Frugal Out of Necessity, Frugal Out of Choice

When I was in college, I was frugal out of necessity. I had very little income coming in – just the money from a part-time job – so every dime that I spent was vital. I ate a ton of ramen noodles. I went to community and campus meetings largely for the free food. I lived in a couple of tiny apartments and was effectively homeless for one short period.

I remember this one Saturday when I hadn’t eaten in about 24 hours because I was literally out of money. I went into work and found one of my supervisors there who was trying to take care of something that wasn’t too difficult but was pretty urgent. I told him to go home and I’d take care of it. About half an hour later, he came back with about $20 in fast food and gave it to me as thanks. I was almost in tears over it.

At that point in my life, I was frugal out of necessity.

In comparison, let’s look at today. My wife and I are both what I would call frugal, but we don’t miss meals any more. Instead, our focus is making sure that those meals don’t cost too much. We’re careful with what we buy, but we don’t have to worry about having enough money to pay for things when we make the decision to buy them.

A great example of this comes from a few days ago. We had to drive a few hours to go to a wedding and that driving time coincided with our family’s dinner time. We could have gone to a drive-thru to pick up supper, but instead we saved about $10 and made sandwiches and other foods before we left, which took about 15 minutes or so.

At this point in my life, we are frugal out of choice.

There are a lot of differences between the two.

Frugal By Necessity

A person who is frugal by necessity does not have enough money to buy many things. For that person, the absolute lowest price on a minimally functional item is the highest priority.

In this situation, walking out of a store with enough calories to feed your family for the next several days at the lowest possible price is going to be the focus when shopping for groceries.

A person who is frugal by necessity is looking at one thing first and foremost: the price tag. They have a very limited pool of money with which to buy things, so the cheapest version of an item will almost always have to be the one that they choose.

This isn’t done by choice. Often, this person is stuck in a situation with very low income. Their buying choices are predetermined by the pool of money available to them, which is pretty small. They have to stretch every cent to cover their household needs, and that means buying the lowest price version of everything.

Frugal By Choice

On the other hand, a person who is frugal by choice has enough money to buy most things. However, for that person, maximizing the value of every dollar is the highest priority, even when that sometimes means spending more than the lowest possible price.

In this situation, for example, a person might buy several bulk items at a grocery store when shopping for groceries because that will save money over the long run. That person might not choose the lowest-priced item if that item is of very low quality.

A person who is frugal by choice usually puts a good deal of thought and careful consideration into each and every purchase, but not strictly as a way to spend as little as possible. Instead, that person is going to strongly consider the value that they get out of the purchase. Will they use the item frequently? Is the item well-made and reliable so that it won’t need replacing soon and will work well?

For the “frugal by choice” person, the decision to be frugal comes from a number of sources. Perhaps they want to use the excess money to invest or to build a business or to save for retirement. Perhaps they have a personal belief in minimalism or want to avoid being overly consumerist. Maybe there’s an environmentalist thread running through it.


So, where does cheapness fall on this spectrum? A “cheap” person is a person who has the means to be frugal by choice, but instead chases the absolute lowest price on everything to the point of reducing their quality of life and the quality of life of their guests and friends.

I do not view someone who is financially forced to be frugal by necessity as being cheap – they are not choosing to have to chase the lowest-priced option. They are doing it because they have to.

For example, if a friend of mine is really struggling to make ends meet and they invite me over for dinner and serve generic boxed macaroni and cheese and some older bread as part of dinner, it doesn’t bother me in the least.

On the other hand, if someone I know who is making a good income and does the same thing, I would view it as treating a guest poorly – though I wouldn’t say anything, I would think of that person as “cheap.”

Common Strategies

These two flavors of frugality share some common strategies.

Both sides are going to value strategies that have little upfront cost but save money over the long run. For example, I’m frugal by choice, but I like to make my own laundry detergent out of equal amounts of soap flakes, borax, and washing soda. I just mix these up in a jar and put a teaspoon into each load of laundry. This is something that a person who is frugal by necessity would also do, because the up-front cost is comparable to or lower than buying even a small bottle or box of laundry soap. For me, it’s something that saves money without much effort and without reducing the quality of laundry cleanliness by any significant amount.

Both sides are going to value quality things that happen to be free. The library, for example, is full of both “frugal by choice” and “frugal by necessity” folks. State parks are often full of both “frugal by choice” and “frugal by necessity” folks. Free open-air concerts? Lots of “frugal by choice” and “frugal by necessity” people in the crowd there.

Both sides will check the flyers before heading to the grocery store. This is one of our biggest savings strategies – and it’s something I did back then, too. The grocery store flyer is nothing more than a list of discounted items which can serve as a guide for what you’re buying at the store.

Different Strategies

On the other hand, in some areas, their frugal strategies are going to diverge.

The “frugal by choice” people are going to be able to make choices that have a high up-front cost but save money over the long run. If I realize I need an item that I’m going to use all the time, I can afford to spend more to buy a very reliable and well-made version of that item. I like to use LED light bulbs as an example. There are cheaper bulbs out there than LED bulbs, but over the long run, you almost never have to replace LED bulbs and they use very little energy, so your energy bill goes down and you don’t have the continual light bulb replacement cost. However, that costs money up front that many “frugal by necessity” people just don’t have.

The “frugal by choice” people can choose to occasionally spend a lot on something that lines up with a personal value of theirs. For example, Sarah and I often take our family on a family vacation of some kind during the summer, because we think that seeing different parts of the country (and, starting this year, seeing different countries…) is something that’s a valuable thing for our children. We plan those trips frugally, but those are things that aren’t on the table for someone who is frugal by necessity.

The “frugal by choice” people are going to be able to buy the “bang for the buck” version of most products, skipping over the lowest-priced version. Appliances are a great example of this phenomenon. When we go buy a new washing machine, for example, we’re going to have criteria that go beyond the sticker price. What does Consumer Reports think of the model? Will it be reliable and last for a long time so we don’t have to deal with washer problems and replacement anytime soon? Does it have the features we actually need? Those options aren’t available to the “frugal by necessity” folks.

Final Thoughts

Not all people who follow a frugal path are doing it for the same reasons. Some simply have to do it and find themselves making choices based solely on the sticker price. Others want to do it because they want to preserve value for other things or they have other values that align well with frugal choices.

Because of this kind of division (and many others, such as environmentalism), not all frugal strategies are going to work for everyone. Some people who are “frugal by choice” won’t find much use for some strategies that work best for “frugal by necessity” folks, for example, and vice versa.

The value comes from recognizing this difference, and knowing that just because a tactic or two isn’t useful for your situation doesn’t mean that a whole list is useless or that frugality itself is useless. It’s just that different strategies work for different life situations, and when you look at a long list of frugal tactics or read a book on frugality, you’re going to find strategies that work best for someone in a different life situation than yourself. Don’t overlook a book or a list just because some of the initial tactics don’t apply to you (or are things you’re already doing) – likely, that list has an idea or two that will work wonderfully for you.

You just have to find it.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.