PerkStreet Financial

This guest post is brought to you by Lynnae McCoy of Beingfrugal.net. She loves to blog, especially about helping other get out of debt.

As the economy has struggled over the last couple of years, there’s been a renewed interest in cutting back on spending. Most of the time this is a good thing. Frugality is smart. But how do you make sure you haven’t crossed the line from frugal to cheap? Here are a few questions to ask yourself.

Am I thinking for the long term or the short term?

Frugality always looks at the big picture. Cheapness always looks at the dollar amount. When determining if you are being frugal or being cheap when making a purchase, consider the cost per use, rather than the price tag.

For instance, if you need a new desk, you could just go buy the lowest priced particleboard desk at your local supercenter. That might reveal itself to be a cheap move, however, when your desk falls apart within the year.

If you’re being frugal, you consider several different things. How much money can you afford to spend? Will your desk be used a lot? Do you have kids who will be rough on the furniture? After considering these factors, you will make a decision and buy the best quality desk that fits your needs and is within your means. In the end, you may spend more than your cheap counterpart, but if your desk lasts 10 times as long as the particleboard desk, you’ve actually paid less per use than the person who needs another desk in a year. That’s being frugal.

What’s more important: people or money?

A frugal person always considers others in their financial decisions. A cheap person only thinks about his financial bottom line.

When I was in college, I had a part time job waitressing at a small restaurant. I still remember a particular customer. He came in one day and ordered a sandwich and an iced tea. He was probably there an hour and a half, and I refilled his iced tea numerous times. I was an attentive waitress, yet when he left, he didn’t leave a tip. Not one cent. That’s cheap.

A frugal person pays for a job well done. A cheap person will find ways to cut costs at other people’s expense. A frugal person will opt to eat at a less expensive restaurant, rather than stiff a good waitress. A cheap person will choose the better restaurant and opt to skimp on the tip.

Are my actions honest or morally questionable?

If you even have to ask this question, you’re probably being cheap. Frugal people may go to great lengths to save a buck, but they do it within the realm of society’s rules. Cheap people think it’s OK to break the rules, so long as they don’t get caught. And in the end, cheap people end up making the rest of us pay more, because of their dishonesty.

A few years ago, when internet printable coupons first became available, I was excited. No longer did I have to buy a newspaper to get great coupons. However, my excitement was short-lived. Several stores in my area stopped accepting computer printed coupons, because some customers had made illegal copies of the coupons and redeemed them. This cost the store money, so they stopped accepting the coupons. And that decision hurt honest customers like me, who were now unable to use legitimate coupons.

The bottom line is that if you’re looking at the big picture and considering the effects on other people when you make your financial decisions, you’re probably safely on the side of frugality. If you even have to ask if a particular money-saving move is cheap, chances are it probably is.

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