On this month’s Smart Shopper blog we are talking about why frugal is cool.

What is frugal living?

Basically frugal means living within your means – which generally means spending less money than you earn each month.

It also means using what you have and not constantly buying more stuff when you don’t need it.

Frugal used to have negative connotations. People who were frugal were considered lower income and less educated. In reality, many people who were frugal 40 years ago went on to become silent millionaires – you know, those people next door who drive the same car for decades and live in the same modest home. Later in life, you find out they actually had millions banked, but they never chose to flaunt it. As a matter of fact – I hope that’s our family one day!

In this tough economy, frugality is now a key way to get through layoffs, pay cuts, unemployment and the rising cost of so many everyday expenses including power, food and gas. You see people from all walks of life and income levels using coupons, turning down the thermostat and carpooling to work.

Frugal is in and frugal is actually cool.

So what encompasses frugal living?

It involves all of the things I have been writing about each week in our Back to Basics 12 week series as well as the remaining techniques I’ll be covering in these last few weeks of the series.

Frugal living involves:

Budgeting: so you know how much money you are earning vs. how much you are spending

Couponing: to cut costs on grocery and non-food essentials. Shopper in 2009 saved over 3.5 billion dollars using coupons. Have you seen all those coupon shoppers in the stores lately – pushing the grocery carts with their coupon binders? They are savings billions of dollars this year! Are you?

Meal planning: to keep you out of the drive through and cut costs on meals while also offering healthier choices for your family.

Cutting utility and other household costs: such as heating and cooling, electricity, water use, TV, phone and Internet expenses.

Having fun frugally: which doesn’t mean cutting out restaurants, vacations and family outings completely - it just means being smart about where and when and how you are having fun.

Frugal holidays and gift giving: which aims to keep you from going into debt while still allowing you to give great gifts and host fabulous celebrations.

These are all aspects of frugal living that everyone can use to get out of debt, stay out of debt and even prepare for a comfortable retirement. That’s pretty exciting!

Are you frugal?

So…the question is - how frugal are you? If you have been reading the weekly Back to Basics Series AND following the techniques outlined in the series, you should have a good grasp on where you stand financially. You should also know where you are spending too much money and where you need to cut back.

The best part about being frugal is that once you realize that you don’t need all of that expensive stuff you may see your neighbors buying, you have less debt, less stress and more hope for a financially sound future. Keep in mind that those neighbors who drive a new car every 2 years, go out to eat 5 nights a week and live in a McMansion may have some pretty hefty debt of their own.

We didn’t buy the house that the bank said we could buy 10 years ago. Instead we bought a 5 yr old house on 1.5 acres in a quiet subdivision out in Johnston County. Because we didn’t opt for a fancy, new, huge home with all the bells and whistles, we are now on track to pay off our house before our kids go to high school! That’s the big picture with frugal living. We have no other debt and soon the house will be paid off as well.

You tell me which is cooler – having all your debt paid off or having a huge house and lots of toys and lots of debt to go with them? I’d say option 1 is infinitely cooler!

So there you have it – the basics of frugal living and the reasons that frugal is cool. If you aren’t already on the frugal fun ship, come aboard and watch your savings increase, your debt decrease and your financial stress go out to sea forever! As I always say, it’s your money – spend it wisely!