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Hello, my name is Ben. I’m a recovering cheapskate.
According to Urban Dictionary, synonyms for the word cheapskate include tightwad, miser, stingy, penny pincher, skinflint, broke, Scrooge, tight, freeloader, greedy, mooch, thrifty, asshole, thief. OUCH! No one wants to be a cheapskate.
1. Acknowledge Your Inner Cheapskate
People often extend much grace and understanding once we admit our problems and apologize for them. However, many of us stubbornly refuse to even admit we have a relentless cheapskate living within.
Do you find free offers irresistible? Do even justified purchases make you nauseous for weeks? If so, you have an inner cheapskate. PLEASE . . . stop bragging about it by calling it efficiency, and stop hiding it. Everyone around you already knows.
2. Admit how spending makes you feel.
I’ve come to realize that I don’t buy things for a lot of deep reasons. Maybe I’m afraid of making a mistake. Maybe I’m afraid of starving to death. Maybe I’m being selfish and want to spend (or save) the money on myself.
Feelings can indicate what’s wrong inside of us, but we cannot solve what’s wrong if we mask those telling feelings. Don’t appeal to logic, which is relative anyway — especially the kind of logic cheapskates use. Excuses about high prices, affordability, and savings are usually a smokescreen allowing us to justify our cheapskate behavior.
3. Face Your Fears
I used to think there were only two different things to do with money: spend or save. Saving ALWAYS seems more responsible, and spending ALWAYS seems scary to a cheapskate (usually we prefer the word irresponsible).
Remember that Michael W. Smith lyric, love isn’t love ’til you give it away? Money is the same way. Money doesn’t actually become money until we spend it. Wikipedia describes money as aunit of exchange, which means it’s the spending that actualizes the power of money. Saving doesn’t replace spending. It only delays it.
What most cheapskates don’t realize is that they’re going to be just as afraid to spend the money later as they are now. Saving can be as much about avoiding a decision as it is about stockpiling for the future. The best thing a cheapskate can do is figure out why they don’t want to spend and face those fears. Time is more likely to make the fear of spending worse rather than better.
4. Celebrate Good Spending
To a cheapskate, all spending belongs in one category: bad/hard. What about compassionate gifts or wise financial investments? These should be celebrated, not mourned. Did you hear about Walter Mischel’s delayed gratification study? Mischel’s research determined that kids who were able to wait for two marshmallows instead of scarfing down one were more likely to succeed in life.
Well, do you know what they forgot to mention? Eating two marshmallows instead of one will kill you faster. The test focused on delayed gratification instead of diet and rightfully so. It’s true that children struggle with delayed gratification, but if we stop at teaching self-control alone, we’ll celebrate a full piggy bank.
What’s the point of a full piggy bank if we end up buying more marshmallows in the end?We need to celebrate good spending. Let’s talk about it at the dinner table, and give our kids high fives when their piggy banks are empty for the right reasons.
What does good spending look like? In our Financial Apprenticeship course, we discuss how good spending is money applied to our highest-level values, which include compassion, creativity, or anything resulting in positive life change for ourselves and/or others.
5. Set Non-financial Goals
We understand many things about goal setting that we can apply to money and all it buys. What about the things money can’t buy?
- Friendship
- Intimacy with our partners
- Compassion toward our children
When we’re labeled cheapskates, it’s not because we care about money. It’s because we care about money more than relationships. Failing to plan is planning to fail. If we’re going to set clear and defined goals for our 401k or savings accounts, the relationships in our lives deserve the same treatment.
What’s the minimum amount of times you want to go out to coffee with a friend next month? Who do you want to buy birthday presents for next year? Good things don’t happen on accident.
6. Set a Saving Budget (and Don’t Go Over It)
Many people have budgets to prevent overspending, but setting the right budget can ensure we don’t save too much either. The problem with cheapskates is that in the moment, the amount we’re saving never feels like enough. We need to step back regularly, and reassess the amount we should be saving. Set that amount of money aside, and then submit to the discipline of spending the rest.
Don’t know where to spend it?
- Give it to charity.
- Buy a gift for a friend.
- Send it to me.
- Light it on fire.
It matters less where we spend it and more that we spend it because this practice lets our savings accounts know we are in charge of them instead of them being in charge of us.
7. Set a Spending Budget (and Don’t Go Under It)
Budgets go both ways. They can inform us if we spend too much (the popular angle), but they can also tell us if we’re spending too little. For cheapskates, we should use the tools of budgeting to make sure we spend in the areas we care about.
Budgets, as a tool to spend more, can make life easier because we end up making a one-time decision based upon our values instead of 100 small decisions based upon our emotions. The feeling of wanting to spend on something important may never come, but don’t be a slave to emotion.
Try setting a gift budget, a family splurging budget, or even a budget for items that those around you value but you struggle to understand yourself. Then . . .
SPEND every penny of it! You’ll find yourself growing relationships — not just bank accounts.
8. Buy Something Extravagant (That you Can Afford)
Webster defines extravagant as exceeding the limits of reason. To cheapskates, extravagance seems like a bad thing, but the best things in life exceed reason: a fancy dinner, a note of admiration, an engagement ring, or a bouquet of dandelions from a toddler. It’s the very inefficiency of them that makes them great.
Love itself exceeds reason. Efficiency can be a great tool, but at its extreme, it can take over our entire lives. Cheapskates are always efficient and never extravagant. The problem is no one gets to the end of their life and says, “Damn, I’m so happy I lived an efficient life.”
If you’re a cheapskate, you must learn when and how to turn down the efficiency dial. Buy something extravagant for yourself. It could be a brand name clothing item you’ve always wanted but could never justify. Maybe you’d like to start a new hobby. Better yet, consider buying something extravagant for someone else. Remind someone of his or her value, foster your relationships, AND help yourself turn down the efficiency dial.
SUPER ADVANCED DO NOT READ:
BONUS #9: REVERSE NEGOTIATION: When to Pay More for Something
You’ve come this far, and you really want to kick your inner cheapskate in the balls. This is the trick — the ultimate in freedom and financial mastery . . . Ready?
I’ll let you in on a little secret: Almost every price is negotiable.
Many sharp tacks have figured this out and already used their power to negotiate lower prices, but that’s only one-half of the equation! Do you know you can offer to pay more for almost everything? When you price haggle you are NOT only limited to increasing your pile of cash, but you can negotiate to increase someone else’s pile?!
I know. Crazy, huh? Your inner cheapskate just did a somersault in your brain. I’ll give you an example. My wife and I regularly read an amazing blog we like. It has challenged us and helped our marriage, and we’ve shared it many times.
In this case, the author (a female from Oregon) had amazing bargain basem*nt prices on all her writings. The price was FREE! Very similar (or lesser) writing I would pay $10 or $20 for on Amazon. I buy books when I believe they are worth it or when I want to support the author. By spending on books by authors I believe in, I’m voting for writers to continue investing time in the craft and increasing the likelihood of more book production. But, why would I not desire to support an author or vote for more of her work just because she prices it at FREE? This placesthe power of generosity outside of our control.
ENTER REVERSE NEGOTIATION.
My wife emailed this author and asked if she accepted donations. She said yes with no cap on the price. We chose to mail this writer a check for $1,000. BAM. Negotiation success! We got exactly the price we wanted.
Maybe the author was thinking about quitting tomorrow, but now she has the resources to keep at it for a few more months. Probably not, but as a blogger, I know how important audience support is. My guess is that there are people in our lives who we benefit from who could use a bit of generosity.
We will never be able to help others as long as our inner cheapskates control us. So think of an author, musician, friend, restaurant owner, or someone else in your life you value. Try negotiating the price up for a change.
Originally Published March 13th 2015 on Financial Apprenticeship
