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Frugality is definitely in the air during the financial crisis of 2008 and 2009. Let’s take a look at how frugality works.

Webster’s dictionary defines frugality as, "prudent economy; that careful management of anything valuable which expends nothing unnecessarily, and applies what is used to a profitable purpose; thrift; opposed to extravagance." In particular, frugality has come to be associated with the idea of saving money whenever possible, being careful with money, and not wasting money. It can also mean trading your time for money. If you can spend a little time to save a lot of money, that can be a form of frugality.

For people who have become unemployed in the economic downturn, frugality becomes important because there is little or no money to spend. For people worried about becoming unemployed, frugality can help free up some cash to build an emergency fund or pay off some debts.

The thing about frugality is that it comes in a thousand different forms, and one of the easiest ways to learn about frugality is by example. There is frugality as it relates to housing, cars, clothing, energy and so on. One big area where people have a lot of control is at the grocery store. A typical family of four in the United States can easily spend $100 or more per week on groceries, or $5,200+ per year. With a little creative frugality, it might be possible to cut that number in half.

For example, everyone knows about coupons. Coupons are basically free money, but you have to invest a little time to collect them. We get a lot of coupons in the mail, and there are coupon sites all over the Web. After collecting your coupons, find a store that offers double coupons.

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May 19, 2009