The new frugality: Be smart, not cheap

Frugality has become a badge of honor these days, said Tom Hundley in the Chicago Tribune. “I’m probably one of the new braggers,” says Carrie Kirby, a self-described “frugalista” who blogs about her coupon-clipping conquests. “It’s become more socially acceptable, more normal, to talk about this stuff.” Economic statistics reflect this scrimp-and-save sentiment. Consumer spending has dropped to its lowest level since 1980 and is expected to continue shrinking. Thrift-store sales have jumped 35 percent, and public libraries have seen a swell in circulation. Even those who can still afford to spend lavishly are showing restraint because of what economists call “luxury shame.”

But cheaper isn’t always better, said Ruth Mantell in Marketwatch.com. There are times when it pays to pay—for instance, hiring an attorney or tax advisor. Likewise, if you’re working long hours or more than one job, cleaning your own house or mowing your own lawn may not be the best use of your time. Even the occasional “guilty pleasure” can be money well spent. Budgeting, after all, is not unlike dieting. Deny yourself too much, says Erica Sandberg, author of Expecting Money: The Essential Financial Plan for New and Growing Families, and eventually “you are going to raid the refrigerator.”

It’s fine to scrimp around the edges, said Pat Regnier in Money. But changing your brand of coffee or being the last person in your ZIP code to buy an iPod” won’t get you all that far. “It’s the big things that really count,” says Chicago financial planner Mary Claire Allvine. You’ve got to make hard decisions and strike out recurring expenditures. Last fall my wife and I stopped making impulse purchases and started packing PB&J for lunch. But after watching our savings account grow by “a whole $75,” we realized that more drastic action was required. If you’re serious about saving, you need to “cross out a major line item,” be it a house with a fancy address or, in our case, the “fat tuition bill” from our daughter’s private preschool.

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