We live within our means, but we don't miss out on little things we want either.
We went a little overboard late last year with spending out savings (birthdays/christmas), then our fridge died, we had to buy a new one and got a massive electricity bill (thanks to the broken fridge), and we've only JUST caught up with getting everything back in order (bills paid in advance, savings, ect).
We need to have savings as we have no credit cards to fall back on in an emergency. We also have no other debt.
Despite the fact that DH and I have enough money to live comfortably, neither of us are overly attached to owning our own home. Everyone says that 'rent money is dead money', but we figure we have a nice, safe home in a good area, and our rent is lower than a mortgage- not to mention we don't have to pay insurance, rates, and for repairs. We keep our money in high interest accounts instead, and once we reach a 'goal' it will go in to a managed investment account, and we will continue to save and repeat till we're happy, or our circumstances change.