One more bite-size idea from Ramit Sethi, in one of my top personal finance books, I Will Teach You To Be Rich
Think of the word frugal. What comes to mind?
For me, I think of a scrooge, penny-pincher who hates to spend money. A person who is a real pain to deal with when it comes to financial transactions, because he/she wants the lowest price and will do anything, will negotiate forever, until they get it. Put simply, the word frugal does not have positive connotations for me.
Or, at least it didn’t, until uncle Ramit exposed my benighted ignorance and showed me the enlightened path. He taught me that what I was defining as frugal, was actually cheap. The following is an excerpt from a chart in his book:
CHEAP PEOPLE VS. FRUGAL PEOPLE
| Cheap | Frugal |
| Cheap people care about the cost of something. | Frugal people care about the value of something. |
| Cheap people try to get the lowest price on everything. | Frugal people try to get the lowest price on most things, but are willing to spend on items they really care about. |
| Cheap people make you uncomfortable because of the way they treat others. | Frugal people make you feel uncomfortable because you realize you could be doing better with your money. |
| Cheap people are unreasonable and cannot understand why they can’t get something for free. Sometimes this is an act but sometimes it’s not. | Frugal people will try as hard as cheap people to get a deal, but they understand that it’s a dance, and in the end, they know they don’t intrinsically deserve a special deal. |
See the difference? Cheap people are lame. Frugal people are wise.
Frugality isn’t about cutting your spending on everything. That approach wouldn’t last two days. Frugality, quite simply, is choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don’t love.
Amen, my Indian friend. Thanks for setting me straight.
Tags: frugal vs cheap, I Will Teach You To Be Rich, Ramit Sethi
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I'm Damien Olenslager. I recently graduated debt-free from college and now work in the tax industry.
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