WHEN IT COMES TO expensive habits worth quitting, smoking should be one of the first on the chopping block. Not only is regular tobacco use bad for your health, it can burn up your finances, too.
“We don’t realize how much far beyond that cost of a pack we’re putting into (smoking),” says Jennifer Folkenroth, national senior director for tobacco control at the American Lung Association. “The reality is, as a smoker, we might not be able to pay our rent on the first of the month, but we will always find the money to buy that pack of cigarettes.”
In addition to the price of a pack of cigarettes, which can run anywhere between $5 to $14, depending on the state, or the cost of an e-cigarette, which can sell for about $15 for prefilled cartridges, there are other surprising costs to smoking as well.
For example, smokers, on average, earn less at their jobs than nonsmokers, according to “Even One Is Too Much: The Economic Consequences of Being a Smoker,” a working paper from the Federal Reserve Bank of Atlanta, which examines this trend and builds on previous research. “On average, smokers’ wages are approximately 80 percent of the wages of nonsmokers,” according to the paper.
Controlling for other characteristics, such as age, education and gender, if you made the decision before age 24 to start smoking, “being a smoker means you will earn less than if you had decided to not become a smoker,” says Julie Hotchkiss, co-author of the paper and research economist and senior adviser at the Federal Reserve Bank of Atlanta. “Just being a smoker, just that decision to become a smoker, is what triggers the wage penalty,” Hotchkiss says.
These lower earnings may be the result of the kinds of qualities smokers do or don’t bring to the job, Hotchkiss says. The choice to smoke itself may correlated with other decisions that affect wages such as attaining a higher education. It’s notable, Hotchkiss says, that this smoking penalty doesn’t vary by how much you smoke. Smokers of one cigarette per day will experience a wage penalty, just like smokers of an entire pack per day do. “It is simply being a smoker that dooms one to less earnings,” she says.
Another potentially overlooked cost for smokers: increased insurance premiums. Individuals who need to find health, life, long-term care or disability insurance on the private market will find that cigarette use increases their monthly premiums.
“When we’re dealing with fully underwritten products, (smoking) is not going to exclude you from getting coverage, but it’s definitely going to make it more expensive,” says Nicholas Mancuso, insurance sales manager at Policygenius, an online insurance sales company. Smoking can increase disability insurance, on average, by 25 percent and more than double the cost of term life insurance, Mancuso says.
And it makes sense: Smokers are more likely to need to tap into their insurance policies since they have an increased risk of developing certain illnesses, becoming disabled and dying prematurely.
Of course, the most severe financial toll from using tobacco arises when smokers contract a smoking-related illness, such as heart disease or various types of cancer, which may require years of pricey medical care or prevent smokers from working in their previous profession. “That’s where the curve becomes extraordinarily steep in terms of cost,” says Dr. J. Taylor Hays, medical director of the Mayo Clinic’s Nicotine Dependence Center in Rochester, Minnesota. Depending on the length and severity of the disease, this is where costs can easily run to the tens of thousands of dollars.
Overall, the total economic costs of smoking in the U.S. from 2009 to 2012 were between $289 and $333 billion per year, according to the Surgeon General’s “The Health Consequences of Smoking – 50 Years of Progress” report. That includes $133 billion to $176 billion in direct medical care costs.
If you want to dodge the excess costs associated with smoking, experts say, the best way is to quit your tobacco habit through support and effective medications. You’ll cease spending on cigarettes, stop destroying furniture with cigarette burns and lessen other related costs. In addition, former smokers have slightly higher average wages than never-smokers, according to Hotchkiss’s working paper, perhaps because the strength it takes to quit smoking is related to traits valued by employers, she says.
Quitting can also help you earn a better rate on your individual insurance policies. You may have to wait two years or so after quitting before you can adjust an individual policy to a nonsmoking rate, but you’ll see cost savings once you do. “If the price is a bothersome thing, look at it as motivation to quit,” Mancuso says.