Seeing as this is a finance website and not a health website, I’m not going to spend time writing about all of the physical health benefits of being a non-smoker. And I certainly won’t spend time reminding you that if you smoke, you’re increasing your risk for heart disease, stroke, cancer and that you’re likely to live 10 fewer years than a non-smoker.
(Sorry, guess I just sort of did.)
All health issues aside, what I’d really want to show you is the negative effect smoking has on your financial health.
According to TobaccoFreeKids.org, the average price for a pack of cigarettes in the United States is $4.80. That means that an average person who smokes one pack per day spends roughly $1,750 per year on cigarettes. That’s a lot of money to be spending on something that’s so bad for you and those around you.
So, what would happen if you took the money you would have spent on cigarettes and invested the money instead? Here are two scenarios that show how much money you could potentially lose out on by lighting up, based on smoking a pack a day for 25 years.
Scenario #1 – Investing in a money market account with an average annual yield of 4%:
| Year |
Balance |
| 5 | $ 9,858 |
| 10 | $ 21,851 |
| 15 | $ 36,443 |
| 20 | $ 54,196 |
| 25 | $ 75,795 |
Scenario #2 – Investing in a mutual fund with an average annual yield of 8%:
| Year |
Balance |
| 5 | $ 11,087 |
| 10 | $ 27,378 |
| 15 | $ 51,315 |
| 20 | $ 86,486 |
| 25 | $ 138,165 |
In the money market scenario, by investing the $1,750 that would have been spent on cigarettes, you would have about $76,000 (pre-tax), instead of being out $44,000 with nothing to show for it. That’s a swing of $120,000 in your favor.
In the mutual fund scenario, by investing the $1,750 you would have otherwise spent on cigarettes, you would have roughly $138,000 (pre-tax) instead of being out $44,000. That’s a swing of $182,000 in your favor. That’s some serious money!
Even if you decided not to invest the $1,750, but instead put it toward paying off credit card debt or increasing principal payments on your mortgage, you’ll be much better off financially than if you let all that money go up in smoke (pun intended).
So, if you can’t get yourself to quit smoking for the health benefits alone, at least try it for the financial benefits. Either way, down the road you’re going to be a lot better off if you kick the habit now.
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{ 2 comments… read them below or add one }
This is an excellent article! It is informative, entertaining and fun to read, and puts a different perspective on the smoking issue.
Like many others, I bought the lie that I was “hooked” on cigarettes. Four years ago, on 10/31/2005, I put out my last one and walked away from it. No gum, patches, hypnosis or other aids. I just stopped. it really isn’t as hard as you think.
So I guess I’m in year 5 of my new savings plan.
Thanks for the comment, Bob, and congratulations on quitting!