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Smoking Is Bad for Your Wealth

Smokers' Wallets Suffer, Along With Physical Health

From the WebMD Archives

Feb. 4, 2005 -- Smoking can make your life shorter and poorer at the same time. Buying all those cigarettes is like letting thousands of dollars flutter out of your wallet or burning money in a cloud of tobacco smoke.

You probably already know that smoking is bad for the heart, lungs, and the rest of the body. But do you realize what smoking does to savings?

The cold, hard numbers recently appeared in the journal Tobacco Control, courtesy of Ohio State University research scientist Jay Zagorsky.

It's not a pretty picture for smokers. Across the board, smokers have lower financial net worth than nonsmokers, even after taking into account the participants' education, income, and marital status, says Zagorsky.

The shortfall becomes larger every year. You don't have to be a financial planner or a Wall Street tycoon to know that's a high price to pay for a harmful habit.

Smoking's Financial Tab

Zagorsky studied a national sample of young baby boomers born from 1957 to 1964. They were the first generation to grow up with clear warnings about the dangers of smoking, he says. Other age groups might have different results.

Participants answered questions about their smoking habits in 1984, 1992, 1994, and 1998. They were classified as nonsmokers, light smokers, or heavy smokers. Light smokers had never smoked more than a pack a day. Heavy smokers had smoked at least a pack a day at some point in their lives.

Zagorsky also calculated participants' financial net worth. He added up all their resources (including home, car, major possessions, retirement account, and other investments) and subtracted their debts. For consistency's sake, he adjusted for inflation, putting amounts in the dollar's value for 2000.

The typical participant had less than $75,000 in net worth each year. Nonsmokers were wealthier than smokers.

The net worth of people who had ever been heavy smokers was almost $8,400 less than that of lifelong nonsmokers. Light smokers' net worth was almost $2,100 below that of nonsmokers.

The wealth gap widened every year.

For every adult year of smoking, net worth dropped $410, or nearly 4%. Since most smokers smoked for nearly 7.5 years, "the total penalty for the typical heavy smoker is almost $11,400, and the total penalty for the typical light smoker is $5,100," writes Zagorsky.

He says the smokers tended to have less education and income and were less likely to be married. Those factors can make it harder to get by, let alone grow rich.

But considering those disadvantages didn't change smokers' shortfall. Neither did eliminating the top 1% of wealth values to screen out extremely wealthy people.

Real-Life Costs

What would you do with an extra $5,000 to $11,000? Pay off debts, make a down payment on a house, save for retirement, fund a child's education, or go on the trip of a lifetime?

Smoking steals those options, trading them for cigarettes. It also reduces funds for smokers' families or medical care.

The best investment for fiscal and physical health: quit smoking.quit smoking. Successful programs improve health and may also boost wealth, says Zagorsky.