When talking about money, personal finance writers often focus on just the cold hard cash. How do you save it? What should you do with it? Where can you make it grow? And the answers tend to be all too familiar: real estate holdings, the stock market, high-yield savings accounts. None of that is particularly bad advice, but at worst, it’s highly classist, as low-income people don’t typically have access to those methods of saving. And at best, it overlooks the ways in which lifestyle changes might actually save you more money and yield a better return than any investment vehicle on the market today.
And when I say “lifestyle changes,” I’m not talking about your coffee consumption. The savings for even the most prolific coffee drinkers, were they to quit cold turkey, wouldn’t match what’s possible by switching to a healthier diet. Both research and personal experience confirm that reducing your meat intake in favor of more plant-based foods can shave hundreds off your grocery bill, lower your health care and insurance costs, and boost your net worth in retirement.
Save on Groceries
When it comes to my diet, I can’t claim a certain label. I’m not vegetarian since I still eat fish (and, on occasion, chicken). And even if I gave up meat entirely, I couldn’t be vegan because I love cheese. But nevertheless, over the last two years, my wife and I have shifted away from red meats and processed foods in favor of fresh fruits and vegetables. As a result, we not only feel better, but we also save over $1,000/year on groceries.
While my results are certainly anecdotal — particularly because of where I live, the food available to me, and the retailers at which I can buy it — researchers have still provided helpful insights into the cost of our diets.
Meat, for instance, is objectively expensive. By weight and serving size, it’s far costlier than every other major food group. And foods high in saturated fat and added sugars (a.k.a. “junk food”) are also more expensive than fruits and vegetables. The only metric by which that isn’t true is per calorie. But in terms of your grocery bill, that doesn’t mean you’re saving money—it just means you’re consuming more calories.
Researchers in this field have found results similar to my own among other working-class folks, too. A six-week study in Rhode Island, for example, found that when food pantry clients were introduced to more plant-based recipes, they managed to cut their food costs in half (in addition to the numerous health benefits recorded across the board, as well). And a comparison of two nutrient-equivalent diets calculated an annual savings of $750 for plant-based meals, due largely to a reduction in meat, poultry, and seafood.
Spend Less on Health Care
Much like your grocery bill, health care spending also depends on a wide variety of factors (and is oftentimes outside of our control). But all else being equal, healthier eaters are likely to spend less on health care over the course of their lives.
According to one study, unhealthy diets account for 18.2% of all “ischemic heart disease, stroke, and type 2 diabetes costs” in the United States — or $50 billion. By their estimate, that’s about $300 per person. And the food group that contributed most to these extra expenses? Processed meat.
Other cost-saving estimates are even higher. Doctors from Massachusetts and California tested whether enrollment in the Supplemental Nutrition Assistance Program (SNAP) — otherwise known as “food stamps” — results in lower health care costs. Because only certain foods qualify for SNAP, program participants tend to have healthier diets. Consequently, these researchers found that low-income SNAP enrollees spent about $1,400 less on health care per year than their non-SNAP counterparts.
Lower Your Insurance Costs
By incurring fewer health care costs, some insurance companies offer lower premiums, cash bonuses, or other perks for participating in certain health incentives (such as quitting smoking/drinking, losing weight, or walking a certain number of steps each day). Depending on the conditions offered by your provider, these rewards can add up to hundreds of dollars in savings each year.
But the most significant savings will probably come in the form of a High Deductible Health Plan (HDHP). Because your monthly premium decreases as your deductible increases, healthier individuals who anticipate only receiving medical care a few times a year would likely save quite a bit of money by paying for these services out of pocket.
Admittedly, that option can be fairly risky. If you become seriously ill or get into an accident, you’ll need to pay whatever remains of your deductible before insurance can cover the rest. Fortunately, anyone covered by an HDHP also qualifies for a Health Savings Account (HSA). These accounts are tax-advantaged at all three steps: 1) you can deduct your contributions on your tax return, 2) the investments grow tax free, and 3) when you withdraw the money for qualifying medical expenses, it’s not taxed then either.
Per individual, the average annual health insurance premium was $5,280 in 2018. That’s money you won’t get back if you don’t go to the doctor much that year. But by opting for a higher deductible and lowering your monthly payment, you can take whatever difference you would have paid for a low-deductible plan and invest it in an HSA instead. You’ll earn money on your savings, and if you don’t use it all on health care by the time you turn 65, you can spend it on whatever you’d like.
So what’s the end result here? A study from the National Bureau of Economic Research found that a healthy, 65-year-old high school graduate retires with a net worth of $110,000 more than an unhealthy person in the same position. For not having to put up any cash to get it, that’s a pretty great return.
Plus, that extra money is likely to be well spent. Health care for the average retiree costs between $135,000 and $150,000. So not only does eating healthy provide numerous physical, mental, and financial benefits now, but it’ll go a long way toward your quality of life later, too.