We're not going to advocate that go cold turkey on your vices, but we will take a few minutes to walk you through the numbers and plant a seed in your mind that from a financial perspective, your vices are less-than-friendly to your wallet.
Many adults like to let off steam at the bar or club, especially on weekends and holidays. In 2014, the American nightclub industry generated over $24.35 billion in revenue. That's a lot of money that could have made it's way into savings accounts, and inevitably a lot of that money came out of savings accounts to fund that spending.
How often do you drink?
Do you drink a glass of wine with dinner every night? That puts you in the top 30% of American adults in terms of per-capita alcohol consumption. If you drink two glasses, that would put you in the top 20 percent.
The cost of drinking
With the average price of a cocktail at $15 (after tip and tax), if you had one cocktail every week for a year, that would cost you $780. If you had just two cocktails every week for a year, you're looking at $1,560. The average salary for an American between the ages of 25-34 is $39,416. If you lived in New York State, your after tax income would be $29,829. If you spent $1,560 on cocktails, that's 5.22% of your annual income on just two drinks per week.
Let's consider the math on somebody in the top 30% of American adults in terms of per-capital alcohol consumption. Let's assume our hypothetical person prefers wine, and only drinks at home. The average price of a bottle of wine in 2014 was $38.40, and the average bottle holds six glasses, so $6.40 per glass.
One glass of wine, every night, for a year would cost them $2,336.00.
Bars and restaurants typically markup their wine by 300%. If half the drinks consumed by our hypothetical person were consumed at bars and restaurants, their annual wine habit would cost $4,672. It's important to note this number does not include the cost of taxis, food, tips or second or third glasses. With an after tax income of $29,829, a once-a-day wine habit would amount to 15.66% of their annual income.
If you decide to cut back on your alcohol consumption, just a few small adjustments to your habits can make a huge difference to your wallet.
- Pay with cash - If you use your credit card to pay for drinks, it can be hard to keep track of how much you're spending; hence, you end up spending more than you'd planned. If you resolve to pay only with cash, it can be much easier to monitor your expenditures and stick to your budget.
- Drink at home - Invite your friends over to share a bottle of wine. As earlier established, a glass of wine at home costs 300% less than at a bar.
- Capitalize on happy hour specials - May bars offer happy hour specials that can save you a ton of money. We've seen hour deals that offer $1 shots, half-price appetizers, and half-price pitchers of beer.
There's no question that smoking is a habit that can be difficult to break. You already know the negative effects it can have on your health, your social status and looks. What you might not be aware of is the personal financial impact it has. The relatively low cost of a single carton or pack of cigarettes conceals the enormous fortune you are spending on tobacco over a given period of time.
Let's stop to think about that portion of your monthly income that goes up in smoke every month.
The cost of smoking
Fair Reporters reveals that "cigarettes have an average cost of $5.51 with the price in most states being between six and eight dollars. This number is taken from the combined prices of all of the states but the actual numbers varying greatly with the most expensive cigarettes costing on average $12.85 (New York)."
A 2016 Gallup poll found that 26% of American smokers will smoke one pack or more every day.
If you smoke a pack a day, and you live in New York, you'll spend $4,690 on cigarettes in one year. With an after tax income of $29,829, you would be spending 15.72% of your income on cigarettes.
If you've been smoking a pack a day for the last 10 years, and you live in New York, you'll have spent $46,900 on cigarettes.
It's important to note that quitting can help you save much more than just the cost of cigarettes.
What many people forget to consider is how much they would save on insurance and health care. Life and health insurance providers increase premiums on those with unhealthy habits, such as smoking. Many insurance providers don't even offer smoker's life insurance policies. Americans can expect to pay on average "15 to 20% higher premiums than non-smokers with equivalent demographics and health conditions."
The premium insurance providers charge on smoker's premiums disappears shortly after you kick the habit.
It's undoubtedly hard to quit smoking, but just cutting back on cigarettes can help you save a lot of money.
- Cut back slowly - Going cold turkey is rarely successful. Perhaps begin by reducing the number of cigarettes you smoke by one every two days.
- Avoid situations you associate with smoking or buying cigarettes - Don't go outside on your breaks, don't pay for your gas inside the convenience store, instead pay at the pump.
- Pay in cash - Just as we recommended with alcohol, you can better monitor your spending on cigarettes if you make the decision to pay for your cigarettes with cash instead of card.
- Seek professional help - Nicotine patches, e-cigarettes, oral NRT, prescribed medication and counselling are often recommended first steps.
It's unclear how to best control or break bad habits, but it's very clear that drinking and smoking cost you more money than you think. If you're looking to cut back, but are unsure how, awareness of the financial burden of your smoking or drinking might just be the push you were looking for. Simply find a pen and paper, open the calculator on your smartphone and run the numbers. Are you surprised by the total?