Wednesday, November 12, 2014

How Not To Be a Cheapskate In Your Journey To Financial Freedom

In my journey to financial freedom for the past one year since I started this blog, many other people have joined in to start their own journey too. Some are younger than me, some are the same age as me while some are older than me. What is common is that we're all on the same path to financial freedom.

I have posted more than 230 articles on this blog on a wide range of topics from personal finance to investments to success stories and even life lessons. In this journey, often we'll ask ourselves how to balance between saving money and spending money. Swinging to either extremities may not be healthy for our lives in the long run. Imagine because young people want to save money and they have to abandon their social lives of hanging out with friends at shopping centres? Or worse still when you go dating, you get labelled as a cheapskate. I'm sure we do not want this kind of life.

Living a cheapskate life is never good. However, thinking that frugality is synonymous with cheapskate is also wrong. They are 2 completely different lifestyle. When we're older and free from the dating world or the need to belong to a certain younger generation of society, then being cheap works perfectly fine for you. But the problem is for young people. Being young means having the desire to be part of a society, to feel belong to a group of people and having some social status. I've been young and am still young by society standards. Telling young people to be separated from society and become some unusual weirdo is never good.


Credit: https://www.flickr.com/photos/51764518@N02/9759057675/


Nowadays, you mostly don't see a group of young students hanging out at hawker centres or coffee shops. Where are most of them? They are either in nicely decorated Cafes, fast food joints like MacDonald or at the cinema watching movies. This is the lifestyle and if you're a young person right now, you probably have to or is doing that to be part of your group. Also, you mostly see young students with trendy and nice clothes during the weekends. Now the question is, will they still be able to save money with this kind of lifestyle?

I was chatting with a friend on this cheapskate issue which revolves around the furniture that we buy. There was an issue that a certain brand of furniture was thought to be valued for money just because it is cheap. However, the problem is most people who buy that brand of furniture realises that it is not durable and falls apart easily. What attracted consumers to buy is the design and what appears to be good quality material but underneath it hides the cheapskate materials that easily dents. But however, buying cheapskate stuffs does not save you money at all. The plan is to make you buy again and again. This is consumerism which I've discussed on in a previous article here.

Buying good quality stuffs saves cost in the long run. It saves the environment too by minimising wastage. A cheapskate person buys stuffs which is cheap and thought to be value for money. A frugal person buys stuffs which is of good quality and yet spends less to own it. This is the distinct difference between cheapskate and frugality.

So How Not to be a Cheapskate and still be able to achieve financial freedom? Here are some ways:

1) Know that being Frugal is not equal to being Cheap. Frugal doesn't mean you own all the crappy stuffs.

Being labelled as a cheapskate is never a good thing. Thinking that frugality is equal to cheapskate will destroy your life. Frugality is a trait while cheapskate is a social disorder. If you save money by taking advantage of others such as not paying for bills, waiting for someone to treat you for a meal, then its cheapskate.

Here's a funny video to illustrate what it means to be cheapskate:

*Warning: Don't do what the video shows if not you'll become a cheapskate


The video is funny. I had a few good laughs on some of their ideas. A frugal person does not take advantage of others. Only a cheapskate does. Frugality is not about owning all the cheap and crappy stuffs. For example, a frugal person can own a branded $100+ pair of shoe and know that it can last for many years vs buying a cheap $20 shoe which can only last for 1 year.  


2) Live like a Spartan when nobody's around

We need to socialise to make friends and build network. These are the times we hang out at Cafes and have meals at restaurants. When you're out dating, it's appropriate to pick up the bill and give a treat to your girlfriend. Even when you're out with friends, paying for the drinks goes a long way for the friendship that you have. It doesn't hurt to pay that little money which strengthens relationships. 

However, when you're alone and nobody's around, you can start living your simple life again. Buying simple groceries and cooking at home is great. Relaxing with an interesting book instead of an iPad seems like a good idea. Nobody will see you as a cheapskate when you're alone. 


3) Get more for less

Believe it or not, it is impossible not to spend any money. You got to spend money for that formal shirt, pants or skirts for your first job interview to look presentable. You got to spend on socialising to build up your network especially during the early days of your life. For young people, you got to date to get a girlfriend. That cost money too. Some of us might want to go on an overseas trip at least once a year to take a break from work. Yes, that is important too to let you recharge from working the whole year.

Since we have to spend money, we might as well spend it smartly. There are discounts all over the city. With the internet, it is even easier to compare products and get the latest discounts. I can buy that same piece of shirt that usually cost $80 for $30. I can get the same plane ticket that usually cost $500 for $200. I can watch the same movie at the same cinema for $9 instead of $12. All these discounts happen all the time. We can get the same product but at a lesser price.

Let me give you a specific example. For plane tickets, it gets easier to travel with budget airlines such as Jet Star, Scoot and Air Asia. But do you know these budget airlines still offer discounts even though their tickets are already cheap? Discounts happen almost every week with special discounts once a month or every few months. Sign up for their newsletter and if you just wait for a few more days before you book your tickets, you might get that $200 plane ticket instead of the $500 ticket.

Let your financial journey not be a cheapskate but a meaningful one.

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Related Posts:
1. Going from working middle class to rich with a simple tweak
2. How do you spend your money?

20 comments:

  1. Hi SGYI,

    I like the comparison of being cheapskate as a social disorder.

    I got reminded of a friend who is often unavailable (with excuses) when my group of buddies get together to celebrate someone's birthday. But he will always avail himself when it's time to celebrate HIS birthday.

    ReplyDelete
    Replies
    1. Hi SRSI,

      You got a good example there. There are indeed people who are like that.

      Delete
  2. Hi SGYI

    I like your last example regarding booking tickets. I think its about getting smart at the same time. Signing up for newsletter, taking advantagr of ocbc 360 etc are all examples of how a frugal person can take advantage of the situation by reducing the expenses.

    ReplyDelete
    Replies
    1. Hi B,

      Yes you're right. Even when we buy things we need, we can still buy it at a cheaper price. Ecen when buyung groceries, there are credit cards which gives 3-5% rebates. Over the months it adds up to quite a lot of money. To me, if I buy an air ticket, it'll be crazy to buy the same seat ticket at a more expensive price when I know I can get it at a cheaper price. After awhile of following the discount trend of airlines, I've come to realised when they will release cheap tickets etc. So I always wait for the discount. Haha

      Delete
  3. A succinct article that hits the nail. The only thing is I am not sure if people equates frugality as cheapskate. Then again if people really think so, that's another form of 'social disorder' in itself that needs a separate study altogether. Haha

    ReplyDelete
    Replies
    1. Hi Kyran,

      Hmm, I hope not too but there will always be people who are confused between frugality and cheapskate. Maybe not equate but more of confused.

      Delete
  4. Very good reminder and I think line between frugality and cheapsakte is kind of thin... ;-)

    ReplyDelete
    Replies
    1. Hi Richard,

      Indeed. Sometimes it can be confusing between the both.

      Delete
  5. Are we cheapskate?

    Just try to recall when was the last time we pay for someone's coffee or meal?


    LOL!

    ReplyDelete
    Replies
    1. Hi Uncle CW,

      I pay for one at least once a week. Lol

      Delete
  6. The issue about younger folks hanging out in cafe and fast food restaurant, whilst true, is a lifestyle trend but not really about money issues.
    I don't think it is correct to link the change in lifestyle with having more or less money.

    Regards,
    SG Wealth Builder

    ReplyDelete
    Replies
    1. Hi Gerald,

      This young lifestyle requires more money to be spent. To not let it become a money issue, we have to plan our finances prudently.

      Delete
  7. Hi SGYI,

    Great article on reminding us that there is a thin line between being frugal and being a cheapskate!

    As a 20yo investing and trying to build capital, it's so easy for my to become cheapskate instead of being frugal. As you said, it doesn't hurt to pay that little money that can help to strengthen relationships and I totally agree! I'll definitely keep this at the back of my head when I'm out with my friends and buy them a simple meal/drink!

    ReplyDelete
    Replies
    1. Hi Aloysius,

      I'm glad the article resonates with you. Yes we can give a treat to those people we care about. In life we want both money and friends don't we? It'll be sad to have lots of money but nobody to share the joy with us.

      Delete
  8. Times have changed. Nowadays most sec sch pupils have hp, something unheard of in pple in their 40s, just to name an eg. Most
    things are so ex. now. Hard to pass day without spending $.

    ReplyDelete
    Replies
    1. I had a hp when i was in sec sch also. As a young student, it is natural to want the latest and trendy stuffs. I bought a good camera hp with the money i earned from my part time when when i was 16 after my O levels. Those days really didn't know what it means to be saving money.

      Delete
  9. Hi SGYI,

    Great article, totally agree on the sentence "live like a Spartan when nobody is around".

    It is important to spend part of your money for a small treat or a small gift. Building network and strengthen friendship on this small amount, definately a great investment. But at the same time, never forget the fact to save and spend wisely for our financial freedom!

    Dropped you an email, hope to hear from you soon.

    Regards,
    KS Tan

    ReplyDelete
    Replies
    1. Hi KS,

      Just nice replied your email. Living a balance life is what i like best.

      Delete
  10. Hi SGYI,

    Indeed! Frugality is a lifestyle of making wise money choices. When people start being frugal, people may take notice and perhaps ostracise them (as you've rightly pointed out, many might have confused frugality and cheapskate), but after some time practicing frugality, they will start noticing changes in their own lives. And trust me, their friends will also take notice.

    Being frugal since young, I find myself relatively free from sociocultural influences. E.g. I still use a not so smart phone and am prouding displaying my phone in public transport. In fact, when I send 1 sms to a friend, they usually reply with a few smses. They can do this because no one else is competiting for their 500 (or more) free smses for their phone plans. Not having a smart phone also mean less "after-office work" from employers.

    I don't care if I wear the same shirt or pants when I meet my friends.
    Now am I cheapskate? My friends certainly know I'm not.
    Why? I give them treats at restaurants, because I can, from the savings I get.

    Becoming frugal allows one to figure out what matters and what doesn't.. And that is the secret of meaningful life, a life where you don't need money to be happy.

    Regards,
    Matthew

    ReplyDelete
    Replies
    1. Yup Matthew. I like your last sentence, a life where you don't need money to be happy. A simple life can be as happy or even happier than a luxurious life. Those who keep chasing money or material stuff will never find happiness in those stuff.

      Delete