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By Jessica Wee

After surviving the pandemic lockdowns, some of us may encounter a heightened sense of anxiety, especially with regards to our health. The question on many people’s minds is whether we should be upgrading our existing insurance policy, especially the medical card (insurance agents are always scaring us about healthcare inflation). It got me thinking – if life has become more precious, shouldn’t we spend more money in preserving our health vs. spending more to pay for ‘future’ hospital bills?

In my interactions with some high net worth clients in my previous job, there was a common denominator – health. All of them prioritize health, not by buying a gargantuan medical card but by spending more money on buying high quality groceries, splurging on a private trainer/ gym equipment, hiring a nutritionist and going through detailed annual health checks.

Let’s look at the correlation of one’s health vs. wealth from a different perspective. First, there is the sheer cost of unhealthy habits. For example, a smoking or junk food habit, and you can save RM7,300 annually (assuming it costs RM20 per packet of tobacco and you buy a packet a day), plus interest. That’s just the immediate savings.

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.

Thirdly, health and wealth correlation is that people in poor health often die at a relatively young age and spend thousands of Ringgit on prescription drugs and health care costs- money that could otherwise have been invested.

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 ensure 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.

Here are the specific correlation between one’s health status vs.personal finances:

A typical non-smoker’s net worth has been found to be about 50% higher than that of light smokers and about twice the level of heavy smokers.

In the US, an increasing number of employers are requiring employees who smoke to pay higher health insurance premiums than non-smokers and/or they are paying incentives to those who quit. In some twenty states without smoker-protection laws, workers can be fired for refusing to quit smoking.

Studies have found that physical appearance affects a person’s earning ability. There appears to be a “fat penalty” for overweight workers, particularly women, who earn less than their slimmer peers. Similarly, smokers have been found to have lower earnings than non-smokers who do similar work.

Research findings also show an association between weight loss and wealth accumulation. It has been suggested that some people develop a “prevention mindset” where they are likely to consider the future implications of present-day activities such as reading nutrition labels and saving money.

Inactivity has been estimated to cost between $670 to $1,125 per person per year. To combat health costs related to overweight and obesity, some employers are providing monetary incentives for weight loss (e.g., a dollar per pound), exercise programs, weight loss contests, and/or access to fitness centers.

Healthy people (non-smokers and those in normal weight ranges) pay lower premiums (preferred rates) for life insurance, compared to smokers and those who are overweight. Policy pricing reflects the strong association between healthy lifestyles and prevention and additional years of life. It is inescapable that you have to declare it on your insurance policy on whether you are a smoker or not.

Higher health costs, in general, affect those with health “issues” (e.g., hypertension and diabetes) the most, due to the ongoing cost of prescription drugs, deductibles, co-payments, and other expenses. Rising health care costs have been shown to directly affect household finances.

Overweight and obese individuals and smokers often pay more than others do for certain expenses such as health, disability, and long-term care insurance. According to a study by The Rand Corporation, obese individuals also spend about 36% more than average-sized people on health services and 77% more on medications. In addition, “Big and Tall” sizes for men and “Plus-Size” clothing for women are estimated to cost 10% to 15% more than regular-size clothing.

Healthy lifestyle choices, such as proper diet and exercise, increase the odds of living a long and healthy life. People who live longer have more time to grow their savings through the awesome power of compound interest. If someone continues to grow their money between, say, ages 75 and 90, instead of dying in their mid 70s, their survivors and heirs will be in a much better financial position.

Financial security and health are strongly related to personal happiness and to one another. The ancient philosopher, Virgil, was once quoted as saying, “The greatest wealth is health.” In other words, health is as much of an “investment” as stock or bonds.

An unhealthy life is an unattractive situation, no matter how much money a person has. It, therefore, makes no sense to destroy your health in the process of accumulating money and, in turn, reduce your earning ability due to poor health. Both health and wealth require proactive action and are jeopardized by simply doing nothing.

So what does all this information really mean and how can you apply what you have learnt? 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 below and the savings listed are actually understated because interest on the amounts saved is not included.

Improved practices/ nutrition	Monthly savings	Yearly savings
Quit smoking, RM20 per pack per day	RM600	RM7,300
Making your own coffee of RM16 per day	RM480	RM5,840
Stop eating junk food of RM3 per day	RM90	RM1,080