Of course smoking is a bad habit that can be tough to kick for some people. The health issues caused by smoking are glaringly obvious but we wanted to take a look at the financial side of smoking and how it can erode your ability to save over the long term. Here is a breakdown in costs for the daily smoker:
Example 1 - 10 Cigarettes per day:
Cost Per Week = $46.78
Cost Per Year = $2,436.74
Cost over 10 Years = $24,367.40
Example 2 - 20 Cigarettes per day:
Cost Per Week = $93.56
Cost Per Year = $4,873.48
Cost over 10 Years = $48,734.80
Source: Health Canada
So, there are the hard costs over different time periods. However, when evaluating the real cost of smoking we have to incorporate the time value of money since you could be investing that money you are spending on cigarettes to take advantage of compounding interest. If we take the annual cost from example two (20 cigarettes per day) and invested the $4,873.48 each year, over a 10 year period with a 5% annual rate of return, your investment at the end of 10 years would be worth $61,298.11!
If the health benefits of quitting smoking are not enough then maybe the financial incentive can help as well. Sorry smokers, we’re not trying to rag on you. We just wanted to point out the financial facts to quit smoking that can help you use that money to save for retirement, pay down debt and save money on life insurance premiums! Here’s the difference in life insurance premiums between a standard smoker and non-smoker:
$1,000,000 Term 10 policy, 45 year old Male
Smoker = $235.06 per month
Non Smoker = $84.60 per month
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