In Birmingham once, I was given a peek inside a majestic Victorian bank that had been closed for years. It's probably a dodgy nightclub now. In which case, its new punters may be a little startled by the stern admonishments emblazoned on its marble walls. “Thrift radiates happiness” one declared.

Thrift radiates happiness! When was the last time that a bank dared to bombard its customers with moral injunctions like that? These days it is bankers who seem to need lessons in the virtues of thrift, abstinence and prudence.

That dour Victorian motto sprang to mind last Saturday, when The Times recounted the story of Kathy Kelly. She is a middle-aged teacher from Bristol. Stung by not being able to afford a wedding gift for her brother, she resolved to live on £1 a day for a year. Bit of a masochistic over-reaction, perhaps - but the point is that she managed this feat so successfully that at the end of her self-imposed penury she was able to buy her brother and his wife a £1,300 life membership of The National Trust. She has now written a book about her annus frugalis of conspicuous non-consumption.

Her achievement is eye-popping enough. But what impressed me even more was the joyous manner in which she accomplished it. She looks a picture of well-being and contentment. Her experiences during the year led her to meet the love of her life. (A bloke, I mean, not a cut-price tin of baked beans.) And she seems to have had a whale of a time foraging for free or almost free items to eat, wear and wash herself with.

Of course she had advantages not usually available to down-and-outs. She paid her rent and utility bills before starting her experiment. She was healthy enough to cycle everywhere. And, being articulate and presentable, she could blag her way into freebies such as book launches that offered nibbles or even a buffet. It's an old dodge, but still surprisingly effective. When I'm in the West End and feeling peckish, I find that a multimillion-pound auction of Impressionists at Sotheby's or Christie's can often be an excellent source of free nosh. (Just don't get carried away and start bidding for the Monets.)

Even so, Kelly's story proves that it is possible to live - and live enjoyably - for next to nothing. Public libraries provide free access to books, newspapers and the internet. Tap water costs nowt. Shops, markets and restaurants throw away tonnes of unsold food (or supposedly unusable by-products, such as chicken carcasses) at the end of every day. You just have to be in the right place at the right time. And if you aren't picky about brand names, and don't indulge in politically correct fretting about the origin of suspiciously cheap products, the basics of life - from tripe to tights - can be bought for a few pence from bargain-basement supermarkets.

But here's a piquant twist. By delicious coincidence, news of Kelly's year of saintly abstinence came in the week that Manchester City Football Club, fortified by apparently unlimited sacks of dosh from the ruling family of Abu Dhabi, announced that it had engaged the services of the Brazilian footballer Robinho on a contract reported in some papers to be worth £160,000 a week. Let's knock 25 per cent off that mind-boggling figure for journalistic enthusiasm, and another 40 per cent for tax. That brings Robinho's take-home pay down to a tolerable £72,000 a week. And let's also assume, perhaps a touch generously, that top-class footballers put in a 30-hour working week. It still means that Robinho will need to toil for less than ten minutes to earn what Kathy Kelly needed to survive for a whole year.

Well, I have no problems with the Brazilian's giant pay cheque. I'm sure he's worth every glittering thread of his gold-encrusted jockstrap. And I look forward to the glad day when all those smirking Manchester United fans around the world choke on their prawn sandwiches as Manchester City win the Champions League.

Nevertheless, the vast gulf between the £1 a day that Kelly needs to survive and the £10,000 a day for which Robinho came scurrying from Real Madrid to Manchester City does raise interesting questions. Will Robinho be ten thousand times happier than Kelly? Will his life be richer, in the broadest sense? Will he derive as much satisfaction from what he purchases with his £4 million a year as she did from her £365?

I probably don't have to tell you what I think. In earlier eras it was well understood that a happy life is as much about renunciation as acquisition. “Getting and spending, we lay waste our powers,” Wordsworth wrote. Yet conspicuous consumption has become the most significant driving force in the lives of many Westerners. Retail therapy is seriously cited as a cure, or at least a panacea, for stress, overwork, family troubles and career setbacks. Status is largely measured by possessions.

The result? Less happiness, not more. Consumerism works by generating perpetual discontent. People buy new cars not because their current ones don't work, but because some cunning commercial has implanted the idea that life would be unbearable without a top-of-the-range Volvo. Ninety-nine per cent of all clothing is bought out of vanity, not necessity. Virtually nobody in Britain actually needs new shoes, in the sense that the ninth child of a Victorian labourer would have done.

The person who researched the origins of happiness more thoroughly than anyone else was probably Michael Argyle, the Oxford professor of psychology. Just before he died he concluded that, provided basic material needs were reasonably satisfied, the world's most contented people were neither the richest nor the most powerful, but those who had varied social lives, creative hobbies, spiritual faith and stable, loving relationships. Kathy Kelly has done us all a favour by demonstrating that, for less than the cost of a Sony laptop, an adult in 21st-century Britain can satisfy his or her basic material needs for a year. Doesn't that make you wonder why you stress and sweat to pay for all those things that you don't really need?

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