Ep. 25 Frugal vs Cheap: The Hidden Difference That Builds (or Breaks) Wealth

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Frugal vs Cheap: The Hidden Difference That Builds (or Breaks) Wealth

Is being frugal the same as being cheap? 

In this episode of the Net Wealth Nest Podcast, host Jim LeBoeuf breaks down the fine line between saving wisely and letting fear of spending hold you back from living your life today.

Learn how to make money decisions based on value — not fear — so every dollar you spend helps you build the future you want.

💡 In This Episode:

• The real difference between frugal and cheap thinking
• Why a scarcity mindset keeps you stuck in paycheck-to-paycheck living
• How value-based spending and frugal habits can accelerate wealth
• Practical tips to stay frugal without feeling deprived
• Why cheapness can actually cost you more long-term
• How generosity, budgeting, and automation create freedom

Whether you’re trying to stop living paycheck-to-paycheck, build an emergency fund, or simply spend smarter — this episode will help you shift your money mindset and start using money as a tool for growth, not fear.

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Transcript

Jim 0:31

Is being frugal, the same as being cheap? Welcome to the Netwealth Nest podcast. I am your host, Jim Lobe. Appreciate you joining us for another episode as we help you build financial stability in your life and break out of the paycheck to paycheck St Cycle. There's a fine line from being frugal and being cheap, and sometimes it can be really hard to tell which side. Of that you might be on. Are you being smart with your money or are you letting the fear of not spending anything dictate you living your life today? Let's unpack what that really means to be frugal and why cheapness could actually end up costing you more in the long term. So first let's start off and try to define the difference between being cheap and being frugal. Frugality is more about the value and how it aligns with your goals, whereas being cheap or having cheapness or however you wanna define that, is more about the fear of spending that money. Frugality builds wealth over time. Cheapness builds walls and puts you inside of a box. And so there's a mindset behind this, and it, it starts with the scarcity versus abundance mindset. And so those that are cheap, they have that scarcity mindset where if I spend this money, that money will not return, or I will not get any return on my spend. Versus the frugal mindset is more about, there's plenty of money. For me to make, but I'm not going to just be willy-nilly about it. I'm going to find the value and I'm going to be very specific in how I spend that money so that I can use the rest of my money as a tool to do other things So people who have maybe a cheap mindset or a scarcity mindset. They typically, stay cheap because they're afraid of losing money even when it's possible that it's holding them back. So an example of this is somebody who's cheap might skip, a networking event or refuse to tip somebody thinking that it's actually saving them money, but it's possible that it's actually costing them opportunity or even reputation, in their community. Value-based spending is where your spending reflects your priorities. And not your fears. And so maybe it's going to that networking event, but if it's a cash bar, you're not buying drinks at that networking event, you're still taking the opportunity to be specific about what you wanna do. And in the example we're using, maybe your goal is to build your network. So you're paying money to go to maybe a conference or an event, but you're not spending additional money that doesn't align with that goal while you're at that event. And so I'm gonna give you some practical frugality. tips that you can use in your everyday life. And the first one should probably not be a surprise if you've listened to any of my previous, podcasts or YouTube videos, is have a budget. Track your budget, but inside of that budget, one thing you can do to help you be frugal and make sure you're spending your money on the things that you care about is build in some guilt free. Fun money to spend, and it doesn't have to be necessarily a lot depending on what your budget is, but there should be a little bit of a bucket in there where you can just spend that money on things that make you happy. Now it's important that you define what makes you happy so that you're spending it on the things that actually bring you joy and not just random stuff that maybe is just the dopamine hit for, you know, an hour, but something that actually brings you joy. Maybe it's going out to eat with friends and family, whatever it might be. Build in a little bit of money into your budget to do that. The second piece is understanding quality and longevity versus short term fixes and how that can come back to bite you. And so I give you, an old, story that I've heard where there were these two factory workers and they both needed new boots. And at the time, and again, this is a really old story, so the money doesn't completely align to today's, but they made $50, a month and a new pair of good solid boots cost. $30 and a pair of just basic boots to get you by cost 10. And so they both did different things. the first person went out and figured out a way to, yes, it's a lot of their income in one shot, but they spent the $30 and bought the high quality boots and the other individual just bought the $10 ones. And the story goes that. The high quality boots lasted for, uh, multiple years, whereas the low quality boots for the, for 10 bucks only lasted maybe six months. And so over the time that the person had bought the high quality boots, they actually ended up spending less money on boots because the person who bought the $10 ones had to buy new $10 ones over and over and over again and spent, two to three times more money. Sometimes just being cheap actually comes back to bite you. Whereas if you need something, The cheapest answer is not always the best answer. And so weighing quality and long-term cost versus just the cheapest thing you can get is something you should investigate when you're buying something that you need to use on a daily basis. Same thing goes with bigger purchases, maybe like a car as an example. Buying the cheapest car that only lasts, uh, a short amount of time because it falls apart is worse than buying maybe a little bit more expensive car, but it'll last you for years and years and years. Automate anything you can when it comes to investments and savings. This will help you be frugal in other areas of the of your life because that money will already be gone. And again, it's part of building your budget. So if you can automate every paycheck, a certain amount of money comes out and goes into your emergency savings, a certain amount of money comes out and goes into investment accounts. That will leave you with whatever's left over. You pay your general bills, you can put some, hopefully some money in your fun bucket as well as any other expenses you might have. But automating that, make sure you're covering all your bases and helps you automatically know like, oh, I've got all this money. I can't just go out and blow it. I have obligations to my future self around investing for my retirement around making sure I have an emergency savings account. So I'm not surprised by any expenses that come up, any of that. The other thing is, I would encourage is if you can find a way. Generosity always has this way of coming back to you, and I can't exactly explain it. for those of you that might have a spiritual outlook on life, I do, I feel like it is a religious thing where, you know, I give and then the world sees that and my, and what I believe in, reflects that back on me because they want me to continue to do that. And so trying to give. Not only money, but my time and my efforts in my life to individuals out in the world is really important to me. And the last thing I just want you to remember is. Money's a tool. It's not designed to be hoarded and just sit there and do nothing with, we've talked about this before, but it amplifies who you are and what you do. So if you can accumulate that money and use it back out, to either grow your wealth to be able to do more of what you're already doing, Think of that money as how can I accumulate really good tools and then how am I utilizing those tools to put good things in the world? Whether it's good things for myself in the future, whether it's good things for my family, my friends, whether I'm being charitable with that, how am I using money as that tool to make my community, my world a better place? And so really a closing takeaway around all of this is being frugal means being smart. Being cheap, it means you're probably being scared. And when you learn to spend intentionally, every dollar becomes a decision, not a fear. It's not a fear that you're not gonna have another dollar coming. So if you found this helpful today, please share this episode with somebody who's trying to find that balance between saving and living, and investing in their future and maybe hoarding money. As well as if you haven't yet subscribed to our channel, we've got new content coming out. We're just recording a bunch of videos. You took a small couple week hiatus to record a bunch of stuff. We've got new videos coming out. head on over to, our YouTube channel. If you're listening to this on like a podcast forum or if you're watching this video on YouTube, Share this with individuals that you, think might benefit with it. Again, we're just trying to help individuals. Build financial stability in their life and, and just get outta that paycheck to paycheck cycle and build some margin in their life where they can be successful and invest in their future and invest, uh, in the world around them. If you have any comments, leave them in the comments section. We respond to all of our comments, and love to engage with the community. Thanks for joining today. My name's Jim, Bye.