Stating the Obvious

I think this post will be mostly stating the obvious, but it's been awhile since I talked about this issue, so here goes.

The Difference: How Anyone Can Prosper in Even The Toughest Times talks about the negative impact smoking can have on your finances. The highlights:

Jay Zagorsky of the Center for Human Resource Research compared the wealth of people who smoke a lot to those who smoke a little and those who don't smoke at all. A non-smoker's average net worth is roughly 50 percent higher than that of a light smoker (less than a pack a day) and 100 percent higher than a heavy smoker's (more than a pack a day).

It's not just the cost of cigarettes -- although quitting gives you an instant opportunity to pour each $4 to $7 you would spend per pack immediately into savings. Just as being overweight ends up costing you more in life insurance, health care, and so on, so does being a smoker.

I've noted before that if you quit smoking you can save up to $6k per year. It's literally costing smoker's a fortune and it's harming our nation as well (who knows if we'd have the health care problems we have now if it wasn't for smoking.) The biggest problem IMO is that it severely compromises your health -- setting you up for a potentially devastating financial event.

All that said, smoking certainly is on the decline, at least in my world. The only people I know that still smoke are my parents. It's probably more health-related than anything (does anyone think smoking is even just neutral to your health?), but it's also having a positive impact on people's finances too.

Comments

[Wojciech Kulicki]

Let me play devil's advocate for a minute:

I don't know a whole lot about smoking, but I wonder if this is the classic case of two things being correlated, but not caused by one another.

In other words, maybe it's not the smoking that causes lower net worth (although it definitely can affect health and therefore some money factors), but some other factor--like a higher tendency to addictive behavior, etc...

Not to be stereotypical, but from my own personal experience, 90% of the people I know who smoked were poor (or at least not as well off) to begin with. Perhaps it's the financial stress and a desire to "fit in" that causes the smoking, not the other way around.

Either way, I completely agree that smoking is on the decline, though the recession might have taken us one step back.

[Kyle]

I live in the south where smoking is a pretty common site. I don't know so much that it is in the decline around here but it is getting to be less of a problem for me. They have banned smoking in doors unless you are 21 and up 24/7. This prevents smoking at any type of family establishment and most bars who are open for lunch. I think Woj has a good point but I know some pretty wealthy people who smoke. I am a reformed smoker and it hasn't really impacted my finances directly to quit. The real savings come from the health benefits because I am ten fold healthier today than I was four years ago.

[[email protected]]

The ironic thing I noticed about smokers (at least in my area), is that they are then one that could use the money the most.

All to often, I have friends complaining about how tight money is. But those same friend are the ones smoking. In the next breath they complain about the price of cigarettes (this trend has happened for years). We discuss the cost impact of smoking, but the cast a blind eye to the figures.

[MC]

I don't smoke, but I do like wine with dinner and I probably spend at least as much per year on wine as smokers do on their smokes.

My point is: why scold smokers for their financial decisions but not those who drink alcohol? Most all classes drink alcohol but those with higher educational levels (like myself) usually spend more it.

Just sayin'.

[BillV]

MC,
Cause that's a whole separte post (hic) ! lol
There is a direct relationship between smoking and cost, besides the price. Health, life. auto, long term care insurance is more expensive for smokers.
Here in Chicago I see a trend of inreased smoking among younger people. 20 to 30's. And these are not poor or struggling types, and, often new parents. I'd think they would know the harm and they do--but it doesn't seem to matter.

[Old Limey]

One good thing that smokers have going for them is that they are less likely to run out of money during their retirement because their chances of having a long retirement are very much lower than non-smokers. I have never smoked but I have seen first hand what it does to the lungs. It isn't just a stroke or lung cancer that can get you, emphysema is just as bad in its final stages. My father-in-law was so incapacitated with emphysema that he couldn't handle living anymore and took an overdose at age 54 and ended it. One of his daughters, smoked her whole life, and now at 70, is in the final stages of lung cancer, his other daughter (my wife), who has never smoked, is still enjoying a wonderful healthy life at 76.

Tobacco would never make it on to the market in this day and age but unfortunately it's a holdover from the last century and it is not possible to put a ban on it. The other huge problem with it is the terrible addiction that can make it a hard struggle to kick the habit.

My wife and I do like wine with dinner, but gave up hard liquor about 45 years ago. You only have to look at health studies from France to see that wine in moderation is not harmful, in fact, red wine is beneficial in several ways because it contains resveratrol, which is now being marketed as a nutritional supplement. We have been in France many times and if you watch the French, in bistros, they eat leisurely and take their time & enjoy conversation while eating, unlike many Americans that bolt their food down quickly, often while they are driving.

[LeanLifeCoach]

Full disclosure... I am an ex-smoker. I've added it up and when I quit nearly 10 years ago it saved me over $2700 each year. While I know I have that money to use for other purposes, I don't actually see it or truly feel it.

From the health perspective, MC has a good point. No doubt smoking is not good for you but what about heavy drinkers, or over eaters. According to the CDC, Obesity is quickly becoming the leading cause of preventable death in this country! The CDC showed chronic respiratory disease as the 4th most common cause killing only 5.1%. But how much of this is caused by all the chemicals we are exposed to without smoking? Plastic out gassing, formaldehyde in wallboard etc...

http://www.cdc.gov/nchs/data/nvsr/nvsr57/nvsr57_14.pdf

[mysticaltyger]

@Wojciech...I was thinking the same thing. Smokers are poor already. I wonder what the net worth of smokers is when you control for income/education.

However, I disagree about smoking increasing in recessions. Typically, smoking actually goes DOWN in recessions...probably because people who might otherwise start are deterred because they have less money. Others have an extra incentive to quit in hard times. Plus, the Federal Gov. recently raised the cigarette tax by a good amount and a lot of states are doing the same.

[J in FL]

I would say that obviously any of the mentioned items, smoking, drinking (excessively/frequently... alcholism, essentially), over eating, all take a serious financial toll on you.

I think FMF only makes the point about smoking because that's what is included in the quote from the book, but clearly any other behaviors that are linked to higher costs in healthcare, insurance, direct costs (grocery budget, ect), are going to have a negative impact on your finances and ability to build wealth.

[Mike]

Another person brought up a great point. You are confusing causation and correlation. Do we know that smokers are not in general poorer people or possibly more rural? I do not deny that it is bad for your physical and financial health, but this statistic alone does not prove it.

[Financial Samurai]

If it feels good to smoke, then there is a positive benefit. It may be negated by an early death, but to the smoker, maybe they enjoyed a more enjoyable life.

[Jim]

Smoking has an obvious direct cost.

But much of the wealth difference is from other factors. I found another reference to the study in question and when they took other factors into account (education, etc) then the difference in wealth was much less. It said: "Even after these factors are taken into account, heavy smokers had a net worth that was about $8,300 less than non-smokers, while light smokers' net worth was about $2,000 lower."

[guinness416]

Unlike the other commenters most of the smokers I know are smart and middle class. Maybe it's because I'm Irish. My husband smokes, three of my nearest four neighbours have a smoker in the household and a number of my coworkers smoke too; and while I don't know all of their net worths they sure ain't broke. It is an expensive habit these days though for those who are on a pack a day or anything close to it - a daily habit of coke and other garbage sodas is probably almost as bad for you but a significantly cheaper vice. And as you get up there in years the life insurance hit for he smoker is pretty rough.

There have been some decent dividends in tobacco stocks in recent years though :)

[BD]

I only know one smoker and he was poor all his life, even before he started to smoke.

He is still *very* poor now, but still continues to smoke (and drink) as much as his meager wages will allow him. I try to convince him to quit both, in order to save more money and try to better his life, but he says those two activities are the only thing that gives him any pleasure in life (which is really sad). I think he's just given up on life and wants to smoke and drink himself to death. :(

So I'm inclined to agree with other people here that many smokers started out in poverty before they ever started the habit.

[BillV]

Smoking is not economic class linked. Many of my friends smoke: they are young, urban, professional, and financially comfortable. I myself smoked. Stopped about 18 years ago. Smoked 3 packs a day. I am not poor. I am not rural. I have an advaned degree. (BFD)

I may be wrong, but why does it seem to me that posters here are making smoking to be a poor, rural addiction. If I am misreading the above posts, mea culpa.

FMF's point--I think-- is, it causes health problems for the individual, costs to the individual,and ultimatlely to the body politic.

Smoking should go away; eating should be moderate; alchol should be consumed in moderation; exercise should part of everyone's daily activities; we should all love one another; and peace will guide the planet.(I'm being snarky here in case it wasn't obvious)

[BD]

BillV - But you stopped, almost 2 decades ago! ;)
So you're not a smoker any more.

The person I was referring to in my comment above is almost 50 and he isn't going to stop, ever. Or at least it's highly doubtful.

Professionals *seem* to be able to quit smoking more often than poor rural folks, at least from my very limited experience (ie, I know plenty of professionals who used to smoke for a brief stint long ago, and have since quit *years* ago and have been smoke-free ever since, but only one poor rural person, and he refuses to quit).

[Old Limey]

Two qualities that I believe you will find in the majority of people that are successful investors are "Will power" and "Discipline". These are probably qualities that addicts, i.e. habitual smokers do not have.

When I see a young employee standing outside of their place of employment dragging on a cigarette I feel very sorry for him (or her). It tells me that they have an expensive addiction that they are unable to kick.

Years ago when I was working at Lockheed, and after the no smoking rule was introduced, instead of taking the escalator down from the top floor of our building I used to use the outside evacuation stairway to go down to get a little exercise. To my surprise I, and many others, started seeing our division manager, a man in charge of 350 engineers, standing furtively on the outside stairway puffing on a cigarette, how demeaning to have to parade his addiction in front of all of the people that he was in charge of. For another thing it was a big waste of company time. It used to infuriate me, but I had to suffer in silence, in the days when smoking was allowed, when my supervisor would call me into his office to discuss my project and I had to sit across from him for half an hour while he chain smoked, blowing cigarette smoke into my face. How I am glad that those days are over for all employees.

I guess my experiences do not support the premise in the previous post that well educated, highly paid, professionals are any better at kicking their addiction than poor, undereducated rural folk.

[JerryB]

During our recent open enrollment for health insurance at work, they announced that the employee cost for insuring a "tobacco user" would have a 10% premium over a non-tobacco user.

[mysticaltyger]

@BillV. You are actually contradicting yourself to some extent. It may be true that you are friends with smokers who are well off, but that's still the exception. However, the statistics bear out that people who are well educated are less likely to smoke, but if they do, they are more likely to quit (which you have proven personally).

I also have a well off, well educated, friend who used to smoke more than 20 years ago. He quit. Once again, this backs up what the stats say.

[BillV]

Mysti,
thanks for the comments( I think;-- grin) Not sure I see the contradiction but I won't take issue with it.

what the posts above show to me is an old truth: Oft times people look at the folks in their circle an extrapolate from there. It reminds me of a friend of mine that was shocked that my family "believed in God". She didn't think anyone still believed in God, because she didn't know anyone who did.

I am fascinated that several of the posters here are so adamant that I say smart, educated, young, and soon to be fin. comfortable people still smoke. Why is this such an issue? Frankly, in my same group, several of the less school educate, less fin. well off do not smoke.

I don't see the connection and i don't see why it is so important to find one. Really. I don't get it. I would like all my friends to quit,some are trying, some aren't. Neither group is dumb, uneducated or poor.

To end tonight Mysti, please don't be offended by anything I said, certainly not my intent--sometimes posts read oddly, just ask FMF. Anyway, Mysti, thanks for the feedback.

[Rod Ferguson]

I am a smoker, about half of my friends are smokers, most have at least a BA/BS (a few HS diplomas, a few PhDs), most are middle class (although a few are dirt poor and a few are well off) and more are urban than rural. I'd say roughly a third smoke mainly while drinking, with the odd half-dozen cigarettes otherwise during the course of a regular day. I'd estimate that averaged, they smoke slightly over a pack a day. Basically, average people from all walks of life (I live in the Chicagoland area).

Having talked to them (and based on my really small, non-scientific pool) I'd guess that the declining smoking rates are more of a case of rising willingness to lie about smoking than actual decreases in smoking; most of the "casual smokers" list themselves as non-smokers for insurance purposes. Our draconian smoking ban (no smoking in any building open to the public or within 15 feet of an entrance) has been in place for two years, and has not caused one person to stop smoking - although it has caused them to stop going out to bars (we rotate amongst our respective houses to host party nights, which include dinner and drinks). Average savings there - about $100/week per person for a net gain of around $5,200/year, so while I initially was against the ban, now I see the light. Ask one of our remaining bar owners and you'd probably get a less than happy response, however (I know of about a dozen bars that no longer exist, some near a state border, but most in the middle of the state; smoking bans are very, very bad for the hospitality business, especially if you own a bar or work for one).

I do have one interesting observation; about a dozen of them (and rising) are now rolling thier own cigarettes. Most are using the hand roller machines, but a few have an electric machine that makes about one cigarette every 5 seconds and produces a pretty good smoke (they are trying to get me to use one; it's only $500, but I'm still on the fence). The hand rollers claim to spend about $2 a pack and about an hour to make them, while the machine rollers say they spend slightly over that, but take about 5 minutes to make a pack. If true, that cuts annual smoking costs down to around $700 - still not cheap, but a far cry from $2700.

Medical costs... well, the statistics are against us, but I know of nobody who is suffering any medical issue due to smoking, so the current overhead is nothing.

I'd go over the benefits of smoking (increased networking - especially now, lower chance for some diseases, weight loss, etc,) but I don't want to be accused of being a promoter for the tobacco industry :). Suffice to say that the smokers I know are aware of the risks, have done a risk/reward analysis and in the end choose to smoke.

[Crystal]

@Rod
Okay, I'm going to swallow my tongue if I don't ask, how does smoking lower the chance for some diseases...which diseases?

@any smokers who might be reading
I assumed that most people who read personal finance blogs would be forward-thinking...doesn't the idea of living long-term on an oxygen machine or having a hole in your throat scare the crud out of you? I personally have seen 3 of my great aunts and uncles end up this way...it's why my grandfather quit smoking 25 years ago. Also, don't you ever wish all your stuff wouldn't smell like stale smoke all the time? I mean, it doesn't smell like chocolate chip cookies or pine trees...it's like air acid. Lastly, isn't there habits you could spend that money on that would be fun and not have such a risk of agonizing death?

I just can't see any true benefits of smoking. I can network with smokers and non-smokers inside of buildings. I can lose weight through exercise. What other benefits have been listed? Even if I could accept the lowered chance of some diseases, isn't that offset by the much higher risk of lung cancer and death by slow suffocation?

As a person who's had asthma her entire life, please realize that you are literally throwing away the ability to breath easy...an ability I would LOVE to have...it just seems like such a huge waste on so many levels...

[BillV]

Crystal,
I wouldn't, couldn't diasgree with you. I even have tried in various ways to aid my friends to quit smoking. Except in 2 cases, I've been told to mind my own business. All I can say--and this is no defense, mind you--it is an addiction like no other.

Rod F, I can understand what you are saying even while I ask you to try and quit smoking. It ain't easy, and it sounds like you don't want to quit. Good luck and good health. };->

[Crystal]

@BillV
I completely understand addiction. I didn't understand the choice part...the smokers who don't want to quit. I don't understand why anyone would choose to smoke other than the fact that they are addicted.

Anyway, I truly hope everyone stays in good health. Good luck!

[Rod Ferguson]

"@Rod
Okay, I'm going to swallow my tongue if I don't ask, how does smoking lower the chance for some diseases...which diseases?"

Minor periodontal disease (gum recession), some types of breast cancer, Parkinson's disease, thyroid and prostate cancer, some skin cancers, tuberculosis, some allergies, etc. It's also a great promoter of blood vessel growth, and if you smoke around 6 cigarettes a day, you get an added boost from the carbon monoxide dose to increased heart mass. It might help protect in-vitro babies from neural tube defects, a possible treatement for Down's Syndrome and possibly ulcerative colitis.

I had links posted to most of the above, but Typepad must have thought my post was spam, so it looks like it's deleted it. I've removed them and am trying again. Basically, just go buy "The Health Benefits of Tobacco: A Smoker's Paradox" by Dr. William Douglass.

Again, trying hard not to sound like a lobbyist for the tobacco industry, there is a difference between recreational (or even regular) use of cigarettes and the dosage that offers benefits. In many cases, overindulgence offsets any potential gain (like so many other things in life, moderation is the key). And, any plant (nicotine is a plant protein, and the base protein for nicotinic acid, aka Niacin, aka vitamin B3) that uses a carcinogen as a protein delivery system is an unsafe plant no matter how you look at it. There are degrees of unsafe, however.

"@any smokers who might be reading
I assumed that most people who read personal finance blogs would be forward-thinking...doesn't the idea of living long-term on an oxygen machine or having a hole in your throat scare the crud out of you? I personally have seen 3 of my great aunts and uncles end up this way...it's why my grandfather quit smoking 25 years ago."

Those are the risks I referred to. There is a whopping 17 times increased chance of me developing lung cancer, bring the total risk to 17% from 1% (if I wasn't a smoker) if I happen to have the gene for lung cancer. Similar numbers are available for emphysema, COPD, etc. Comparatively, you increase your chances of prostate cancer by 30% and heart disease by 50% by eating meat. I'm a vegetarian, so I'm ahead of the curve. Again, I had links backing up this information, but removed them. If you search the various medical databases out there (National Library of Medicine, Oxford Medical Journal, British Medical Journal, etc,) and sometimes Reuters and the other news outlets, you can find the studies that I'm referring to.

"Also, don't you ever wish all your stuff wouldn't smell like stale smoke all the time? I mean, it doesn't smell like chocolate chip cookies or pine trees...it's like air acid."

True about the smell, but I have to say that since I've stopped going to bars, I no longer smell like deep fryer grease - which is a bonus. There are hygenic actions you take; keep your clothes in a closed closet with a cedar brick, change your clothes more than once a day, etc.

"Lastly, isn't there habits you could spend that money on that would be fun and not have such a risk of agonizing death?"

Yes, but we choose to do this. I could make the same statement about eating meat. Meat isn't cheap either, you know. And us vegetarians have the added benefit of not killing any animals for our food.

"I just can't see any true benefits of smoking. I can network with smokers and non-smokers inside of buildings. I can lose weight through exercise. What other benefits have been listed? Even if I could accept the lowered chance of some diseases, isn't that offset by the much higher risk of lung cancer and death by slow suffocation?"

It's all a matter of perspective. I don't think going from 1 to 17% is that much of an increase. It's there, I don't deny that, but it's not big enough for me to quit. Others I know feel the same. Still others wouldn't touch a cigarette with a 10-foot cattle prod. Che sera, sera.

"As a person who's had asthma her entire life, please realize that you are literally throwing away the ability to breath easy...an ability I would LOVE to have...it just seems like such a huge waste on so many levels..."

We all have our advantages and disadvantages; our own plusses and minues. There's a lot of things that people were born with that I wish they didn't squander away. And I know of people who think I'm wasteful in some areas. It's all about who you stand next to.

[Rod Ferguson]

BillV - I appreciate the concern, but really - I know what I'm doing.

Crystal - one more thing: smoker networking. Unless you are one, you have no idea the advantages are to being in that network. Since the US has gone to great lengths over the last 20 years to make smokers second-class citizens, people who still smoke (admit to smoking) have begun to form that same sort of bond that other sub-cultures form. If you are a member of that group, you are given sort of an instant acceptance until you prove you aren't worthy of that acceptance. In the business realm, this translates to a sort of trust; while you are standing outside smoking with the others, you tend to talk about things going on at work, who's getting a promotion, who's about to get fired, what company we're buying next, what company is about to take us over, etc. You also talk about friends and family, what they do, where they work, shared interests, etc. Aside from the obvious benefit of knowing what is going on at your company beyond the scope of what you can see in your position, this is a great environment in which to expand your social horizons for possible job transitions; as a member of the "group", others are more likely to recommend you to family and friends in hiring positions or as business contacts. It doesn't help to come stand with us while we're smoking and just try and join the conversation, either. I've been around when non-smokers are trying to jump in and we just keep the conversation banal; very much an "us versus them" treatment. Another point to the same theme - the case of me being an identity theft victim (prior posting). I filed the case with my local police, and went in for an interview. The officer clearly didn't know how to process this claim and was getting frustrated and I think he was about to give me the blow off "we'll get back to you if we need more information" when I suggested that we adjourn outside for a smoke (I saw his cigarettes in his coat). He agreed, we went outside, had some small talk, talked a bit about the case, then went back in. He still didn't know how to process it, but he wasn't frustrated anymore and was very accomodative after that. He called me a couple days later, I met him outside where he was smoking, joined him, signed a few papers and was done. Did he treat me that way just because we were both smokers? I can't say for certain. I do feel that it helped, though.

[Crystal]

Rod, I also seem to bond well with people and get the advantages of it...I do it with humor instead of smoking.

My company is 100% tobacco free because the billionaire who owns it is big on health and hated working in smoking companies in the 1970's...smoking here will get me fired.

But you obviously feel very strongly about wanting to smoke, so have fun.

[Rod Ferguson]

Crystal, I wasn't suggesting you go out and start smoking, any more than I was suggesting you stop eating meat. I was just providing the data you were asking for. I don't judge people based on personal choices, even if I'd not make the same choice for myself (i.e. - the smell of bacon is truly disgusting to me; it makes me nauseous. Yet I still cook it for my wife and friends, because it's what they desire. I'd never eat the vile stuff, though.)

I think the biggest problem in this whole debate is the lack of tolerance for other people's choices. It's also amazing to me the number of people who are so very emotional about something they know so very little about; how many "health crusaders" fighting against tobacco and nicotine regularly take a multivitamin with B3 in it, for example? I wonder if they'd create rationalizations or their heads would just explode if they knew.

But, this is a financial blog and FMF is right - smoking is an expensive luxury that a lot of people really can't afford.

[Crystal]

Rod, I agree that FMF's point was a simple "it's expensive"...this whole post could have been about any regular unnecessary expense. But, it was interesting this way. :-)