This is the next post in my series on simultaneously getting in shape and improving your finances.
For those of you who haven’t been following along, you can catch up by reading Physical Fitness and Financial Fitness and Being Healthy Can Grow Your Net Worth.
Today we’re going to talk about a Money Magazine article that says you can save a boatload of money by slimming down.
A few of their thoughts:
In a 2013 Duke study, researchers tracked health care spending by body mass index levels. The average annual cost for a person with a low BMI of 19 was $2,541. With a BMI of 25—considered overweight—it was $2,893. At a BMI of 33, what’s deemed obese, the costs topped $3,439. “The risk of illness starts increasing already from the lower end of “normal weight,” ” says lead researcher Truls Ostbye.
The add-ons don’t end at the doctor’s office. A 2010 McKinsey study estimated that obese Americans spend an aggregate of $30 billion extra on clothes. A 40-year-old obese man will pay twice as much for life insurance, says Byron Udell, CEO of insurance comparison site AccuQuote.com.
I’m betting this list could go on and on. But the savings on medical, clothing, and insurance costs seem like enough to show there’s a great advantage to getting down to an appropriate weight.
Let’s try to put some specific numbers on these:
- The medical cost difference between normal and obese is $898 per year. Over 40 years that’s almost $36k (not including what you could have earned if you had saved the difference and invested it.)
- The clothing number is a bit harder. Googling around I found that Americans spend $12 billion on clothes each year. Over 40 years, that’s $480 billion. If obese Americans spend $30 billion extra, that’s 6.25% more. The average American family spends $1,700 a year on clothes, so 6.25% of that is $106.25 which is $4,250 over 40 years.
- I spend about $600 a year for $1 million of life insurance (purchased when I was in my late 30’s). If obese people spend twice as much, that’s an extra $600 a year or $24k over 40 years.
Put it all together and that’s almost $65k over 40 years. Now add in the costs of extra food at home, eating out at restaurants, and so forth and we’re probably talking close to six figures.
And There’s More
But it doesn’t end there. It gets worse. Much worse.
Being overweight also dampens your earning ability.
Another quote from Money:
A 2012 study published in the International Journal of Obesity asked participants to evaluate résumés with photos, and overweight candidates received lower starting salaries and were said to have less leadership potential. Bias adds up: On average, obese workers earn 2.5% less than those with normal weights.
A few comments:
- I’m not condoning the way obese people are treated, I’m just recognizing it and its impact on earning.
- My guess is that part of the negative impact is because obese people are, on average, generally thought to be less attractive (again, not taking a side on this, just recognizing American perceptions of beauty).
- Making 2.5% less over your career is a HUGE hit!!! Someone starting out making $40k a year and getting 3% raises ends up earning $3.7 million over a 45-year career. Someone who earns 2.5% less each year ends with almost $1.7 million less!!!! Yikes!!!!! Even if the difference is only 1%, that’s over $800k lost during your career!!!
My Story
I’ve had a few battles with being overweight.
In the 90’s I ballooned up to 230 pounds (at 6 feet 4 inches tall) and was just too heavy. I went on the Atkins diet for several months, ate bacon and sausage every day for breakfast, lost 20 pounds, and my cholesterol DROPPED like a rock.
After that I started biking and then swimming and was able to keep most of the weight off.
By the time I moved to Colorado, my weight was inching back up again. Even worse, I was mostly fat and little muscle. So I hired a trainer, started working out under his direction, and so far have moved from 28% body fat to 16% — and I’m still going.
I don’t know if I’ve saved money or earned more during the times I’ve been thinner, but there’s one thing I do know: my quality of life has been MUCH better when I’m in shape than when I’ve been heavy.
So my encouragement to you is that if you need a bit of toning, get out there and do something about it (maybe in the morning). You will certainly feel better and likely feel better about yourself. And you may save/make a ton of money in the process!
Good job trimming down again ESI! For those that are struggling with finding the time to exercise in order to slim down, I would have two thoughts.
First, you don’t have to go nuts with the exercise. Even :30-:45 of brisk walking every day is a good way to start and will make a difference if you have been sedentary otherwise.
Second, I would say that you will have more energy the rest of the day to make up for the short time you spent exercising. It won’t kick-in on day one, but shortly thereafter.
Good motivation!
Just to add one thing: The energy part is unquantifiable but a huge loss. The productivity low from being obese is without exaggeration enormous. I know because I am still there, and yet I am progressing fast to a normal weight.
I couldn’t agree more. I thought the post might touch on that a little bit. I think that work performance can be hindered by lack of energy. Also think about it – when you are tired and lack energy you get cranky and make mistakes. So there might not be as much bias there against overweight people as the stats may suggest. Some of that may be performance issues. A lot of really successful people get up early and work out. That is interesting because it shows they have discipline, willpower, stamina, and probably a lot of energy. The workout also energizes them and gives them confidence. I need to get back into the habit of early morning work outs.
As someone, like you, who likes to measure and monitor things, how are you measuring your body fat %? It seems like there are so many methods that give different readings.
I actually have two methods for measuring body fat and they are very different (as you note).
The “official” numbers above are from the scale at my gym, measured with my trainer. It’s a more sophisticated machine where it not only reads through your feet but through your hands as well (you hold something while being measured). I assume that it’s a bit more accurate.
My home scale was purchased at Amazon last Black Friday and says I’m about 6% higher than what the scale says at the gym. So I hate it. 🙂
Anyway, I’m not hung up on the actual % as much as I’m looking for the change — where I started and where I am now. That’s the true measure I’m looking to improve.
Now that’s assuming the scales are consistently reading the same way every time I use them…which could be wrong as well, but my guess is they are at least close.
Good article and I agree that keeping to a healthy weight has a financial reward.
But your career earnings math is not correct. I have the feeling that you looked at the baseline case using 3% annual growth vs 0.5% compound annual growth, when it looks like that heavier people earn 2.5% less than their thinner counterparts but they should both have the same rate of compounding (although one could argue that the more fit / attractive folks can change jobs easier and thus increase their compounding rate when they change jobs). Agree with the principle, just a minor nit pick on the math.
-Mike
As Forest Gump said, “I am not a smart man.”
Or maybe I said that… 🙂
Anyway, that’s why I qualified it a bit — I wasn’t sure what they meant in the article. So I used the 1%/$800k part as a low end to show it’s going to be meaningful no matter what.
The 2.5% difference should carry through the entire earnings so the difference is about $92,500.
You can calculate it two ways.
Start with 40K vs 39K annual salary, (this is the 2.5% difference). Then compound both at 3% for 45 years (so you continue to make and average 2.5%) and then sum them up. You will get a difference of a little more than $92,500. Or you can just multiply 3.7 million times 2.5% and get $92,500.
Ok, let’s dig a little deeper into this subject:
1. From what I understand, the 0.5% difference in salaries is at the start of a new job. If you assume that two people start the same job and work it 45 years then that 0.5% difference adds up to $92.5k. So the difference is at least that. But…
2. …how many “starts of new jobs” do people have over 45 years? If you assume that people change jobs every five years, that means each person has nine new job starts in the 45 years. If the difference in wage increases at each of those points is another 0.5%, the cumulative impact over 45 years has to be much more than $92.5k (I’ll let you do the math on that). And…
3. …to the broader topic of obesity and income, there are tons of pieces that point to the fact that there’s an impact to overall career earnings. Some say it’s small, some say it’s huge, and a few even say it’s hardly anything. But most do lean towards at least some impact and most think it’s significant.
A few pieces worth reading include (I Googled and these were some of the articles on page 1):
http://www.forbes.com/sites/freekvermeulen/2011/03/22/the-price-of-obesity-how-your-salary-depends-on-your-weight/#65992c7261c7
“The world of business is still rife with discrimination. Women get paid less than men, people who are physically attractive earn more and are more likely to be seen as suitable leaders, and race determines chances of promotion. The business world in that sense is no different than other walks of life.”
“Various studies have shown that overweight people are seen as less conscientious, less agreeable, less emotionally stable, less productive, lazy, lacking in self-discipline, and even dishonest, sloppy, ugly, socially unattractive, and sexually unskilled; the list goes on and on.* The stereotypes run so deep that even obese people hold these same discriminatory beliefs about other obese people. Therefore, it may come as no surprise that research has provided strong evidence that obese people are paid less than their slimmer counterparts.”
This goes on to compare weight/income levels for men versus women (spoiler: obese women get hit harder).
https://www.theguardian.com/money/us-money-blog/2014/oct/30/women-pay-get-thin-study
The headline alone is enough for this one: “For women, being 13 pounds overweight means losing $9,000 a year in salary.” (very heavy women earn $19k less)
$9k per year adds up over 45 years…
http://www.businessinsider.com/science-overweight-people-less-successful-2015-9
“What factors would you consider when evaluating candidates for a job or a promotion? Their past performance? Personality? These qualities might be meaningful, but a growing body of research suggests that we’re swayed, too, by aspects of a person’s physical appearance — namely, their weight. When it comes to judging professional potential, we’re often biased to see overweight people as less capable.”
This could explain why there is a difference…
http://www.mirror.co.uk/news/uk-news/short-men-overweight-women-earn-7521045
This one is interesting because it hits on the fact that short men also earn less.
I could go on, but I think the point is clear: there is some (probably significant) earning impact when a person is obese.
Add that to the savings issues noted in the post as well as general quality of life issues, and why wouldn’t someone want to try and get to the right weight?
No doubt. All your points are well taken.
I was just using the verbiage from the article that said it was an average of 2.5% less.
“Bias adds up: On average, obese workers earn 2.5% less than those with normal weights.”
If they used the term correctly then the average would mean that you add up all the data points and divide by the number of them and get a 2.5% difference. Of course they could have used the term incorrectly too.
“My quality of life has been MUCH better when I’m in shape”. I agree with that 100%. I make the time to be fit and I think I am in very good health for being in my late 50s. I continue to see in my younger friends the toll that lack of fitness/healthy eating have on them. I also love that my clothes fit me from year to year. I don’t have to spend time and money buying new clothes.
“I also love that my clothes fit me from year to year. I don’t have to spend time and money buying new clothes.”
This is a GREAT point!
My wife still has clothes she wore in college (believe it or not) and I have some that are 10 years old — still in good shape. The fact that we haven’t changed sizes has saved us a ton of money.
My wife just made me get ride of a shirt from high school. I think it may have been sophomore year – so about 20 years ago.
It fit perfect. I miss it.
I’d recommend a DEXA scan for anybody looking to accurately measure body comp changes over a period of time. It’s easy enough to find a location that has the equipment either through Google or a local gym. Your best bet would be to reach out to a crossfit affiliate or strength & conditioning/performance gym but a globo gym might have some info too. I’ve always lived in large cities so I have no idea what it’s like trying to find one in a non-urban area.
I lost 50 lbs. after my 2nd child was born by making lifestyle changes that I’ve maintained for 14 years now. The benefits of being healthy and in good physical condition are far reaching, for sure. I admit, I don’t always enjoy my gym time, but I love that I can keep up with my teenagers and do the things I love to do (like martial arts and climbing). I spent 3 days at theme parks this year riding roller coasters – I credit the lack of soreness to being in good physical shape.
Good for you!!
And remind me never to pick a fight with you… 🙂
After my third (or was it fourth) child I was also at 235 at about 6′ 5″. I dropped down to 210 but have been creeping back up. I certainly felt better when I lost weight and had more energy and structure to my schedule. I was sleeping better and had an easier time waking up in the morning. Most people couldn’t tell I lost 25 pounds because I am so tall but it made a big difference.