How To Live Life Well as a Cheapskate: It’s Not About Penny-Pinching
Written by
Laura Beck
Edited by
Carly Brashears
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Many people think being a cheapskate means depriving yourself of life’s pleasures, and being labeled as one can come across as negative.
But in reality, the cheapskate philosophy is not about pinching every penny. It’s about adopting a mindful and deliberate approach to managing your finances, so you can make the most out of your resources, lead a satisfying life, and maintain financial stability without giving in to the pressures of overspending.
You don’t have to deprive yourself of the things you enjoy. You simply need to find a balance between spending wisely on the things that truly matter to you and cutting back on unnecessary expenses. This approach can help you create a fulfilling and rich life without draining your wallet.
We asked experts for tips on living an enjoyably frugal life. Here’s what they suggested.
Prioritize Purchases Based on Personal Happiness
Living life well is about spending money on what you truly value, not what society values, said Robert Johnson, a finance professor at Creighton University and author of finance and investing books.
“Many personal financial planning so-called experts chastise people for spending money on certain activities, like buying a latte at a coffee shop or buying avocado toast,” he said. “For some people these are wasteful expenditures and can be eliminated. But, for some people — those who derive a great deal of utility from these expenditures–they are perfectly rational expenditures.”
We all find happiness and “utility” in different purchases and experiences. Don’t let others make you feel guilty for small indulgences that enrich your life. The key is to prioritize spending based on what makes you happy. Ask yourself if your purchases align with your values and passions. Focus money on hobbies, activities and experiences that make you uniquely happy.
“For many, a trip to the local coffee shop is about much more than the latte, it is a social endeavor,” Johnson said. “The problem that people get into is that they spend money on everything and don’t prioritize. Prioritize what makes you happy and direct your resources there. Minimize spending on items that don’t really matter to you.”
Try stretching your budget by taking advantage of tools that cut down your everyday spending. Store loyalty programs, cash-back apps such as Upside, and digital coupons are easy ways to save on everyday purchases — gas, groceries and restaurants, for example — while leaving you more money left over to spend as you wish.
Follow Your Own Definitions of Happiness
Living frugally is not about scraping by miserably. It’s about spending mindfully on what matters most to your happiness and values. Prioritize joyful purchases and activities that are worthwhile to you.
“The key is to prioritize your expenditures and spend money on what makes you happy and don’t spend money on activities and goods that don’t provide you happiness,” said Johnson.
As an example, Johnson related that for many years he chose to drive an older car. Cycling brought him joy, so he prioritized having a nice bike over having a nice car. He prioritized his own happiness over conforming. Stop judging your spending by society’s standards. Follow your own definitions of fulfillment, and you’ll find money can buy happiness.
“For some an automobile is an extension of who they are,” said Johnson. “They derive a great deal of utility from driving, for instance, a fancy sports car. For others, a car is simply a utilitarian means of transportation.”
Beware Spending Just To Impress Others
Many overspend just to keep up with the Joneses, buying cars or gadgets for status rather than joy. As Johnson noted, people often spend to conform to social expectations, not personal fulfillment. Don’t waste money trying to impress others.
“Living life well is achieved by spending money on what we value, not necessarily what a consensus of society values,” Johnson said. “We are all individuals and receive what economists refer to as utility (a synonym for happiness) for different experiences or goods. That is, we are all unique and value experiences or goods in our own unique manner.”
Buy Quality
Cheapskates may spend more upfront on durable, quality items that will last, rather than buying lower-quality just because it’s cheaper.
“It’s about making smart, long-term decisions, like investing in a good pair of shoes that will last years instead of buying several pairs of cheap shoes that wear out quickly,” said Shri Ganeshram, CEO of Awning.com.
Pay for value when it really counts. Consider cost per use, not just purchase price.
“Embracing quality is an enlightening way to live well as a cheapskate,” said Ganeshram. “When we focus on quality, we invest in items or experiences that add true value to our lives, and this is central to living well on less.”
Ganeshram described an experience he had working with a young couple aiming to furnish their new apartment. Initially, they were inclined towards buying cheap furniture to save money. However, after he discussed the merits of quality with them, they decided to invest in fewer, but better-quality pieces.
“Over time, they appreciated the durability and the aesthetic appeal of the better furniture, which significantly enhanced their living experience,” he said.
Save and Invest Wisely
Rather than spending every extra dollar, cheapskates put savings towards goals and investments. Even small amounts add up over time through the power of compound interest.
“How does a focus on saving and investing contribute to living well as a cheapskate?” asked Ganeshram. “The idea is to let your money work for you, not the other way around.”
Ganeshram explained that, by putting aside a portion of income into savings or sensible investments, you can create a safety net and a potential future income stream. This financial cushion can provide a sense of security and freedom, which is essentially living well. It’s about creating multiple streams of income which can afford you a quality life without constantly worrying about the pennies.
“For example, a friend of mine with a modest income decided to save a good portion of it over a couple of years,” said Ganeshram. “With the accumulated amount, he invested in a small yet profitable venture. Over time, the returns from his investment now allow him a level of financial freedom he didn’t have before.”
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