How Does Tobacco Use Negatively Impact Personal Finances?
Many individuals struggle to meet their basic needs related to nutrition, housing, and healthcare. Nicotine addiction and the consequent expenditures on cigarettes may impose extra financial strain on low-income households. The burden of smoking’s harms tends to disproportionately affect those in society with fewer resources and advantages. In 2013, the prevalence of smoking among US adults living at or below the US Census poverty threshold was 80% greater than that of those living above the poverty line. This elevated prevalence is in part due to the reality that compared to more advantaged smokers, over time disadvantaged smokers have a lesser likelihood of quitting. Given this, low-income smokers are a priority population for whom tobacco cessation efforts require further development, adaptation, and innovation.
In addition to dramatic adverse health effects, cigarette use is also an expensive behavior that may have a broader impact on the wellbeing of smokers with limited financial resources. The average price per pack of cigarettes in the US was $6.18 in December 2014, which means that a household consuming a pack of cigarettes per day would be paying just over $2,250 per year for cigarettes — or approximately 10% of the annual income for a two-adult, two-child household living at the US Census poverty threshold. In many low-income households, the portion of a household’s budget devoted to purchasing cigarettes is even greater. For instance, in New York state, a market where cigarette prices are relatively high, low-income households with smokers spend approximately 24% of their annual household income on cigarettes. As such, a low-income household that includes even one smoker could see a substantial proportion of its disposable income consumed by cigarette purchases.
Negative Financial Effects of Smoking Cigarettes
With inflation and rising expenses, employees are more concerned than ever about their current and future financial states. According to Gallagher’s 2023 US Benefits Strategy & Benchmarking Survey, nearly 1 in 2 organizations increased the importance of financial wellbeing this year. The survey shares that companies did this by offering personalized financial planning, using auto enrollment for retirement plans, and enhancing life insurance benefits. However, one component that doesn’t often come to mind with financial health is helping employees reduce their out-of-pocket spending. When an individual quits tobacco, these potential savings include zero or reduced spending on:
Tobacco
Due to taxes, the cost of cigarettes varies per state, but it’s still a significant expense. The highest per-pack cost in New York is $10.45, so if a smoker has a pack-a-day addiction, that’s $313.50 per month. Even at an average per-pack rate that’s lower, employees will still be saving thousands of dollars yearly by quitting.
Healthcare
Smoking harms nearly every organ in the body, resulting in higher healthcare expenses for smokers. The laundry list of costly health issues that tobacco use can cause include heart disease, COPD, diabetes, and lung cancer. Once a person quits smoking, health improvements happen quickly. Minutes after the last cigarette, their heart rate slows. The risk of a heart attack drops sharply in 1 to 2 years after quitting. After 5 to 10 years, stroke risk decreases, and the risk of developing mouth or throat cancer drops in half.
Less Obvious Expenses
The costs of buying tobacco and healthcare expenses for using tobacco are well-known. However, some expenses tobacco users pay may be under-the-radar and add up to a financial hit over time. People who smoke also pay less obvious costs such as dental care, life insurance, and other health-related expenses.
Financial Benefits of Not Smoking
Financial wellness, like tobacco cessation, will remain a crucial part of employee health long after the pandemic has passed. But now is the time to address the topic and alleviate the financial strain felt by many who are trying to quit tobacco. To see how the EX Program can help your employees improve financial wellness by quitting tobacco, please contact us to see a demo today.
Research Study on Financial Stress and Tobacco Use
A study conducted in 2011/12 examined how cigarette use behaviors relate to self-reported financial stress/strain among low-income smokers. The study found that difficulty living on one’s income, paying for healthcare, paying for housing, and paying for food were common conditions in this population. Time to first cigarette and cigarettes smoked per day predicted financial stress related to affording food, housing, and living within one’s income. For instance, those whose time to first cigarette was greater than 60 minutes had about half the odds of reporting difficulty paying for housing compared to those who had their first cigarette within five minutes of waking. The study concluded that smoking and particularly heavy smoking may contribute in an important way to the struggles that low-income households with smokers face in paying for necessities.
Conclusion
Tobacco use negatively impacts personal finances in various ways, including direct expenses on purchasing tobacco, increased healthcare costs, and less obvious expenses such as dental care and life insurance. The financial benefits of not smoking are substantial and can significantly improve an individual’s and a household’s financial wellness. It is crucial for organizations to address the financial strain faced by employees who are trying to quit tobacco and to provide support for tobacco cessation to improve overall financial wellness.
Frequently Asked Questions
1. How much money can an individual save by quitting tobacco?
By quitting tobacco, an individual can save thousands of dollars yearly, including expenses on purchasing tobacco and reduced healthcare costs.
2. What are the long-term financial benefits of not smoking?
The long-term financial benefits of not smoking include improved financial wellness, reduced healthcare expenses, and the ability to allocate funds to other essential needs.
3. How does tobacco use impact healthcare expenses?
Tobacco use can lead to higher healthcare expenses due to the increased risk of various health issues such as heart disease, COPD, diabetes, and lung cancer.
4. Are there less obvious expenses associated with tobacco use?
Yes, tobacco users may incur less obvious expenses such as dental care, life insurance, and other health-related costs, which can add up over time and negatively impact personal finances.
5. What are the financial implications of heavy smoking on low-income households?
Heavy smoking may contribute significantly to the struggles faced by low-income households with smokers in paying for necessities, leading to increased financial stress and strain.
6. How can organizations support employees in quitting tobacco to improve financial wellness?
Organizations can support employees in quitting tobacco by providing access to tobacco cessation programs, financial planning resources, and promoting a healthy lifestyle to improve overall financial wellness.