So which one were you? Frugal, Thrifty or Cheap? Hybrid? Or none of the above?
These are the types of spending habits and I think this is where we should all start from when we discuss about saving money. If you are one of the three, chances are, you already have an idea of saving. But between these three, there are actually different definitions of what saving actually means.
A frugal person focuses on value and intentional spending. This person is willing to buy expensive shoes for the value of comfort and style (whatever things she want to find in a shoe). This person will go from store to store to find those shoes that fits her criteria. This person has also a budget allotted to something, for this example, wardrobe, and sticks to that. As you can see, this person saves money by sticking to the budget planned in a recurring* basis. (*Recurring because people have different ways to plan: weekly, monthly, quarterly, yearly)
A thrifty person focuses on avoiding waste for a longer term goal. This person will not buy shoes if her sneakers are still in good shape. This person will go down the shoe repair shop and have her shoes repaired should it get small damages but can still be salvaged. More often than not, a thrifty person also has a budget plan in hand. There's quite a very thin line between these two. One of the differences is being a bit strict on the intentions of spending.
A cheap person is unwilling to spend money even at the expense of others and self. This person will buy shoes marked off at 70% even if she does not like the style or hurts the feet because of the thought of "saving money" by buying something at a discount. There is an illusion that you SAVED MONEY but she didn't, reality is she spent 1000PHP for that shoes. And most likely, since she didn't get the best value for it, she will end up NOT wearing it leading to waste.
Why do these matter? We want to define what is saving money. Saving is income not spent or deferred consumption. A frugal and thrifty person understands these concepts very well but not a cheap person. A cheap person thinks she is saving when she's actually spending and worse it's actually hurting her finances. However, there's a debate that being thrifty is being too restrictive. In my personal opinion, it just depends on what works for you.
In conclusion, the only way to properly SAVE is to simply NOT SPEND a portion of your income. If you are none of the above, ready my previous blog, maybe?
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