Skip Navigation

The Financial Impact of Improved Health Behaviors

Health and wealth are related in many different ways. First, there is the sheer cost of unhealthy habits. Eliminate a $10 a day smoking or junk food habit, for example, and you can save $3,650 annually, plus interest. That's just the immediate savings. There are also savings over the long term for the rest of someone's life. The Centers for Disease Control estimates that a 10% weight loss could reduce an overweight person's lifetime medical costs by $2,200 to $5,300. Delaying the onset of diabetes can save thousands of dollars annually in increased medical costs.

Secondly, financial problems can affect a person's health status and vice versa. For example, overdue medical bills can result in physical symptoms of stress (e.g., migraines, insomnia, and anxiety) and/or delayed or inadequate treatment. Financial distress also makes it difficult to afford recommended health maintenance practices, such as routine check-ups and eating the recommended 5 to 9 servings of fruits and vegetables per day. High health costs can lead to a poor credit history and/or bankruptcy and reduced income available to save for retirement and other financial goals. Medical problems were found to be associated with about half the cases of bankruptcy filed in 2001.

A third health and wealth relationship is that people in poor health often die at a relatively young age and spend thousands of dollars--money that could otherwise have been invested—on prescription drugs and health care costs. Many don't live long enough to collect the pension and Social Security benefits that they spent a lifetime working for. On the other hand, those who practice recommended health behaviors will more likely exceed average life expectancy and need a large retirement nest egg to insure that they don't outlive their assets. Most financial planners routinely plan for life expectancies in the mid 90s to assure that their clients don't run out of money.

Below are specific relationships between health status or behaviors and personal finances:

So what all does this information really mean? It means that health and wealth are strongly related and changes in one area of life can have positive effects upon the other. Do you want to put research into practice? Start by identifying practices that you can directly control and calculate the potential weekly and annual financial savings of improved health behaviors. Seeing the numbers that are possible may provide an incentive to make positive changes. Several examples are provided in the worksheet below. The savings listed are actually understated because interest on the amounts saved is not included.

The Financial Impact of Improved Health Behaviors Worksheet
Improved Health/Nutrition Practice Weekly Savings Annual Savings
Saving $3 a day currently spent on junk food, fast food, or alcohol $21 $1,092
Getting two meals from one by eating smaller servings $ 9 $ 468
Quitting smoking (a pack a day) $35 $1,820
Substituting pasta, beans, soups, etc. for meat 2-3 times per week $15 $ 780
Reduce the number of meals eaten away from home by two $10 $ 520