reasonably good condition. This desk’s market value has increased over the decades due to a combination of inflation, lasting construction, and general desirability. There’s no reason to believe that market value will go down in the near future. The absolute price I paid is generally irrelevant.
Qualities of a cheap person and how to be frugal
As an example, these are qualities of a cheap person or cheapskate:
- Drives an unsafe vehicle and skirts safety inspections by bribing the inspector
- Buys a car with “no money down” and a very long debt payback period
- Aims to pay the lowest cost per calorie for groceries
- Intentionally shows up late to social gatherings at restaurants to avoid buying expensive meals out but eats other’s leftovers
Often this person comes off as stingy, unwilling to spend money even where it makes sense to. A cheap person’s only concerns are the absolute cost without considering the value received from spending money.
Meanwhile, a frugal person would take a different approach. Here’s how to be frugal but not cheap in the same scenarios:
- Purchases a used vehicle to mitigate depreciation with a certified safety inspection
- Makes large purchases by paying in full to avoid high debt interest rates
- Buys off-brand groceries to save money and focuses on nutritional & health value per dollar
- Suggests having social gatherings as a potluck at their place instead of a restaurant to save money but build healthy social relationships
Frugality is a focus on overall value, accounting for more than just the absolute price of an experience, service, or product. A cheapskate is solely concerned with the specific and immediate cost.
Good value + (purchase price < market price) = frugal purchase
A key component of the difference between cheap and frugal is value. It’s not necessarily quality—which is certainly nice, but quality can be neither frugal nor cheap. A frugal purchase, or good value purchase, is derived from the price you pay relative to its market value. It should also be of significant use to you: not destined to wind up in a landfill anytime soon. In sum, a low purchase price compared to market price added to high, lasting usefulness to you—defines frugality.
Part of our choice of city life vs country life was analyzing the total value of each housing choice for our personal situation. While buying a place in the country would have been cheaper in terms of the mortgage itself, it would have meant more driving and less walking for us. We also benefit from more free entertainment, culture, and city events.
Fancy stuff and expensive hobbies
This mentality lets us fill our house and our lives with some high-end objects. We have a teak dining set by J.L. Møller that will outlast both of us. It’ll do so while increasing in value, making it more of an investment than a furnishing cost. Buying it for $933.55 when the local market value exceeds $2,000 makes it frugal. Our Danish designed tabletop cabinet just found a new home as a gift for a very happy wife. The husband gleefully picked it up from us for $295. It’d served as an organizer for nearly two years for us. At a cost of $83.38, it was a solid money maker.
Careful shopping lets us “rent” many things we’d simply like to test within our lives. Thinking about selling a thing, when we buy it, helps us avoid immediate depreciation from new things. We don’t feel guilt from the expense itself or feel limited by the inherent traits of a FIRE budget.
Cheap vs Frugal in Hobbies
Last fall, I started getting into mountain biking. We live within a 10 minute ride of a solid 15-20 miles of riverside mountain biking trails. I’ve carefully biked through the connecting fire roads—and even occasionally on the actual MTB trails—with a hybrid bike. I wanted to take it up a notch.
My research showed mountain biking could wind up being a very expensive hobby. Buying a new $2,000 hardtail bike seemed crazy, just coming to the sport. I found a gently used 2012 Trek 29er with disc brakes and front suspension that needed a minor repair. After $100 for the bike and $30 part, I was zipping around the MTB trails for the season. My amateur skill wouldn’t notice the difference between the high-end, new hardtail. The 90%+ cost savings sure was noticeable, though.
I loved the rush and was getting more comfortable in technical sections every time I repeated a route. I rarely saw someone else on the trails-which isn’t too surprising when it’s 2 pm on a Tuesday. Everyone else is toiling away at the office. After the season, I decided I got a good enough feel for the sport. I figured I might have a sudden stop with a tree at some point, too. I needed a biking partner to safely keep this up and I didn’t have one.
It was time to find the Trek a new home. With the season over, lots of other folks were offloading their bikes on local marketplaces. With plenty of savings and no budget needs, I was in no rush to sell the bike quickly. I waited until the start of the next biking season. With Spring in full bloom, the bike sold quickly once posted for sale at a competitive price of $290.
The alternative cheap choice would have been to buy a mountain bike made by Huffy, Schwinn, or Hyper from Walmart. I could have had one for $100-200 the day I was ready to make the purchase. I wouldn’t have needed to be patient going cheap vs frugal. But, I’d have been riding a bike that wouldn’t retain its initial value (take a look at secondhand prices for those brands), while having a worse riding experience. Many experienced riders would even suggest they’re less safe.
Cheap vs Frugal: Price Paid is the Key Difference
That’s not to say these “investment” purchases or “rental” periods always work out profitably. Occasionally we’ll wind up with something we break, lose, or otherwise destroy the value of. Some things are simply hard to sell used—though I did once sell a toothbrush for a profit. Significant research to identify what purchase within a given hobby or interest that can hold its value is often required. It also takes patience to wait for a good deal and even more for a profitable sale on the other side.
When comparing the differences between frugal vs cheap, cheap is fast, and short term. Frugal is methodical and long term.
The point is that frugal decisions and careful planning can allow you to fit high-quality, high-priced stuff into a FIRE philosophy. FIRE is all too often tied to being cheap. Really, core tenants are more compatible with value orientation and frugality. The more expensive item, in absolute terms, can sometimes provide a better experience while you have it. Simultaneously, it can offer a profitable return when you’re done with it. This works when you have the extra funds available to make the initial purchase. Having extra funds for investments is a natural part of being on the road to FIRE.
Of course, the most frugal purchase of all is to buy nothing. That may be a reasonable goal, but most of us aren’t ascetics.
If you can consistently churn those frugal purchases through an appropriate market for them, powering your plan for financial independence, you might consider a mental trick of mine. It’s the idea that “everything is for sale”—a way to capture expected future value, which I’ve touched on throughout this post. It’ll let you turn your frugal mindset into a profit machine.
Where do you think it makes sense to be cheap vs frugal?
Let us know in the comments or on Twitter!