Thanks to the recent financial crisis, frugality and thrift are increasingly becoming positive attributes. But if, like many people, you find yourself looking for ways to trim you spending, you may find yourself flirting with what can be a very fine line. You know: the one between making smart financial choices and being outright cheap. In fact, in many cases it's a line between thrift and outright thievery. You know you've hit it when your savings become someone else's loss - or your own. Here we'll look a few common examples where thrifty become downright cheap. How far would you go?

IN PICTURES: Debunking 10 Budget Myths

Thrifty: Buying Items That Are on Sale
Cheap: Only Buying Items That Are on Sale
Seeking out sales can be a great way to help make groceries, clothes and virtually any other items you need fit into a tight budget. At the grocery store, for example, you might choose the cereal that's on sale, rather than the one that's on your list.

When people cross the line to cheap, however, is when they refuse to buy anything that isn't on sale. This can often backfire by causing you to buy things that might be of lower overall value or that you wouldn't have even considered buying otherwise. You may find yourself spending more than you would have had you just purchased what you needed. It can also put shoppers out of touch with the value of what they're getting for their money - and isn't that what thrift is all about? (For related reading, check out Attention Discount Shoppers: Don Buy Just Because It's On Sale.)

Thrifty: Tipping According to Service
Cheap: Never Tipping at All
Common etiquette requires that customers provide tips for certain services. As a result, some of these service providers are actually paid considerably less by their employers, because they expect that tips will make up the difference. In some states, this may even be less than minimum wage. If you get rude or indifferent service, it may be fair to leave nothing, but if you never tip, ask yourself why. Is it really because you feel your waiter or taxi driver makes plenty of money, or is it just because you can't bear to part with it? (For more guidelines on tipping, read When To Tip? And How Much?)

Thrifty: Putting Money Aside for Savings
Cheap: Saving Everything and Living on Nothing
Living a very Spartan lifestyle can a great way to achieve a big goal, but it's no way to live. If you're working toward retiring early, buying a house or taking time off work to spend with family, travel or pursue other goals, digging deep to make this happen just might be worth it. But if you find yourself saving nearly every penny and scrounging to make ends meet, it may be time to ask yourself just what you're saving for. If you don't have an answer, you've probably gone too far. (Get some great (and reasonable) saving tips in 5 Painless Ways To Save More Money.)

IN PICTURES: 20 Lazy Ways To Save Money

Thrifty: Taking Advantage of a Good Deal
Cheap: Taking Advantage
If you find a great way to stretch a dollar, there's nothing wrong with making good use of it. For example, if you're in a coffee shop that provides free refills, stick around and enjoy a few cups if you're in the mood. But please, don't keep the cup and come back later (or every day thereafter) for more. A couple of extra cups of coffee probably won't put a dent in a business's bottom line, but if more people follow your lead, it might just quash its free refills. (You caffeine habit may be costing more than you think. Find out just how much in The Real Cost Of Drinking Coffee.)

Thrifty: Cutting Out Internet and Cable
Cheap: Stealing It from Your Neighbors
If you start cutting costs, you'll soon learn that you can get by with a lot less. But if you want to be able to brag about your frugal living ways, you have to actually do without. If you cut out your internet but then log on through your neighbor's wireless signal, you're about as enviable as the guy who parks a Prius in his driveway but keeps a Hummer in the garage.

The Bottom Line
If you've cut your budget so far that you need to resort to taking advantage of others, consider yourself cheap. The same is true if your sense of frugality begins to look more like austerity or self-denial. Budgeting and saving money should be a measured approach to reach a financial goal or survive tough times, not an end in and of themselves. While being frugal may be trendy right now, taking this trend to its extremes may be no better than falling prey to overspending. After all, neither approach leads to living well, which is what smart financial planning is all about.

Find out what happened in financial news this week. Read Water Cooler Finance: G20 Leader Spats And China Fakes It.

Related Articles
  1. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  2. Savings

    All About Income

    Income is the money you or a business earns by providing goods or services, or through investments.
  3. Taxes

    Top Tips for Minimizing Taxes on Severance Pay

    A look at the top ways to lessen the tax burden on severance pay.
  4. Budgeting

    The 5 Most Expensive States for Child Care

    To get a better sense of how child care costs can fluctuate, here's a look at the costs of child care across the country.
  5. Professionals

    8 Justifications For Sky-high CEO Salaries

    Why are CEO salaries so astronomically high? There may be more to the story than you think.
  6. Home & Auto

    Looking To Invest In Home Improvements?

    Some home improvement projects could cost you more to complete than they’ll pay out in equity. So, here we show you the worst projects to avoid.
  7. Fundamental Analysis

    Understanding the Internal Rate of Return Rule

    The internal rate of return rule is a popular method used to compare investments or projects.
  8. Home & Auto

    Are Home Inspections Worth It? - Price vs. Value

    If you’re wondering whether home inspection is worth the investment, the following information will help you decide.
  9. Budgeting

    How to Defray Long-Term Care Expenses

    Here's a handful of options on what you can do to defray long-term care expenses.
  10. Budgeting

    The True Cost of Home Caregiving

    Caring for eldery family in-home might be unavoidable, but most caregivers don't realize the true cost of doing so.
RELATED TERMS
  1. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  2. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the ...
  3. Back Pay

    The amount of salary and other benefits that an employee claims ...
  4. Contingent Commission

    A commission with a value dependent on an event occurring, and ...
  5. Collection Commission

    The percentage of premiums that an agent is owed for collecting ...
  6. Cash Bonus

    A lump sum of money awarded to an employee, either occasionally ...
RELATED FAQS
  1. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  2. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>
  3. How do I know how much of my income should be discretionary?

    While there is no hard rule for how much of a person's income should be discretionary, Inc. magazine points out that it would ... Read Full Answer >>
  4. Does my employer's matching contribution count towards the maximum I can contribute ...

    Contributions to 401(k) plans come from employee salary deferral and employer match dollars. According to the IRS, employees ... Read Full Answer >>
  5. What proportion of my income should I put into my demand deposit account?

    Generally speaking, aim to keep between two months and six months worth of your fixed expenses in your demand deposit accounts. ... Read Full Answer >>
  6. How do I use the rule of 72 to estimate compounding periods?

    The rule of 72 is best used to estimate compounding periods that are factors of two (2, 4, 12, 200 and so on). This is because ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!