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Laura Rowley Money & Happiness

Laura Rowley, Money & Happiness

Practicing Thrift Can Give Your Spirits a Lift

by Laura Rowley

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Posted on Wednesday, February 25, 2009, 12:00AM
Frugal is finally sexy. Just ask Beyonce.

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.

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127 Comments

Showing comments 6-35 of 127<< PreviousNext >>
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  • Yahoo! Finance User - Wednesday, February 25, 2009, 8:20PM ET  Report Abuse

    • Overall: 1/5

    quick Laura, can you text this message to Obama?

  • Yahoo! Finance User - Wednesday, February 25, 2009, 8:40PM ET  Report Abuse

    • Overall: 3/5

    An earlier commenter said banks s/b paying 7% in order to encourage savings. If you do that math, then banks would have to be charging much more than 7% to loan money, especially for things like mortgages. Is that what you want? Or do you just not understand the basics of how a bank works? I'm flabbergasted at times at some of the suggestions/comments on these columns that just make no sense or have any basis in reality. Sorry to be a curmudgeon...

  • Bonnie S - Wednesday, February 25, 2009, 8:42PM ET  Report Abuse

    • Overall: 5/5

    As a daughter of a depression-era mom, I've learned to be frugal and then some! Use it up, make do, wear it out. I'm tight with money, 'cause we didn't have much.Got a little more now, but, that habit is tough to break. Love your article. Thanks.

  • Stephen - Wednesday, February 25, 2009, 8:43PM ET  Report Abuse

    • Overall: 1/5

    I stopped reading after I read, "Frugal is finally sexy, just ask beyonce." Good Lord.

  • SteveK - Wednesday, February 25, 2009, 9:52PM ET  Report Abuse

    • Overall: 5/5

    The best article by Laura that I've seen. I've always considered that anyone who wrote a column about such unrelated topics as "Money and Happiness" was totally lost....seriously why not "Airplane Wings and Barbecue Pork Marrow?" Don't know if Barack is OUR SAVIOR with his emphasis on making loans for auto purchases available. If you don't have the money, you don't deserve that car as far as I can see it. Surprised she didn't quote one of our venerated Founding Fathers to further the argument that SAVING NOT SPENDING is Patriotic!! (apologies to G.W.Bush, oh ye wise one)

  • pbergn - Wednesday, February 25, 2009, 11:59PM ET  Report Abuse

    • Overall: 1/5

    Simply horrible!

  • Karen - Thursday, February 26, 2009, 1:44AM ET  Report Abuse

    • Overall: 5/5

    Everyone is pulling back on spending at the same time. The government doesn't want you to save money (good for you), they want you to spend it (good for them -- more taxes). Rates are low so that people will take out loans. But banks have tightened credit and that's put a squeeze on small businesses.

  • Nostra - Thursday, February 26, 2009, 2:22AM ET  Report Abuse

    • Overall: 1/5

    Frugal or not frugal, money has nothing to do with happiness. Another subversive article.

  • Yahoo! Finance User - Thursday, February 26, 2009, 3:33AM ET  Report Abuse

    • Overall: 2/5

    The religionist psychologist preaches the pleasures of thrift for the masses (whilst the continued profligacy of the wealthy goes unremarked). More corporate media disinformation, as usual.

  • Yahoo! Finance User - Thursday, February 26, 2009, 6:31AM ET  Report Abuse

    • Overall: 1/5

    that reminds me....i have to cancel the internet...even though i have the money

  • SandyLady - Thursday, February 26, 2009, 7:12AM ET  Report Abuse

    • Overall: 2/5

    Frugality is a virtue if that is what you can CHOOSE...However, if frugality is a necessity, therein lies the problem....and it is a fact of life for too many working people. I fail to see what kudos we must give elitists for "not buying diamonds for years"....whoop-de-doo. How about sharing your wealth instead of bragging about it? I would find that much more commendable and so would a lot of other folks. Hey, Laura, why not come back here to planet Earth and write about us common folk...you started out okay with the dolphin story and finding less expensive resources, however, it's small comfort for the people out of work and out of a home and are really hurting.

  • pullamafingaplease - Thursday, February 26, 2009, 7:20AM ET  Report Abuse

    • Overall: 2/5

    Just like Beyonce, I'll bet you got a free swim with the dolphins for this plug.

  • Yahoo! Finance User - Thursday, February 26, 2009, 7:21AM ET  Report Abuse

    • Overall: 1/5

    Thrift is not sexy, it's desperate. I thought I rated that comment on another article already. Is this getting to be your tacky catchphrase thru the downturn?

  • Mary - Thursday, February 26, 2009, 7:25AM ET  Report Abuse

    • Overall: 1/5

    Enjoy every minute because the way they are printing money a Toyota will cost 80 million in three years.

  • Yahoo! Finance User - Thursday, February 26, 2009, 7:35AM ET  Report Abuse

    • Overall: 5/5

    Great insights to a timely topic - thank you!

  • Yahoo! Finance User - Thursday, February 26, 2009, 7:58AM ET  Report Abuse

    • Overall: 4/5

    Frugality comes from maturity and the setting aside of childish ways. Do it.

  • DAVID - Thursday, February 26, 2009, 8:50AM ET  Report Abuse

    • Overall: 5/5

    Yes, swimming with the dolphins is on our list for nest year. Another way to make yourself a little happier is to clean up arond your neighborhood. A few weeds here, a clip of a branch there, a little bit of litter over there, encouaging this neighbor or that one to clean it up a bit. It really makes a difference!

  • Jack - Thursday, February 26, 2009, 8:59AM ET  Report Abuse

    • Overall: 5/5

    Laura, you sound like Forest Gump. "Happy is as Happy does". Wow, I feel so enlightened now, I think I'll eat some shrimp tonight.

  • Yahoo! Finance User - Thursday, February 26, 2009, 9:00AM ET  Report Abuse

    • Overall: 1/5

    Pathetic

  • taopraxis - Thursday, February 26, 2009, 9:02AM ET  Report Abuse

    • Overall: 1/5

    The already absurdly indebted government is blowing trillions more for wars, bankers, and helicopters but ordinary people should eat beans out of a communal pot to save soap and water and huddle under a blanket in the garage next to the furnace to keep warm? Whatever...pathetic.

  • Jet - Thursday, February 26, 2009, 9:06AM ET  Report Abuse

    • Overall: 2/5

    I laugh at the idea of Beyonce (or any other celebrity) being frugal. Anyone spending more than 100k a year (whether their own money or others) cannot possibly be considered frugal. Frugal is not the same as living below your means. Frugal is avoiding waste. Being that anyone can live a very wealthy life on well less than $50,000 a year, if you spend more than $100,000 a year is certainly wasteful. Even spending $30 to $50,000 a year, you're living like a king. The problem is that people don't recognize it and think that swimming with the dophins or owning a fancy TV will make them happier. Neither does though they both might provide a quick rush.

  • Vinny - Thursday, February 26, 2009, 9:17AM ET  Report Abuse

    • Overall: 3/5

    By being frugal, you are fighting against the government and the Federal Reserve. Their policies encourage spending, waste, debt, and a general careless and throw away society. The days of good that will end up as antiques are gone under these policies of funny money from a printing press. Buy the cheapest, use, throw out, replace, repeat is the increased method. Morality, quality, savings, thrift, appreciation are all under attack as dollars are devalued and credit expanded.....but the days of the Fed's monopoly on funny money are coming to an end, credit can not be expanded much further, foreigners don't want our devalued dollars in payment of debt, and there is a growing flight into things of real value and honest monies such as gold. Hopefully soon people will start to realize that when the workers of the country hold the purchasing power in the form of a 100% monetary metal backed currency, markets are calm and level, goods are high in quality, savings are substantial, efficiency and appreciation of a days work are king. It is only through government intervention that the markets are distorted forming bubbles and transferring wealth to the people who use the new inflated and borrowed money first, the banks, the government, and wall street. We must fight to put this purchasing power back in it's rightful hands, the people who go out and earn it with a day of hard work. Government fiat currency will be the death of our Republic.

  • Valhalla360 - Thursday, February 26, 2009, 9:24AM ET  Report Abuse

    • Overall: 4/5

    Not bad for a change. Sold the house and cars and a whole lot of other stuff and moved onto our boat (because we wanted to not because we had to), a year and half later and we hardly notice what we got rid of. Without going thru photos, I would have a hard time listing most of it. For those of you who thing the big bad buisnessman is out to get you: 1) They don't want to kill the middle class. The middle class is the goose that laid the golden egg. They want you to do reasonably well so thier companies sell stuff and they can skim a nice profit off the sales. If they push you into bankruptcy, the sales drop and there is less for them to make. 2) If you really don't like a buisness avoid busness with them. Don't buy the product, buy from a different company, buy no name brands, if the money moves away from them they will change. The biggest problem with americans relationship with buisness is they want buisness to take care of them. Buisness is there to make money. Nothing else. Sometimes it makes them more money to take care of customers but the profit is always the underlying reason.

  • Fred - Thursday, February 26, 2009, 9:30AM ET  Report Abuse

    • Overall: 1/5

    What can I say??

  • Yahoo! Finance User - Thursday, February 26, 2009, 9:35AM ET  Report Abuse

    • Overall: 1/5

    Turning frugal has destroyed Japanese economy and will now destroy US economy. Demand creates supply and the cycle creates growth. You turn frugal and reverse the cycle, and it will not take long to set in a major depression.

  • spinaltap58 - Thursday, February 26, 2009, 9:42AM ET  Report Abuse

    • Overall: 4/5

    People went way over their heads in the last few years. The philosophy was " it's all about me" and that of "Entitlement." Yes many undeserving persons bought expensive homes even though they showed no income, did not have jobs and put no money down, some even borrowed closing costs. Can you imagine the audacity? Well now its time to pay the piper and everyone is feeling it not just the irresponsible borrowers. Of course the Mortgage brokers didn't mind pushing these dimwits through the system letting them know they were qualified for mortgages. They got nice commisions out of it.The underwriters passed everything through as well, there was no oversight. On top of that the borrowers took out second and third mortgages without ever giving a second thought to how they would repay it. They knew they never would and so used their homes like piggy banks to go out and buy whatever they wanted.. So now the responsible ones will pay for the dimwits. Yes we the tax payers will pay for the failed oversight.In the old days those that did not paytheir debts were put into debtors prison. They should be charged with Grand Larceny and the mortgage brokers should be charged with Fraud. Then we will see change and more jobs created by hiring more corrections officers court officers and mortgage related investigators to keep these slimebuckets in check!!!

  • Yahoo! Finance User - Thursday, February 26, 2009, 9:44AM ET  Report Abuse

    • Overall: 1/5

    what a weird article

  • HR Dir - Thursday, February 26, 2009, 9:44AM ET  Report Abuse

    • Overall: 5/5

    I spend a pretty penny per year and I feel as though I live below my means - maybe not frugally, but I work hard, save and invest and enjoy life. Once the kids are out of pre-school, we can even go back to a one income life-style banking the second income (spouse and I LOVE our jobs). Rather than spending money on ticky-tack things here and there, we bought a boat for family outings. Rather than expensive hotel trips, we camp - with the boat... in tents... and it is FUN! The kids love it. We have visited almost every city east of the Mississippi through our KOA membership staying in cabins or tents and the kids have a lot more fun camping on the outskirts of town than staying in a frumpy hotel. Our other cost savings is cooking from scratch... We save tons of money cooking our food - knowing what is in it and having great, healthy, good tasting food. We started this due to food allergies and although our youngest grew out of most of them, it works for us! Last tip - "shop" your local green grow / farm / farmers market. We sign up for a share which covers our food for $100.00 per month April - October. Fresh, local food ready for your creative touch. This helps the community, your budget and is good for you! Good luck...

  • Yahoo! Finance User - Thursday, February 26, 2009, 9:45AM ET  Report Abuse

    • Overall: 1/5

    No spending money won't get you a honey

  • No - Thursday, February 26, 2009, 9:54AM ET  Report Abuse

    • Overall: 2/5

    Uh, yeah, Beyonce ain't frugal. Further, the time to be frugal is not when you need to be.

Showing comments 6-35 of 127<< PreviousNext >>
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