“Your first wealth, is health,” said Ralph Waldo Emerson and according to one anonymous stoic, “You cannot enjoy wealth, if you’re not in good health.” To further solidify the point, Herophilus, an ancient Greek physician said, “When health is absent, wisdom cannot reveal itself, art cannot manifest, strength cannot fight, wealth becomes useless, and intelligence cannot be applied.”
It would appear that over the span of hundreds and thousands of years there has been a perceived link between health and wealth. Yet, many fail to grasp the all but seemingly obvious connection between the two.
While ancient Greek philosophies and inquisitive quotes sound nice, what facts are present to support the correlation between the two? Below are a few facts that at a minimum demonstrate how one impacts the other:
-In 2012, a study published in The American Journal of Medicine, stated that more than 62% of U.S. bankruptcies in 2007 were attributed to medical problems
-Health and personal finance behaviors are strongly related in dozens of specific ways, including life expectancy and job productivity (O’Neill 2004; 2005; O’Neill and Ensle 2014)
-According to one study, better health has a strong correlation with ability to earn wealth. For example, those who are physically active (working out 3+ hours per week) were found to earn 6-10% more in wages (Kosteas 2012)
-Poor health habits, such as smoking, have been associated with negative impacts on one’s financial situation. For example, the typical nonsmokers’ net worth is 50% higher than a light smoker and nearly 200% higher than a heavy smoker (Zagorsky 2005)
These few findings alone outline the relationship between health and wealth and how one can impact the other.
What does all this mean? How can a better understanding of the two help secure a better future? In short, it means ones health and wealth are intertwined and can often be impacted by both the positive and negative factors of each. Understanding and identifying behaviors and strategies that reinforce one another is key to finding a “healthy” balance between the two.
A key component to both is planning.
Traits of a planner can include being goal-oriented, careful about spending money, and more likely than non-planners to make savings progress and have sufficient savings for emergencies and retirement. People who are planners may make daily or weekly to-do lists to keep track of the tasks they plan to accomplish, juggle their workload, meet deadlines, and schedule time wisely. Planners are more likely to complete routine health checkups and screenings.
Successful health and wealth outcomes have been linked to a person’s propensity to plan (Ameriks, Caplin, and Leahy 2003; Lusardi and Mitchell 2006; Lynch, Netemeyer, Spiller, and Zammit 2010; Scholz, Sniehotta, Burkert, and Schwarzer 2007).
A study conducted by O’neill, Xiao and Ensle in 2016 studied personality traits of planners. This study created several measures of financial and physical health and wellbeing. The findings were that:
1. Respondents who reported frequent planning behavior had higher health behavior scores than others
2. Respondents who reported frequent planning behavior had higher financial behavior scores than others
3. Respondents who had higher health behavior scores also had higher financial behavior scores
Therefore, studies like this and others are helping connect the dots that health and wealth are related, and changes, good or bad, can influence the other. Planning behavior is not an inborn skill. People can learn to be better focused. Likewise, people with health issues can learn about better health practices, such as thinking holistically about actions they want to take to improve their lives. Not only are health and financial behaviors moderately correlated with one another, as indicated by the findings of several articles and studies referenced here within, but the same behavior-change strategies can be employed to improve both aspects of people’s lives. Understanding the correlation between the two types of behaviors may be helpful in practice, because a person who is a planner in regards to their health may also be planner in the domain of their personal finance. Strive to find that balance between health and wealth so that you may keep and enjoy both.
VP, Wealth Planner