First Gen American asks:
I believe that the difference between being frugal and a tightwad miser is knowing when to throw money at a problem. What is that tipping point for you? Define, elaborate, ponder.
This is a really popular personal finance topic, especially with frugality bloggers.
For us, frugality has to do with efficiency and value. As a frugal person, you may buy a more expensive model of a needed item, but that item will last longer and give more pleasure while you use it than a cheaper model would. Frugal people do not have false economies. They are happier with less stuff, but they buy what they need and some of what they want. They don’t waste money on things they don’t really want, and they make sure they’re able to afford what they do buy. Frugal people are mindful of their purchases and their true desires.
Misers practice false economy– they save pennies and lose dollars. They lose horses for want of a nail. They fail to make purchases that would increase their overall happiness and even those that would increase their overall income or wealth. (Not knowing when to throw money at a problem.)
Tightwads and cheapskates neglect their personal and social capital. They go against social norms in ways that can hurt other people. They may practice petty theft (see: ketchup packets), under-tipping, and so on.
Grumpy readers, how do you differentiate between the different types of low-spenders?