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Thrifty or cheap? What's the difference between them when it comes to money management

Looking at value for money is not ‘being cheap’. It’s all about being financially prudent — and sustainable

So, there I was, inside a Maserati, being driven by a friend who was in the process of closing a “million-dollar” deal on his hands-free. I almost didn’t notice that he neatly swerved away from Sheikh Zayed Road and took the exit to Al Khail. When I did, I wanted to know why he was taking the “scenic route”.

“Don’t want to pay Salik,” he was nice enough to put the caller — at the other end — on hold. “We’re not in a tearing hurry, are we? Yes, we may be five minutes late, but I’d have saved the Dh4.”

“You just closed an obscene deal!” I sputtered.

“Right, but that doesn’t mean I should spend on something I don’t need to spend on,” he countered gamely, and went back to his phone conversation.

Now, here’s the thing. This friend is one of the most generous people I know. Ever ready to go out of his way to help, always insisting (adamant even) on paying the bill at restaurants, being a financial enabler in many ways… and yet he’s awfully careful when it comes to stuff like Salik… he likes living in an apartment which is rent-controlled… he seeks out hole-in-the-wall-type places “as long as the food is great” in favour of swanky five-star curations.

I have realised now that my friend falls in the “thrifty” category — a word that’s often, mistakenly, a surrogate for “being cheap”. He’s a living example of how one can be generous — not cheap — and thrifty at the same time.

Dubai-based entrepreneur Nitin Shukla says he doesn’t like the sound of the word ‘thrifty’. “I think ‘being financially prudent’ describes the state of being money-wise better…”

He gives an example. “For instance, if a bottle of milk at the grocery store near my building is Dh5, and the one at a store a kilometre away is Dh4.50, I will go that extra mile — yes, just to save 50 fils. I would describe myself as someone who understands the value of money… I don’t mind spending money, but I want to pay the right amount.”

Nitin calls it fiscal discipline.

He also points out that while he has no problems spending money on others, he does have a problem “spending money on myself”. “I don’t want to get spoilt, therefore I am more regimented, almost military-like.” It has to do with him being an entrepreneur and a self-starter, he feels. “I came from the 40 per cent, and am now in the top 1 per cent — but, I may lose it all… so I don’t want to spoil myself, and I don’t want to forget the value of money… you see, it’s a matter of principle…”

The psychology of being thrifty

“When I was young, I used to wonder why people who work so hard couldn’t spend money on themselves,” says master life coach and rapid transformational therapist Anita Raina. Her parents’ generation — for whom money problems were real — “prioritised education and a government job in order to create a sense of security. They had a belief that money is scarce and if they spent it, then they won’t have any.” Later, she understood this issue at a deeper level. “I learned that our interpretation of events determines the course of our lives, not the actual events themselves. So, if parents went through difficult times and now believe that money is not available to them, then they are likely to pass on this belief to their child. Or, if children grow up hearing their parents complain about not having enough money, or when asking for something are told there isn’t enough money... all of these contribute to the child believing that money is scarce.”

According to Dr Tara Wyne, clinical director and clinical psychologist at The LightHouse Arabia, thrifting very much depends on mindset. “The person who is thrifty feels that they achieved abundance because they used their time, judgement and effort to get the best deal at a fair and just price. With this abundance mindset, you don’t necessarily covet the newest, shiniest, top-of-the-range specification on everything because you don’t feel you missed out.” Thrifty people feel satisfied and content with the bargains they have struck. They often feel they’ve hit the jackpot, because they got something of value without denting their savings. “They often transform the seemingly ordinary into the best and classiest version of itself,” Dr Tara continues. “They value quality, but are willing to get something average and up-level it.” What’s more, while thrifty people are often more psychologically flexible and regularly buy sensibly, they also occasionally get something absolutely new but still in a sensible price range.

Dr Louise Lambert, associate professor, Canadian University Dubai, does another deep dive into the psychological perspective. “Being thrifty is good money management. It’s about still getting what you need and, on occasion, merely like, but calculating its cost, value, time and use.” Basically, it’s about being adult enough to know the difference between “needs” and “wants” and taking the middle line of living a good life within one’s financial parameters so you can sleep well at night as well as enjoy your days.

Mind you, “they don’t mind spending when the math makes sense, but also don’t hesitate to say no, that’s a bad deal or a nonsensical reason to spend when you can get the same for less money and the same quality without much more time involved. It would be the equivalent of being conscious of healthy food choices, cooking one’s meals and watching one’s weight, but not being obsessive over counting calories and being miserable or unhealthy because of it and having fries now and again to enjoy life.”

It’s about maximising money.

Being a cheapskate vs being thrifty

The biggest difference between thrift and cheapness is that being cheap often comes at the expense of other people, points out Dr Mercedes Sheen, associate professor and Academic Head of Psychology at Edinburgh Business School, Heriot-Watt University Dubai. “For example, someone who is cheap will depend on their friends and family to pay for their basic needs, and they often won’t pay their fair share of things like food and transportation.”

She argues that, often, trying to save money or displaying the unwillingness to spend on things that are not necessary can be viewed as cheap rather than just being thrifty or frugal. “But, on the other hand, spending money wisely, especially on big-ticket items, can be very wise and is not the same as being cheap.”

Another important differentiator is the reason for being thrifty. People who are cheap take price as the most important factor, whereas people who are thrifty see the value in what they buy. “Something that affects your everyday life — for example, healthcare — is worth spending on rather than saving a few dirhams,” says Dr Mercedes. “However, if there is value in a lower-priced item over another that costs twice as much, then buying the lower-priced item is the better option.”

Dr Tara says cheapness pays no heed to quality, it’s a drive towards paying the least amount, obtaining the best bargain ever — “the hunt is to accomplish the lowest cost deal possible. It’s cheating the odds on price, even if what you buy or acquire makes no sense in terms of your taste or your need”.

Being cheap is about spending less, avers Dr Mercedes, whereas being thrifty is about prioritising your spending so that you can have more of the things you need for yourself and the people you care about.

“Cheapness” has a negative connotation for a reason, feels Dr Louise. A person who is “cheap” might have money but hoard it, or deny themselves even small pleasures that would make them, their relationships and life more enjoyable. “However, it is often less about money and more about the infringement on social norms that bothers other people about it. Imagine a husband keeping an Excel spreadsheet on all household spending — not a bad idea to see where money goes and where it could be better managed — but it becomes destructive when every dirham needs to be accounted for in the name of saving money [and there is some to spend within reason], plus everyone suffers for it materially as well as psychologically because it becomes a form of control and rigidity everyone else is forced to follow.” Being cheap often also comes at one’s own expense and detriment — i.e., buying coffee one does not even like because it is the cheapest grocery store brand, but feeling satisfied because 75 fils were saved in the short-term.

But cheapness should not to be confused with living on a budget or tightening one’s belt over the summer to pay for tuition in the fall or save for a car. “This is a temporary means of managing money in order to meet a goal,” explains Dr Louise. “Being cheap is a lifestyle of denying one’s self joy but feeling sanctified that one has saved doing it.”

And in times of excess, the worst insult you could give someone is to say they are “cheap”. “Any tightening of the belt — even the good kind — is seen as a negative when it should not be,” she offers. Spending too much leads to materialism and lower life satisfaction and wellbeing. “Never enjoying one’s life also leads to fewer positive emotional experiences. The middle way — maximisers — seem to get the best outcomes.”

Being thrifty in Dubai

Today, being aspirational is equated with a certain lifestyle. You want to earn more, so you can spend more. Where does being thrifty enter the equation — especially in a city like Dubai that thrives on a certain ‘lifestyle’? “With great difficulty,” laughs Dr Louise. “We are heavily influenced by what societies value, even if we don’t believe in it ourselves. Someone who is thrifty might not talk about money in order not to look cheap, while others might spend more to show others they have social status, the ticket to entry being money.” But luckily, the narrative is changing. “With climate change already here, the notion of spending to spend is going out of style and materialistic spenders who are externally motivated by status and recognition are falling out of social favour in many circles as it is increasingly seen as the irresponsible thing to do.” As economies become more uncertain, thrift becomes more popular and normalised and people who value maximising money tend to find one another as their activities and spending levels will match.

Dr Tara doesn’t believe everyone in Dubai holds the value of earning more to spend more — and that there are many segments of the Dubai population who deeply value saving, living well, but ensuring they get value for money: “There are many who engage in conscious spending practices, who privilege cost and quality. These people spend time to research and arrive at the very best in class for their money. They would like their hard-earned money to go further and engage their discernment to deliberately ensure that they spend wisely and not mindlessly.”

Thrifting and fashion

“You can spend a dollar on a jacket in a thrift store. And you can spend a thousand dollars on a jacket in a shop. And if you saw those two jackets walking down the street, you probably wouldn’t know which was which,” Helen Mirren had famously remarked. Adding to that, Dr Mercedes says, “Being thrifty is not about choosing the cheapest item; it is about choosing the item with the best value.” Something that costs less than another item with the same ingredients or from another less expensive store does not mean it has less value. “For example, buying a high-end new bag will cost you two to three times more than a pre-loved item. It makes sense to buy a pre-loved item because you save money, it is sustainable, and it allows you to own many different brands. On the other hand, buying fake items, often called master copies, to save money and showcase a certain lifestyle is unethical and simply wrong.”

Having said that, for a sports enthusiast, it makes sense to buy good quality equipment that supports their activities and lasts longer rather than buying cheaper equipment that can cause harm and last half the time. “Someone thrifty will take advantage of sales or purchase previous season’s products.”

The sustainable story of a Dubai thrift store chain

Jennifer Sault, always an avid ‘thrifter’ herself, used to be operations manager of Gulf for Good, a local non-profit organisation in Dubai, that helps children around the world through life-changing adventure challenges.

“Daily, we would receive phone calls from the community asking if they could contribute their clothing and volunteer their time, which Gulf for Good didn’t have capacity for at that time.” So, she started collecting clothes and doing flea markets on the weekends as a way to raise extra money for their projects. This drive gathered momentum — quickly and organically — until “every wall in my house was covered in clothing”. They then got sponsored storage and the support kept growing.

That was when Jennifer started the Thrift for Good store. The first store was opened in November 2020 (on the Palm Jumeirah) and the second in November 2021 (at Times Square Center), and “we hope to keep growing from here. Our mission is to rehome preloved clothing to reduce waste and raise funds for children around the world in partnership with Gulf for Good. The clothing industry is an environmental catastrophe. Approximately 150 billion clothes are currently produced per year [more than ever before!], and given all of the resources that go into clothing, it is a terrible shame that nearly 3/5th of new clothing find their way into the landfill within their first year of life. We exist to turn the fashion industry on its head, to provide a true local zero-waste solution for decluttering as well as a guilt-free way to access sustainable fashion… So far, we have rehomed over 300,000 items and we hope to continue to grow to provide access in every community in Dubai.” According to Jennifer, people here are hungry for a sustainable option for their clothing — so Helen Mirren will definitely approve.

Thrift for Good’s mission goes beyond thrifting and sustainability as 100 per cent of profits are donated to children’s charity projects in partnership with Gulf for Good. As she says, “It only costs Dh1,500 to provide a child in Tanzania with absolutely everything they need to thrive for a year… We can sell that in one day at one of our shops.”

For Jennifer, being thrifty is to use money/resources wisely, without waste. It does not mean a compromise on quality or value, as “cheap” would imply. “You will find perfect quality and, often, high-end brands in our stores. They may be a seventh of the price that you will find them new, making their prices accessible, but our products carry a lot of weight.”

To live a more sustainable lifestyle, every individual should take responsibility for their choices and their possessions in particular — is Jennifer’s way of looking at things. When we throw something “away”, there is no magical zero waste away place. “There is a landfill, an ocean, a forest etc that is impacted. When thinking like this, ownership is a burden because everything we buy is our footprint. We need to take care to choose and declutter our items mindfully… It’s a beautiful goal to improve one’s quality of life, a goal so many of us share here in Dubai, but an even better one to do so in a way that doesn’t hurt but instead helps others too. Being thrifty simply means you can do more with less. You can have what you need to thrive and also invest in planet and people too.”