Frugal vs Miserly: Why we need to know the difference for managing money

Published: February 25, 2021 at 11:18 am

Last Updated on February 25, 2021 at 11:18 am

If there is one word in personal finance that is mostly misunderstood, it has to be frugality. After the 2008 financial crisis, it became popular online when people with uncertain or no jobs had to relearn money management. A frugal person is often misunderstood to be a miserly person who deprives themselves of worldly pleasures in the name of money management, minimalism, financial independence, early retirement etc.

When young people seem to think getting rich is possible only by sacrificing current pleasures, it becomes crucial to appreciate the difference between a frugal person and a miserly person and how it can make a big difference to our outlook on money management and investing.

Much of this confusion about frugality comes from the absence of a single opposite state. What is the opposite of frugality? Is it extravagance? Or is being a spendthrift?

You may have heard the phrase “spending problem”. This is usually assumed to be the same as being a spendthrift. While this is true, there are two types of spending problems.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

Spending for the sake of spending or spending because one can is being extravagant. The opposite of this state is not frugality. The opposite of extravagance is miserly.

Not spending or not spending enough when one should is being miserly. Frugality lies somewhere between extravagance and miserly. Where exactly will depend on the individual? That is why it is hard to understand.

Most of us will be familiar with the difference between needs and wants – if you want a template to discuss this with your child, check out my new book for kids: Chinchu gets a superpower!

Needs are not just everyday needs like groceries, internet and petrol. How we are going to spend after retirement is a future need; a family holiday two years from now is a future need; our child’s college fee is a future need;

Let us leave alone present needs to keep the discussion simple:

  • If I spend on wants without thinking about how the expenditure will affect my (present needs and) future needs, I am extravagant.
  • If I flatly deny my wants or my family’s wants, I am being miserly and making everyone miserable!
  • Frugality (in my opinion) is trying to balance wants with future needs. This balance will mean separating wants into short-term, intermedia-term, and long-term wants, aka delay gratification. Thus frugality is middle-ground somewhere in between being a miser and a spendthrift.

Frugality stems from Latin – frugalis or thrifty. Thrifty sounds like a bad word, but it only means “using money and other resources carefully and not wastefully”. This is very different from miserly, which is not spending enough or not at all.

What is the difference between frugality and minimalism? “Do I really want this or not?” is commonsense and a common baseline for everyone. A minimalist could take this one step further and debate, ” Do I really need this or not?”.

Be it wants or needs, frugality only requires cautiously planned spending. So is distinctly different from minimalist.  That said, both minimalism and frugality have nothing to do with self-deprivation (or being miserly), as many on social media are quick to judge.

Is frugality necessary for building wealth?  Obviously yes. If we spend without considering future needs, we will have difficulty meeting future needs (what wealth means in this context).

The trouble with us is a tendency to take on extreme positions: “Stop asking me to invest, invest, I want to enjoy today”. Focusing on enjoying today is a guaranteed way to end it soon.

Why should enjoyment stop today? We can continue to enjoy spending money on all our needs and wants throughout our life. For this, a balance is essential.

A first step in finding this balance is to stop judging others without data (she is depriving herself in the name of being a long-term investor) and start understanding our future needs and how we can live a “good life” not just today for as long as we are around.

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)