Laura Rowley Money & Happiness

The singer, whom 'Forbes' magazine recently named the richest star under age 30 -- with a fortune of $80 million -- described herself in an interview as "very frugal."

"I haven't bought a car since I was 16 or diamonds since I was 17," she told the British publication 'The Mirror'. "I have a lot of property. I've invested my money and don't have to make any more, thank God, because I'm set. I'm now able really to be free and just do things that make me happy."

Of course, when you are as famous as Beyonce, people tend to lend you diamonds and cars for free for the publicity. (And hopefully she hasn't invested all of the money in property, or she won't be set for long.)

The Connection Between Frugality and Happiness

And while equating frugality with abstaining from diamonds is pretty hilarious, I like the connection Beyonce makes between frugality and happiness. That's the way I've always thought about it. If you can shave a little off the price of everything, you have more resources to do things that make you happy.

The key is not to find those savings at the expense of others, says John Lastovicka, a professor of marketing at Arizona State University who has studied thrift. "I think certainly there are a lot of ways that a person could spend less that does not endear them to other people -- like the guy who's always gone when the bar bill comes," he says.

Drink-and-dashers notwithstanding, thrift has been essential to survival over time. "I don't think you and I would be here if there weren't frugal people 100,000 years ago," Lastovicka says. "It's why we've done really well as a species. Someone figured out that we need to save some of the crop so we can eat in the winter."

What's Your Winter Crop?

And that's at the core of frugality -- to not simply be prudent for the sake of prudence but to have a point, a higher purpose for the effort. What's your winter crop?

For me, it's my family. If I can figure out how to save on groceries, energy, housing, and other basics over time, I'll gain more educational options for my kids down the road. (The ideal would be funding at least their bachelor's degrees without student loans. Graduate school may be another story.)

Moreover, creative cost-cutting can yield priceless memories today. For instance, we took a family trip to Florida this month. By negotiating down the cost of the condo and getting the best deal on a car rental, we saved enough to swim with the dolphins (fulfilling a childhood fantasy inspired by too many episodes of 'Flipper'). And research suggests buying experiences increases happiness for the consumer -- and the people around them -- more than buying stuff.

The Material and the Experiential

That's the conclusion of a forthcoming study in the 'Journal of Positive Psychology'. Ryan Howell, assistant psychology professor at San Francisco State University, asked participants to reflect on a time in the past three months that they used money to make themselves happy with both material and experiential purchases. (Experiential purchases were defined as those in which you get nothing but a memory at the end -- concert tickets, dinners out, a weekend away, etc. Material items were defined as tangible objects in their control -- shoes, jeans, electronics -- but excluding pricey purchases such as homes and cars.)

Participants were then asked to reflect on 26 different questions that had to do with psychological needs satisfied by the purchase. "On a scale of 1 to 7, both material purchases and life experiences were in the positive category," says Howell. "It's just there were sizable differences between material and life experience. The idea is you're happy with a material purchase but you're thrilled with a life experience."

In addition, experiential purchases made people around the buyer happier as well. "People felt closer to friends and family as a result of the purchase," Howell notes. "We were also surprised in that experiential purchases made them feel a higher sense of vigor; they felt more alive because of the purchase."

Cheap Dinner vs. European Vacation

Interestingly, there was no difference in the happiness levels reported for more expensive experiential purchases -- a $400 weekend away -- versus cheaper ones, such as a $30 dinner. "It's an interesting way of thinking -- you can have just as much satisfaction if you pick the right daily activities as opposed to one big European vacation" that would require two years of deprivation, Howell says.

That's an upbeat message for millions of consumers who are feeling the pinch and becoming frugal by necessity. Consumer spending has contracted to its lowest level since the 1980s. A whopping 63 percent of respondents in a recent Harris Survey said they would not make a discretionary purchase if a discount or deal were not available. The National Association of Resale and Thrift Shops reports that nearly three-quarters of its members posted higher sales in September and October 2008, with an average increase of 35 percent over the year-earlier period.

And even funerals are becoming more frugal, according to the 'Boston Globe', with people choosing pine coffins over mahogany, and cremation over the purchase of a burial plot.

Which, if anything, serves as an excellent reminder of why it's better to spend your resources on swimming with the dolphins -- or whatever your childhood fantasy might be -- than on a bunch of stuff.

Because you really can't take it with you.