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The True Cost
Of Cigarette Smoking


by Keith Rawlinson
Volunteer Budget Counselor

Most people already know about the cost of smoking as it relates to health.  By now, nearly every adult in the U.S. who smokes has heard that smoking often leads to such things as cancer, emphysema, reduced lung function, etc., etc.  I would also hope that most people who smoke are also aware that it makes your clothes stink, your house stink, your car stink, so on and so on.  But I'm not really here to talk about those aspects of smoking.  This is, after all, a financial article; so, let's talk about the financial cost of smoking.  This is a cost of smoking that many smokers fail to really consider.  Yes, oftentimes smokers realize that it is expensive to come up with the money for pack after pack of cigarettes day after day, but they still fail to consider the long-term financial cost of smoking.  Worrying about how to pay for the next pack of cigarettes is short-term thinking.  Worrying about how much of your financial future those packs of cigarettes are costing, is long-term thinking.  People who are wealthy, or are well on the way to becoming wealthy, tend to think long-term.  For more on this, please read the article Do You Think Like a Wealthy Person?

Let's take a look at what smoking really costs in terms of dollars:

For this example, we will use $5.50 as the average cost for a pack of cigarettes.  We will also figure that the average smoker smokes one pack per day.


$5.50 per day gives a monthly average of $165.00 spent on cigarettes.  If , instead of spending it on cigarettes, you were to just save that $165.00 every month in a cookie jar where it earned no interest whatsoever, you would have the following:

$9,900 in five years.

$19,800 in ten years.

$39,600 in twenty years.


And don't forget, this was without earning any interest.



Now, let's do the same thing but this time let's put the money into a bank account or Certificate of Deposit earning only 3% per year.  Here's what you would have:

$10,666 in five years.

$23,057 in ten years.

$54,170 in twenty years.



This time, just for the fun of it, let's put the money into a decent Growth Stock Mutual Fund earning an average of 10% per year, which is a reasonable, historical average.  Here's what happens now:

$12,777 in five years.

$33,799 in ten years.

$125,295 in twenty years.


You could possibly pay your house off completely in twenty years with money that would otherwise have been spent on smoking.
Even if you don't want to wait twenty years, think about what you could do if you had $12,777 to spend as you pleased every five years.
Imagine having $12,777 to put toward buying a car every five years.



Statistics suggest that most smokers have taken up the habit by the age of eighteen.  Just for the fun of it, let's look at what happens if, instead of buying cigarettes,  that eighteen-year-old decided to invest that money into a decent Growth Stock Mutual Fund, and let's have him do it until retirement at the age of sixty five.

That gives him forty seven years of earning an average of 10% per year in his Mutual Fund.  At the time this teenager retired, he would have:

Over 2.1 million dollars!




Okay, now that you are aware of how much cigarette smoking costs in the long term, let's talk about some practical advice and strategies.



Who says quitters never win?

I realize it is very, very difficult to quit smoking completely.  If you can muster the determination, strength and discipline to quit smoking completely, I highly recommend you do so.  And don't feel badly if you have tried to quit in the past and 'failed.'  Current statistics suggest that people who managed to give up smoking completely had quit an average of 15 times before accomplishing their goal of quitting forever.  So don't think of quitting smoking, and then falling back into it as failure--think of it as practice!  Quitting smoking is not an easy task, but it is certainly a worthwhile one.  Not only does it help you financially, but statistics show that after you have been smoke-free for ten years, your risk for smoking-related diseases drops to almost that of a non smoker.  And if you have kids remember that, statistically, the children of smokers have an 80% chance of taking up smoking themselves.  So if you can, quit smoking and start putting that money into savings where it can grow.  Like I said, if you don't want to wait twenty years or more for your financial reward, then just take out the eleven or twelve thousand dollars you'll have every five years and go spend it...have fun...that's part of your reward for quitting.


Cutting back.

OK, let's get realistic and say that you can't quit completely.  I have met many smokers who say they can't quit, but I have yet to meet one who says that he couldn't cut back if he wanted to.

What if every other time you pulled a cigarette out of the pack, you slid it right back in and just waited for the next one.  In other words, hold off as long as possible between cigarettes and try to get yourself down to half of what you were smoking.  In our example, that would be half a pack per day or $82.50 per month.  If we save that into a Growth Stock Mutual Fund earning a return of 10% we get this:

$6,388 in five years.

$16,899 in ten years.

$62,647 in twenty years.


All this from just cutting down to half of the cigarettes you would normally smoke.  So, even if you can't quit completely, by cutting down you can still have around $6,000 to spend any way you want every five years.


Now, what if you are really weak when it comes to cigarettes?  What if you can't even cut down to half?  Well, do you have the discipline to make sure that there is one cigarette left in the pack at the end of the day?  We're talking about giving up only one cigarette per day.  It's nowhere near the money you build up from quitting completely, but here's what happens in our Mutual Fund:


$638 in five years.

$1,689 in ten years.

$6,264 in twenty years.


Granted, we're not talking about huge sums of money now, but wouldn't it be fun to run out and spend $600 on whatever you want every five years.  Don't want to wait five years?  That's ok, let's just put the money in the bank...

In our example, the average cost of one cigarette is 27.5 cents.  That works out to $8.25 per month.  $8.25 put into a 3% bank account every month adds up to around $100 in one year.  That means that by giving up just one cigarette per day, you can have $100 to take yourself and a special someone out to a nice dinner every year.  $100 per year probably won't make you wealthy, but it sure would get you a pretty nice dinner and it certainly shows you the financial cost of smoking.
Want to improve your health, have extra spending money and be one step closer to becoming wealthy?  Then stop burning up money by smoking. Quit smoking or at least cut back.  Then start putting that money into a bank account or Mutual Fund instead.  And of course, read all of the articles on the Financial Page and put what you learn into practice.

If your smoking habit is different than in my example and you want to know how your specific smoking habit is affecting you financially, then check out my free, downloadable  Future Value Calculator  software.  To figure out what would happen to your money in a mutual fund, just enter what you spend on cigarettes per month into "monthly contribution,"  Enter "10" for "annual yield" and enter whatever length of time you want to calculate for into the box labeled "time".  To calculate for a bank yield, do the same things, but instead of entering "10" for "annual yield," enter whatever annual percentage rate your bank is paying.


Please know that all of the thoughts, information, suggestions and techniques given on this site are nothing more than the author's opinion on the matter being addressed.  Do further research before making any decisions.


This article copyright 2007,2009 by Keith C. Rawlinson (Eclecticsite.com).  All rights reserved.

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