I wear a Rolex watch and dress in smart clothing from the likes of Zegna, Armani, Canali and Hickey Freeman. I know that this description probably doesn’t sound like someone who is frugal, though it maybe sounds like a douche who likes to show off. The truth is though, I’m both – I am frugal and yeah, I do like to show off. I’m just not cheap.
Now I know what you’re thinking – frugal is just a nice way to say cheap. As in, he squeezes a nickel so hard the Indian cries (old joke but you get the idea, or maybe you don’t – in that case, check it out on Google). Yeah, I hate spending money needlessly.
My girlfriend is the exact opposite of course – if something isn’t perfect, she wants to toss it, even if it cost a lot of money (honey, just because the brand new suitcase got a tiny rip in the lining doesn’t mean we toss it in the trash) but I digress.
Bottom line though is that frugal and cheap are two very different things which point to very different types of people. Let me give you an example of a cheap person:
I have a good friend who has millions in the bank, literally. She will happily come over to my place and drink my expensive wine and dine on my food; but when it comes to bringing something to the dinner party, she usually brings this horrible swill that makes two buck chuck look good by comparison. It’s cheap and that’s all she’ll bring. Why? Because unlike me, she isn’t frugal – she’s just cheap.
Okay, so let’s break this down. I’m a frugal person. I travel a lot. I wear nice clothes and I wear a Rolex watch. However, I also am smart enough to understand that a used Rolex watch, which costs half of what a brand new one costs looks exactly the same as a brand new one, especially after you send it out for servicing. Unless I tell people it’s used, they’d never know (of course, admitting it publicly here kind of lets the cat out of the bag but whatever…).
Ditto for clothing – sure, I could spend $3,000 on a nice Armani suit at the showroom. Or I could spend $300 for a recent model suit in perfect condition which my excellent tailor will customize for me and save me $2,650. In other words, I’m frugal – I’m careful with my money. I’m not cheap though. A cheap person would go to the Salvation Army and buy a stained polyester suit just because it’s cheap.
Let’s put this a different way. As a frugal person, I recognize that I look better in that $3,000 suit than I would in a cheap polyester POS. I know that in my work as a salesman, I will make more money wearing that fancy suit than I would wearing the junk. People like to buy from successful people. It’s just a fact. So I get there is value in wearing the good suit and the fancy watch.
However, I also understand that I work hard for every dollar I earn – make no mistake about it, sales is a hard job and it’s not something everyone can do and certainly not something everyone can do well. It takes a lot out of you to do the job well. As such, I won’t just willy nilly part with my money because something looks nice and shiny. I want to know what kind of value I’m getting for my money.
So again, there’s value in my Armani and Brioni suits and as such, I buy them and wear them and feel great in them. I also make more sales because I wear those things along with yes, my Rolex watch. That’s not being spendy – that’s being smart. I invest money in my appearance because it means I’ll make more money in the end.
Once I’ve determined what value I’ll get for my money, I then turn to another question – can I get the same value at a cheaper price? In other words, yes, I can go and buy a brand new custom made suit at Armani and spend the $3,000-$5,000 they want for it.
However, I’d feel like a sucker by doing so when I know that I can buy a practically new suit which someone else wore a few times and then dumped for the latest shiny object. I can pick up that same suit for 10 cents on the dollar and my very excellent private tailor will make it look as if it was made for me all along.
Another difference between me as a frugal person and someone else as a cheap person is experiences. I’ve mentioned quite often how much I love to travel. I’ve been all over Europe and took my girlfriend on a fabulous trip to Prague a little over a month ago. We dined at an amazing restaurant called Alcron. It’s a Micheline star restaurant and was a fabulous experience.
The total tab for the evening was quite expensive but as a frugal person rather than a cheap person, I was happy to pay it. I knew that I got value for my money – my girlfriend and I were pampered by the staff of five waiters (five waiters for a total of 8 tables mind you), including a very knowledgeable sommelier and I even left them a generous tip.
By comparison, someone else I know had been visiting me here in New York about two years ago (I’m not naming names because she is someone close to me who would be pissed if I did that). She offered to take me out for dinner and I was happy to accept. She couldn’t understand though why I thought that going to McDonalds was not “going out to dinner.” That’s an example of a cheap person as opposed to a frugal one.
Another thing that separates the frugal from the cheap is their storage. I have lots of stuff in storage – I have thousands upon thousands of dollars worth of silver in storage and I also have lots of quality clothing in storage. That’s because I’m frugal – I understand the value of things. A cheap person would have a storage space filled with moth eaten clothes and faded blue jeans because they can’t bear to throw anything way, even junk.
Look, the bottom line is, if you’re cheap then you’re just wasting your life. If you’re frugal though, you’re a smart person who understands that nothing is free in this life and so you have to get value for your money.