“It costs a lot of money to look this cheap.”
–Dolly Parton
“I buy expensive suits. They just look cheap on me.”
–Warren Buffett
GOOD THRIFT
It has come to my attention that some of you pursuing financial independence are, ahem, a little overzealous.
You all work hard to save money, and that is good. But the way some readers go about it concerns me. Thrift is good, but you can overdo it.
So, in this post, we will cover the difference between being thrifty and saving money (good) and being cheap or ugly/obnoxious (bad).
There is etiquette to saving. You just don’t want to be the person who does the financial equivalent of loudly slurping your soup in front of company.
THRIFTY VS. CHEAP
A thrifty lifestyle means that there is little wasted money. Thrift is an approach to life that balances your short- and long-term needs without wasting resources.
On the other hand, cheap means that you are so extreme in your thrift that you become ungenerous. And sometimes your actions are counterproductive too–like buying cheap shoes that do not last and cost more in the long run.
Everyone knows someone cheap.
For the record, neither Dolly Parton nor Warren Buffett qualifies as cheap (see the quotes above).
THRIFTY GONE BAD: UGLY, OBNOXIOUS, AND EXTRA CREDIT CHEAP BEHAVIOR
Unfortunately, we all know someone obnoxious. But, for our purposes, cheap ugly, and obnoxious people save money at someone else’s expense. It is one thing to save your own money. But it is another to put a cost upon someone else.
CHEAP AND OBNOXIOUS DISCLAIMER
I will give three concrete examples to show the differences between the three behaviors.
But I took some precautions.
First, all the names are changed to protect the guilty. Second, the resemblance between these ugly behaviors and actual events is strictly intentional. Third, I have seen behaviors like this before, but I have changed them a little so that they can’t be traced back to the perpetrators.
No. 1: JOHN’S THRIFTY COFFEE
I love coffee. But what can you do to keep down the expense of going out to the local coffee shop? Let’s talk about a theoretical person named John and go through the actions he could take.
Thrifty—John decides to save money and cut out designer coffee and those expensive designer lattes. Instead, he brews high-quality coffee at home to save money. He occasionally splurges and goes to the coffee shop with friends, but not often.
Cheap—John brews the coffee at home but buys bitter low-quality swill to save money. The coffee John uses tastes like charred sawdust. (Note: if only John is drinking the coffee and not his family, it is a victimless crime).
Obnoxious/Ugly—John goes to his bank to do business and drinks three cups of complimentary coffee there instead of drinking his sawdust blend at home.
Obnoxious Extra Credit—John goes to his bank, drinks three cups while there, and does not even pretend to do any business. For even more extra credit, John leaves the empty coffee cup behind for someone else to clean up.
Don’t be like obnoxious John.
No. 2: SUE’S THRIFTY GIFTS
Gift giving is not always easy, especially if you are trying to balance giving a quality gift to someone with saving money. So, in this example, let’s use a fictional character named Sue to see how she handles her gift-giving options. How can she be thrifty without being cheap or obnoxious?
Thrifty—Sue makes a personal gift for someone, a craft, art project or food, or something else that she knows they like and that also suits their needs and personality. It takes time, but Sue makes it as heartfelt as possible, and she saves money too.
Cheap—Sue regifts something that she knows the person will never use–like designer decals for a toilet cover.
Obnoxious—Sue regifts something back to the person who gave it to her.
Obnoxious Extra Credit—Sue uses a gift for a year and THEN regifts the used gift back to the person who gave it to her.
The obnoxious Sue has a hard time maintaining friendships.
No. 3: TONY AND DINING OUT
Finally, this is an example of a fictional character named Tony. Tony wants to cut down on his dining out expenses. Let’s look at the range of Tony’s possible actions. How can Tony be thrifty without being cheap?
Thrifty—Tony has friends over but has drinks first at his apartment. Then they walk to a reasonably priced local restaurant to dine. No one orders drinks while there, so they can all save money on the restaurant drink mark-up. Finally, they return to his apartment for dessert and ice cream from the local market.
Or, when Tony feels especially thrifty, he cooks a meal for his friends and entertains them in too.
Cheap—Tony walks to a reasonably priced local restaurant and asks for more expensive ingredients to be substituted into his dishes. He does not offer to pay more. He also requests extra bread and takes the bread home, along with any loose ketchup packets. Tony finishes by leaving a sub-par tip for his server.
Obnoxious—Tony and his date go out with another couple. Tony and Tony’s date order the most expensive items on the menu, plus two astronomically priced bottles of wine. Tony and date are the only ones who drink it. When the meal is over, Tony offers to split the bill equally with the other couple.
Obnoxious Extra Credit—Tony does everything above and leaves no tip for the server either.
In this last example, Tony and his date get married later. They are perfectly matched miserable humans and deserve each other.
CONCLUSION
Saving money is tempting, and you should do it whenever possible. But don’t be like the obnoxious and ugly versions of Tony, Sue, and John.
It is not worth it. And besides, you will live longer.
Disclaimer: consult with a financial fiduciary before taking any steps outlined here. Not all advice may be suitable for your circumstances or investment style.
Photo credit: Paulette Vautour
License: Unsplash