No one wants to be considered a “cheapskate,” but there’s a big difference between being cheap and frugal living. The benefits of living frugal are plentiful but to truly understand what makes being cheap and living frugally so different, we take a look at some very wealthy people who have adopted this way of life and are thriving because of it.
The Difference between Being Cheap and Frugal Living
Unfortunately, being cheap and living frugal are often used interchangeably when in fact they are quite the opposite; one is typically considered a negative attribute while the other is usually considered to be a positive attribute.
You know the saying, "Too much of anything is bad"? Well, being cheap is penny-pinching to the extreme. At best, it’s obnoxious; at worst, it’s unsafe, harmful or illegal. The TV show Extreme Cheapskates has some stellar examples of obnoxious cheapness, like scooping leftovers off another person's dinner plate at a restaurant. But any time you are sacrificing your own health and safety, or worse, someone else's, just for the sake of saving a few dollars, it's never a good thing. In these cases, being cheap can ultimately lower ones’ self-esteem, embarrass others, and sometimes even alienate friends and family.
What it means to Live Frugal
On the other hand, frugal living (sometimes considered thrifty living) is about prioritizing your spending so that you have more money for the things you really want and need. People following a frugal lifestyle think about the bigger picture, and often follow a budget regardless of how much money they make. While being cheap can mean sacrificing quality, value, and time for short-term savings, a frugal lifestyle involves being resourceful—and never at the expense of others. Canada’s Huffington Post has highlighted a few great examples of how to live frugally and save money:
- Taking lunch to work instead of eating out
- Taking advantage of coupons and promotional offers
- Limiting social outings, vacations, concerts, and sporting events
- Limiting unnecessary expensive purchases (clothes, cell phone upgrades, etc.)
You can find a lot of other great frugal living ideas and tips for how to live on less money in a variety of blogs under our “saving money” section.
A Financial Expert Weighs in on Frugal Living
Toronto-based financial expert Barry Choi talks a lot about the benefits of frugal living and frugal shopping on his blog Money We Have. For example, while he still spends money on a nice meal or gaming from time to time—things he can afford that bring him joy—he still uses grocery store flyers and searches for cheap airfare; however, he won’t spend 10 hours searching for airfare to save $100; his time is worth more than $10 an hour. (Another great example on Extreme Cheapskates: A man spent 7 hours searching his home and around town for money, and only came up with $7. Anyone's time is worth way more than just $1 an hour!)
Barry’s final thought in one of his recent blog posts sums up the frugal life in a nutshell: “From using coupons to looking for the best deal, frugal living will always be a part of me. Okay, if I win the lottery, I would totally buy a new house, but I’d probably still wait three years before I upgrade my phone.”
Lifestyles of the Rich and Frugal
You may think that people who make millions of dollars a year—even billions—wouldn’t live frugally. But that’s exactly why some of them were able to acquire so much wealth to begin with! (On the other hand, there are plenty of examples of famous folks who spent their fortunes only to ultimately declare bankruptcy when the good times came to an end.) Here’s a quick look at some wealthy people who have embraced different forms of frugal living.
1. The British Royal Family
Just because you’re royalty, doesn’t mean you shouldn’t watch your spending! Queen Elizabeth II reuses gift-wrapping paper, mends her clothing instead of replacing it, and has posted signs around Buckingham Palace reminding staff to turn out the lights when they aren’t using them. In addition, Kate Middleton and Princess Anne are fond of recycling clothing, and Prince George and Princess Charlotte have both been spotted wearing clothing that Princes William and Harry wore thirty years ago!
2. David Cheriton
One of the wealthiest Canadians, technology investor David Cheriton insists on living a frugal lifestyle and despises needless spending. “I’m actually quite offended by that sort of thing,” he said in an interview once. “…these people who build houses with 13 bathrooms and so on, there’s something wrong with them.” Cheriton drove a 1986 Volkswagen until he bought a 2012 Honda Odyssey just a few years ago. He also resides in the same home he has owned for over thirty years, and even cuts his own hair. He went to Maui once and windsurfed, then felt awful about the money he spent. (Now that's a little excessive.)
3. Sarah Michelle Gellar
That's right, even Buffy the Vampire Slayer isn’t above clipping coupons. Sarah Michelle Gellar who starred in the ground-breaking series, which catapulted her to stardom, has a net worth of about $20 million. But even that doesn't stop her from living frugal: “I cut coupons to this day...why should I pay more? If there’s a coupon, I’m going to use it. Just because you’re successful doesn’t mean that you should be errant in your spending.”
Truer words have never been spoken. The actress and entrepreneur also doesn’t like making big purchases. “I will go back and stare at a leather jacket for a couple days before I even purchase it.” She gives herself some "cooling off" time before buying a big-ticket item—we like that!
4. Jay Leno
He’s known for owning a collection of classic cars, so it may come as a surprise to learn that former The Tonight Show star Jay Leno believes in frugal living. “When I got The Tonight Show, I always made sure I did 150 [standup comedy show] gigs a year so I never had to touch the principal,” Leno says, and to this day he hasn’t touched that income. If you’re able to create two streams of income, this tactic could work for you; otherwise, be sure that when you come into some money you use it to pay down debt, save it up, or invest it rather than spending it on something you don’t need.
5. Kelly Olynyk
Toronto-born NBA player Kelly Olynyk—who signed a contract worth an estimated $50 million with the Miami Heat—is most comfortable in a T-shirt and ball cap, leases a Toyota Tundra pickup truck, and uses an iPhone 5 while in Canada. “I don’t wear designer clothes or shoes, I don’t drive a fancy car,” says the frugal living 28-year-old. “I’ve never taken a vacation. I wouldn’t know what a vacation is.” But for those of you who are interested in vacationing, here's how to do it while saving money: 7 Steps for Vacationing on a Budget.
Contact Credit Canada for Free Advice on How to End Debt and Live a Frugal Lifestyle
Many of us are afraid to live frugally for fear of being labeled a “cheapskate,” but they are two very different animals. Living frugal means following a budget, avoiding impulse buys, and prioritizing your spending to pay down debt and save up for the things that are truly important to you. Plus, once you’ve learned how to manage your money and make it work for you, it can be a real confidence booster! If you’d like to learn more about the frugal lifestyle and how to live on a budget, contact Credit Canada for free financial advice or to talk about your debt situation. It’s free and confidential, so don’t hesitate to call us today at 1.800.267.2272.
