Dubai: When it comes to managing money, are you considered ‘frugal’, ‘thrifty’, ‘miserly’, or a ‘penny-pincher’? While these words are often interchangeably used to describe conservative spending, did you know they do not all mean the same and have different connotations and usages?
“When pursuing financial freedom or simply looking to secure our finances, we naturally make inadvertent choices between being frugal, thrifty, or miserably miserly. While the savings terms seem swappable for many, they are not,” said Mirin Raul, a financial coach based in Dubai.
“Being frugal is far from being miserly with our money, which is a common misperception. A bigger challenge is if you’re frugal but mistaken for being miserly. While it’s good to be careful with money, being frugal, thrifty or miserly boils down to not just gauging the value of money, but also our time.”
When living within our means goes beyond control
When it comes to living within our means, every lesson on managing routine or everyday finances begins with the need to spend less, save more, and sacrificing splurging pleasures for future comfort. But while that makes sense to an extent, where does one draw the line?
Also, is there such a notion as being too frugal when scrimping or saving? ”When excessive, frugality can cost you more than help you save. For instance, avoiding the doctor, neglecting house or car maintenance, skipping insurance in its entirety can cost you in the long run,” added Raul.
“To put it simply, the difference between such extreme form of penny-pinching is one prioritises saving over living comfortably and well within his or her means, while the other makes it his or her sole mission to save by compromising on living comfortably.”
“‘Frugal’ and ‘thrifty’ are positive terms for those careful with money, avoids wasteful spending, and associated with being economical at choosing to buy quality items at a low price. ‘Thrifters’ also look for ways to creatively save hands-on,” said Mohammad Shaan, a UAE-based financial planner.
“However, ‘miserly’ has a negative connotation and refers to one who cuts back to the point of being unreasonably frugal. This involves hoarding all they can find at the lowest price possible, while entirely disregarding the quality. This often causes more financial harm than good in the long run.”
How do you know if you’re frugal, thrifty or miserly?
You know you’re frugal if you research a range of options for the item that you want to buy and optimise the cost and quality of an item and ensure it fits within your budget, explained Shaan, while adding how you also find ways to save money without sacrificing your lifestyle.
“You know you’re thrifty if you’re frugal, but you don’t mind spending more time on creatively finding hands-on ways to say mending your clothes, reupholster a couch, or browsing thrift stores for gently used items, then fixing them up so they are as good as new,” he added.
“On the other hand, being miserly involves buying stuff you don’t need because it’s on sale, best-price-ever, super cheap, etc. Also, you constantly seek thrills in how little you end up spending each time, to the point you don’t realise that you sacrifice a lot your time to save money.”
Frugal living is not about feeling deprived and miserable
When saving money, Raul flagged how it’s also easy to put off spending your savings that you’ve set aside for fun activities or hobbies, all in the hopes that you can save more for something else. “If you're never spending your ‘fun money’, you might have taken frugality too far,” added Raul.
If you're not spending your ‘fun money’, Raul suggested examining whether you’ve cut it out of your life because you don't want to spend. “Remind yourself that being frugal doesn't mean you don't take care of yourself, and let yourself spend some of the money you've set aside for that purpose.
“The objective behind being careful with spending is clear to the frugal-minded: They have a goal in mind and they know why they are sacrificing a pleasure in the present. To them not spending but setting that money aside instead, is a goal in itself. The frugal also often give within their means.”
What to do if you find yourself too stringent when saving?
If you find yourself always avoiding activities you enjoy just because they cost you money, Shaan suggests one possible reason why. “Often times, you may be suffering from fear of spending money, referred to as ‘Chrometophobia’,” he said. So how does one overcome such a fear?
“Most sufferers of Chrometophobia fear they will overspend and have nothing for the future. To avoid overspending or thinking about it, you should create a budget or a money map and solely rely on it to bring your spending back on track.
“There are also apps connected to your credit cards and bank accounts to prevent your spending from going out of control and gives you suggestions when are needed. These apps also give you an alert when you come close to your set budget or when you start overspending.”
Frugality and thriftiness are essentially about getting the most value out of your money, while with miserliness, the sole focus is to amass wealth without any particular financial goal in mind. So do you consider yourself frugal, thrifty or miserly?
As mentioned earlier, the three words are related to spending money wisely, but they have different connotations. While frugal and thrifty are positive terms associated with being economical with certain targets in mind, miserly is a negative term associated with being unwilling to spend money.
“Even those who choose frugality do not push the envelope so much that it compromises the quality of their lives. They do not deny themselves things that they enjoy, only to be able to save some money,” added Raul.
“So the choices we make and the lessons we learn about money reveal our attitude towards how we allocate that money. It’s also a proven fact that being miserly reduces the quality of our life as we deny ourselves what we enjoy doing and sadly, this is a cost you won’t be able to save over time.”