Whether you have a penchant for tasty cocktails or prefer to test your luck at the casino, you aren’t alone. Americans, across all age groups, are spending money on their vices. Cash is the preferred payment method but some are getting into debt because of it.
That’s one of the takeaways from a recent Bankrate.com survey on vice and spending, which found 84% of American adults spend money on at least one substance or gambling method and many are doing it once a week! So could their drinking, betting and smoking potentially put their retirement savings at risk?
Vices Americans are spending the most on
When it comes to what Americans are spending their money on, alcohol and lottery tickets rank highest, particularly among the Gen X and baby boomer generations. Millennials prefer tobacco, cigarettes or e-cigarettes, and marijuana, while Gen Z is into sports betting.
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Among high-income earners, alcohol and gambling are the preferred indulgences. Low-income households lean more toward tobacco or marijuana.
Vices Americans are spending the most on
Alcohol–66%
Lottery–64%
Casino games–40%
Tobacco/cigarettes/e-cigarettes–30%
Marijuana/recreational cannabis–28%
Sports betting–20%
Taking on debt in the pursuit of fun
Splurging on a vice isn’t bad until it becomes a problem and impacts your ability to save for retirement.
That’s the case for 11% of the adults polled by Bankrate. They are paying for their vices on credit cards, with buy-now-pay-later services and borrowing from family and friends. That comes as the average APR on a credit card is around 20%.
“By all means, set aside some fun money, but make sure you're also checking off other priorities such as saving for a rainy day and paying down high-cost debt,” says Ted Rossman, Bankrate senior industry analyst. “It's necessary to build fun into your budget.”
How to know when it’s a problem?
Fun is one thing, but if it feels like it is getting out of hand and the debt is mounting, you may want to reign it in by paying only with cash. Otherwise, left unchecked, the debt may spiral into a full-blown addiction.
“If someone says, ‘My drug use is draining my bank account,’ or ‘I lost my job and so I can no longer pay my bills,’ those are… positive criteria when I’m diagnosing someone with an addiction,” says Dr. Sylvie Stacy, an MD who specializes in addiction and preventative medicine.
Even if you aren’t incurring debt from your vice, if it prevents you from saving for retirement, it can negatively impact your long-term financial well-being.
Every penny counts
The average amount spent on vices isn’t breaking the bank — $636 for alcohol and $370 for tobacco — but every penny spent on that means one less penny saved for retirement.
The more you can save the greater your balance will grow. If a large portion of your budget goes toward your vice, consider reducing it and saving the money instead.
“If substances, gambling or other recreational activities are part of your monthly lifestyle, you could opt to pay for those things only with cash to help limit overspending,” says Rossman. “And just as importantly, it prevents adding to your credit card debt and thus accruing more interest charges.”
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