How to Be Thrifty

A new book offers a game plan to 20-somethings who want to reclaim this lost art.

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In Generation WTF, sociology professor and self-help expert Christine Whelan offers up a game plan for overwhelmed 20-somethings who aren’t quite sure how to get their lives, money, and careers together. Whelan writes that thrift is a lost art that recent college grads can use to their advantage, and in fact, it recently helped her start saving $50 a week. Excerpts from our recent conversation:

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

Why do you think thrift is so important? Is it a skill that 20-somethings can learn, even if they haven't been thrifty already?

When the economy went south a few years ago, we were bombarded with messages about saving money. But penny-pinching is distasteful to this generation of young adults because it seems pointless and punitive. They want to live for the moment and have fun while they are young, single and free! Thrift isn't penny-pinching, though: It's about spending and saving so that your financial life is in keeping with your core beliefs and values. And that makes the money conversation a whole lot sexier and more personalized.

Why do you think so many college students don't even know the meaning of the word thrift?

In part, it's a vocabulary issue. It's not that college students don't know the concepts of good and bad uses of money, but the word thrift is so old-fashioned that it's fallen out of use for this generation. And that's a shame: Thrift is a very personal exercise. In Generation WTF, I don't say some purchases are always good or bad. It's up to you, the individual, to figure out how you want to use your money to build your own future, to help others and to have as much fun as possible along the way.

What's the best way for someone to teach themselves to be more thrifty?

I encourage young-adults to think about thrift through some basic exercises of self-discovery. First, what are your core values? Do you value security, friendship and faith? Or perhaps excitement, family and education? Pick five core values and then write them down on a slip of paper that you can clip on to your credit card as a constant reminder.

Second, where does your money go? Track your spending for a week—and be sure to list all the "little" stuff, too. Third, go through your expenses for the week and ask yourself whether each purchase fits into your core values. Not all splurges are bad ways to spend your money, and "right" versus "wrong" use of money is a very individual exercise. For example, if you treated three of your buddies to dinner, but strong friendships and relationships are one of your core values, this might be a good way to spend your money. However, daily snacks on the run might not be getting you toward any of your goals.

As you say in your book, it's easy to think everyone has certain things, like iPods or a new car. What's the best way to avoid jealousy?

Don't let your mind play tricks on you. If you think "everyone" has an iPhone, go on to Facebook and look at the last 20 people who have posted on your wall, or the 30 friends who have updated their status recently. What type of phone do they have? Odds are "everyone" doesn't have a better phone than you do, even if you own social group.

Then, get out of your bubble a bit and do some volunteering. Spending time with those who are less fortunate gives you much-needed real-world perspective. Giving of yourself to help others not only helps your community, but also gives you a feel-good boost that rests your "keeping up with the joneses" attitude for a while.

Finally, think in terms of experiences. Things may go out of style, but memories don't. Going to a concert or on vacation with friends is probably a better way to spend your money than a gadget that's going to be out of date in a few months anyway.

[In pictures: 10 Ways to Improve Your Finances in 2011.]

Are you thrifty? If so, how did you learn to be?

For much of my life, I really wasn't thrifty, but once I started thinking in terms of my values—in terms of what was really important for me to spend money on versus what was just mindless spending—I was able to cut back my spending without feeling deprived at all. One of the best parts about writing Generation WTF was that I was able to test out all the advice myself!

Two of my core goals are health and a thriving marriage, so the last year, we set goals of spending less money eating out (fewer date-nights out) and my husband wanted to lose some weight. Now, I make lunches for me and my husband each week—saving $50 or more each week—and do lots of cooking-in-bulk and freezing so that there's always a good dinner waiting at home.

Yes, we spend a lot on groceries (and while we go in with a detailed list and meal-plan, I don't skimp on spending when we do our weekly shops), but we save a lot of money on take-out and consume many fewer calories. More than a year later, we've resurrected the romantic dinner at home and my husband has lost 35 pounds.

Kimberly Palmer is the author of the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.