You’ve probably heard the word frugal living thrown around a lot lately. No doubt fueled by a tough economy. But have you ever given some thought as to what it means by living frugally?

Let’s take a look at what frugal living means, and we may even dispel a misconception or two along the way.

Frugal Living Defined and Explained

Frugal Living Doesn’t Mean You Are Poor

Frugal living gets a bad rap from people who don’t truly understand the word. The first misconception is that frugal living means you are poor.

This idea is almost entirely backward from the truth. People who are living frugally are smart with their money and how they use it. These people manage to avoid drowning in debt, and they pay their bills on time.

Most people who live this way make a decent living. They have discovered how to live below their means and save their money on what is important to them.

Nor Does It Mean That You’re a Cheapskate

Despite what others may think, frugal living does not mean that you are cheap. Sometimes not having the biggest house in the neighborhood or the fanciest car just indicates that you are smart.

To some, there is a fine line between frugal and cheap. But in actuality, there are substantial differences.

Cheap people often take advantage of others to serve their own interests. Frugal people will often forgo something of little consequence to them to spend their money on something that matters.

They will often save it for the right opportunity to come along.

I have heard an example that describes the difference between a cheap person and a frugal person. Pretend you are at a local fast food place and you get a burger and fries.

When you go to get some ketchup packets, a cheap person will grab a huge handful just to have some to use at home later. They are taking advantage of the restaurant to serve their own interests better.

A frugal person will take the ketchup packets they think they will need, but save any leftovers to use later to avoid wasting them.

A frugal person might eat a lot of rice and beans to save on their grocery bill. Today’s rice and beans aren’t your mom’s rice and beans, though.

It may be a fine line, but it is a huge difference in thought process and intent. It’s easy to see how living frugally can be the best for the environment.

Frugal People Are Smart About Spending

If there is any point I want to make about living frugally, it’s that they are smart about how and where they spend their money.

Instead of acting on an impulse buy, a frugal person will weigh the decision with conscious thought — Do I really need that magazine or expensive food? — and instead saves the money for something important.

That’s why you can see frugal people going on vacations and buying reasonable homes while others just waste their money.

They understand the value of a dollar and know that being wise with it may mean that they can spend more time with their kids.

Living Frugally does not mean that you are cheap or poor…

On the contrary, it may say that you do have money and that you are smart about it. Frugal people have a personal value system attached to their spending habits, and it serves them well. They don’t get into debt or work hard to get out of debt.

This value system often helps with not wasting so much as well. I guess you could say that the world would be a better place if everyone were just a bit more frugal.