When it comes to saving money, most experts preach the gospel of thrift. For the most part, this means finding ways to pay less for everything–from groceries to clothing, utilities, and everyday bills. Being thrifty or frugal also means making the most out of very little, mostly because it helps you reduce financial waste while freeing up more cash to save. However, there’s a difference between being frugal and being “cheap,” and some strategies that help reduce spending now could easily cost you more in the long run. If your goal is saving money this year, focusing on frugality can help.

In simple words, frugality refers to being more prudent with your money. Many people mistakenly take frugality for living life like a miser. However, the reality is living frugally does not mean cutting down on essential costs and living a life full of restrictions. Instead, it refers to carefully planning and spending your hard-earned money so that every penny that you pay is spent towards a specific purpose without any wastage of resources.

MART PRODUCTION/ Pexels | Frugality is the quality of spending money very carefully and in limited amounts

However, people mix frugality and chronic under-spending to being a cheapskate, which are two very different terms. For the most part, a cheap person is someone who is willing to cut corners or do things the cheapest way possible, no matter the consequences. In contrast, a frugal person values his time and money and rather than finding the cheapest place for his groceries and other basic expenditures, he would instead find ways to cut down on wastage throughout the daily routine, such as finding a more efficient route for a grocery run or creating meal plans that cut down on grocery waste. 

They avoid investments

Gratisography/ Pexels | Frugality is founded on the principle that all riches have limits

Some people view the stock market as a form of gambling and although there’s always some risk involved in investing, the degree of risk varies depending on the investment. Venture capitalism may not be your thing, but there isn’t much to fear when it comes to index funds. As long as you continue to invest in the market over the long term, history has shown constantly increasing rates of return in the American stock market. Sometimes the market goes up, and sometimes the market goes down, but as long as you keep riding the ups and downs, in the end, you’ll likely come out with far more than what you originally entered the market with.

MART PRODUCTION/ Pexels | Frugality is the quality of spending money very carefully and in limited amounts

Under-spenders, however, avoid even a small amount of risk, and one that could end up costing them huge in the long run. Under-spenders are, in such cases, anxious about risking their money, even if there’s a likelihood of a decent return on their investment. However, failing to invest in yourself can end up costing you big if this results in you not getting ahead in your career. In all honestly, not doing so is a far bigger risk, one that involves potentially gigantic loses in income and likely removes the possibility of you ever being able to retire comfortably.