Smoking a Pack a Day Can Cost You Millions
July 7th, 2008 • Related • Filed Under
I made the following assumptions:
1. You smoke a pack a day
2. A pack costs $9.00
3. You smoke from age 18 to age 65
4. You could invest and receive 10% on your money otherwise
Based on that…
Your monthly cost of smoking is $270.00
Your annual cost of smoking is $3,240.00
But here’s the kicker: If you instead took that money and invested it, assuming no transaction costs and assuming that you can earn 10% on average per year, a smoker could’ve accumulated $3,490,026.45 by age 65. Yes, over three million dollars!
I created a calculator you can download to figure out the cost with different assumptions (higher/lower smoking frequency, different number of years until retirement, different cost per pack of cigarettes).
Thanks for the link. Good luck with the W network. 
Thanks for the mention. The W Network challenge has been fun so far. You were tied for second ...
Thanks for the mention, have a great weekend, and good luck with the Challenge too! 
I missed the last episode but will catch the upcoming one. Thanks for the mention! 
Thanks for the link.
I've been enjoying the shows - quite entertaining1 
@Luigi - as far as I know, withdrawals count for the actual tax year in which they are made. Jan/Feb ...
Preet, quick question:
Does a RRSP withdrawal in January/February 2010 counts as income for 2009, in the same way a contribution ...
Yes, increased savings will hurt companies, if the average person hides their cash away in a Scrooge McDuck-style vault. ...
Great excellent interesting informative blog post,.... 
Comment by Michael James on 7 July 2008:
I once heard someone say with all seriousness that the financial cost of smoking isn’t a big deal because smokers probably won’t live long enough to retire anyway. There is some truth to this, but surely it should make smokers think about the life costs of smoking in addition to the financial costs.
Comment by Preet on 7 July 2008:
@Michael James - and the strain on the health care system that they impose. I think there is some merit to a health care burden tax on cigarettes.
Pingback by squawkfox » Festival of Frugality: Bare Necessities Edition on 8 July 2008:
[...] goes up in smoke in Smoking a Pack a Day Can Cost You Millions. WhereDoesAllMyMoneyGo does the smokey math. By his calculations, smoking can cost you over 3 [...]
Pingback by Frugal Babe » Archive » Carnivals and Festivals on 8 July 2008:
[...] need another incentive to quit smoking, Where Does All My Money Go has an eye-opening post about how much smoking costs. And that’s just for the money you spend on cigs - he doesn’t even go into the [...]
Comment by Tax & Financial Planning on 9 July 2008:
This is great Preet. I don’t think I’ve ever seen anyone actually calculate the cost to the smoker. I wonder if the taxes in the cigareetes are enough to cover the added load on the health care system.
Pingback by A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com on 11 July 2008:
[...] hosted the Festival of Frugality which included a link to The Cost of Smoking Calculator I wrote [...]
Pingback by Credit Card Brains » Carnival of Personal Finance #161: The “Feeling Renewed” Edition on 15 July 2008:
[...] at Where Does All My Money Go says smoking a pack a day costs you… [...]
Comment by Sam on 24 July 2008:
Its a good thing I gave up smoking last year. Thought I only smoke 1 stick a day, it sure made a lot of difference to my health when I stopped it. Fewer visits to the doctor, healthier body which means i’m more productive than before.
Nice post!
Sam
Fix My Personal Finance
http://fixmypersonalfinance.com
Comment by Brandon on 24 August 2008:
I’m glad I don’t smoke
Comment by Dave on 28 August 2008:
I used to smoke cigarettes. I quit. And that means I am now entitled to a smug, Born Again attitude. So piss on you all.
Comment by Dividend Growth Investor on 29 August 2008:
Over the past 50 years Altria Group ( MO) was the best performing stock in the S&P 500, by clocking an annualized average return of 20% per year. If history repeats the same way, it will pay better to become addicted to investing in cigarettes ( buying cigarette stocks) than to actually be addicted to smoking them..
Comment by FinancialCourseBlog on 29 August 2008:
Nice calculations, thanks for those… I always thought smoking is expensive but I never knew exactly how expensive! Oh boy!
I’m sure the costs are much higher considering the health risks and problems that accumulate as time passes. Who taught us to smoke anyway?
Comment by rtask on 2 January 2009:
nice post, but isnt 10% a little optimistic after tax? not a smoker trying to belittle your point, but i laugh a little every time i read “assuming 10%” in articles.
Comment by Preet on 2 January 2009:
@ rtask - Guilty as charged, I normally would’ve used 8% but cheated and picked 10% to emphasize the point. I was also going to add a box so that the user could choose their rate of return as well, but wanted to cut the variables down as much so that the focus remained narrow. Thanks for reading…
Comment by Mike on 2 January 2009:
Who pays $9 a pack for smokes…lol? Thats a bit pricey. In the midwest we pay less than $5 a pack. Not to say this price won’t increase with big daddy government taxing everything. I’m not advocating smoking because it is not a wise use of money. Personally, I smoke 2 packs a week and it’s a personal choice. Eating fast food is also a huge waste of money and is extremely detrimental to your health not to mention it is much more of an epidemic in this country than smoking.
Comment by rtask on 2 January 2009:
^in canada, normal brand name cigarettes do cost upwards of $9 a pack, lately there have been cheaper brands that are around $6-7 though. eating fast food is not a “huge” waste of money since a typical fast food meal is $6-7, and the cost of a meal through groceries is probably about half that. smoking is $6-9 a pack that you dont need to spend at all, whereas food you still have to pay for alternatives. its easy to see which is the bigger waste of money (although im not saying one is less harmful to your health than the other)
Comment by Kyle on 17 January 2009:
In Ontario DuMaurier (brand name) cigarettes cost me 7.50 a pack and I smoke them to ensure there will be enough money in the health care to take care of me when they eventually kill me. I think the obesity problem is much worse than smoking. Look at the stats, 2/3 of all Americans/Canadians are OBESE. What kind of strain does that put on the health care system??? Much more health problems than just smoking.
Comment by Learn Stock Market on 1 March 2009:
Yes we should invest our money in buying stocks or in other financial securities, rather than in smoking and it can also create health problems then cost you even more.
Comment by meka on 3 March 2009:
how much would it be if it was a 5% annual return?
Comment by Jr on 13 March 2009:
Yes, assuming 10% - that’s a bold assumption considering how much wealth has been lost globally since 2007. POOF. Just like smoke! How ironic!
In all seriousness, though, good post. And certainly some food for thought.
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Comment by L on 20 May 2009:
It makes me laugh when people defend smoking. Such as comparing it to eating fast food. One difference is, people around you, such as your children, are not consuming poison just because you choose to. Even residue on clothes, your home, and car is harmful to little ones.
That was off topic, but on topic: my parents quit in December and have saved hundreds, probably over a thousand, now. I could definitely find something better to do with that amount of money:)
Comment by lexcis on 2 June 2009:
i cant belive how much it discus me to see 10-14 smoking allegali
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Comment by unkown on 11 June 2009:
its stupid to smoke beacuse… WELL ITS DUMB!!!!!
Comment by Britme on 30 June 2009:
As a very recent 1 & 1/2yr non-smoker all I can say today about smoking is how dumb I was these last 20 years and how smart, richer and healthier I feel today!