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 $10.00
3. You smoke from age 18 to age 65
4. You could invest and receive 8% on your money otherwise
Based on that…
Your monthly cost of smoking is $300.00
Your annual cost of smoking is $3,600.00
But here’s the kicker: If you instead took that money and invested it, assuming no transaction costs and assuming that you can earn 8% on average per year, a smoker could’ve accumulated $1,876,137.97 by age 65. Yes, almost two 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, higher or lower rate of return on investments).
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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.
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[...] 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 [...]
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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
\
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!
Comment by russ on 23 July 2009:
In Alberta, a pack of brand name smokes cost $13.00! They’re trying to get you to quit here by bankrupting you! Whatever works, I guess.
Comment by Preet on 14 August 2009:
Just an update – changed the numbers in the sample case to have a lower rate of return (8% instead of 10%), and increased the cost of a pack of cigarettes to $10 from $9. Inflation, natch. But as always, you can still change the variables if you download the spreadsheet.
Comment by Lara on 8 January 2010:
The problem is we who have been smokers for many years find it so absolutely hard to kick the habit. It’s an addiction, a horrible nasty smelly addiction, well known to cig sellers and smokers. What to do with a habit that’s worse than heroin? And slightly more sociallly acceptable? Try a presrciption drug like chantix that causes suicidal thoughts or do it by sheer willpower, good luck, it’s an expensive and disgusting and chained-to-it- habit that can’t be stopped easily.
Comment by dlm on 11 January 2010:
How would you feel if someone close to you developed lung cancer from your secondhand smoke?
The addiction is only for two thirds of smokers. One-third find it not difficult to quit, especially with nicotine gum. Who keeps promoting the heroinlike difficulty??
Comment by Peeved on 15 January 2010:
Ok, as a smoker of over 20 years myself I will make a few defenses in regards to smoking. First of all it a personal choice(and for some addiction.) And no, it will not cause undue harm to other people if a smoker is conscientious.
As a conscientious smoker, I choose not to smoke around children, nor do i smoke indoors and leave a residue to “contaminate” others with. Here in california, it is fairly highly regulated where you can and cannot smoke while in public.
This also means that conscientious “non-smokers” should not go out of there way to come over to a designated smoker area and give me the 3rd degree about how horrible and wrong I am and that I am harming others and children, etc, etc…. Nobody forced you to walk the extra 200 feet to prove a point and bring yourself or your small children into any “immediate danger.” Again as a conscientious smoker, if I see children even heading in my downwind direction, the cigarette goes out.
I do like the comparison that was made to eating fast food, CO2, or any multitude of other maladies that are causing more harm to people en masse, so much more so then my “choice” (no, right) to smoke.
And to those whom complain that it causing everyones healthcare costs to remain sky-high and or is burdening the system, I will make several points:
1. Obesity, Diabetes, and their subsequent “complications”, and treatment costs is probably the largest single healthcare problem and expense, at least here in the United States.
2. Just because I am a smoker does not make me a lecherous “welfare-like” drain on society and the healthcare system. I already pay the “sin” taxes for my choice. And we all know the majority of those funds never make it towards an earmarked program for the treatment, prevention, cessation and such of tobacco related products. This is how it is with every “tax”, people. There are plenty of other “sin” taxes out there as well, which we all make a choice to pay or not. The point is that there is after all a choice. If you want to purchase an overpriced gas guzzling 4mpg XUV, you pay a luxury tax at a minimum, not to mention all of the others that are added on.
3. For the record I also pay a ridiculous amount of money in taxes as a higher income single person, but still have the same expenses as everyone else does. The truth of the matter is, I will never see the money that the government takes out of my paycheck in the form of social security nor am i eligible in any way for such enitlement programs which cost just as much if not more such as medicare. but i am splitting hairs on that point.
4. I understand that people choose “smoker’s” as a cause to get “righteous” about, since it is something tangible, or at least something you can see it right before your face. Whereas I would be considered in the wrong for pointing my finger at someone who is morbidly obese and giving them a once over for sucking the life out of the healthcare and tax systems, or any other number of reasons.
I don’t believe it is right to categorize a group of people and “demonize” them as a whole, there are many reasons that the problems of today exist and the world is not a terrible place because I made the choice to smoke and continue doing so.
Comment by meow on 21 January 2010:
I would also like to add that I think it is wonderful how non-smokers are free from second hand smoke except in a few tiny spaces that they do have to be. However, I am wondering as a non driver, where and when will I be able to go out in public and not have to indure “second hand” car exhaust that isn’t just bad for my health but the entire planet.???? Too bad they don’t smoke because they could put that in their pipes and smoke it. No no they will just fill their gass guzzling SUVs with poison. cancer causing chemicals and set that on fire in their engines.
Comment by meow on 21 January 2010:
I ment “DON’T have to be”
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