Skip to main content

Lighting Your Cash on Fire: Smoking is Bad on Your Finances

No matter how you slice it, smoking is bad for your health. And bad health costs you money.

Obviously, if you get any of the cancers associated with smoking, including lung, you are going to miss days of work as you deal with doctors and getting treatment. And there’s a ton of non-cancer ill effects on your health. All told, Americans spend $170 billion on medical costs each year because of smoking. And lose another $156 billion in lost productivity.

And it can be deadly. The CDC says that nearly half a million people die each year in the United States from tobacco use. And not just for you, the smoker. Since 1964, approximately 2.5 million have died from exposure to second-hand smoke. So don’t put your children at risk.

But 80/20 Your Finances isn’t a health blog. This is a personal finance blog. So while I will encourage you to stop smoking to protect your health, maybe protecting your finances will also be enough reason.

Improve your finances by kicking the smoking habit - stop lighting your cash on fire. Smoking bad finances.

Cost of Smoking

The average cost of a pack of cigarettes is $5.51. But in New York, that goes up to $12.85 a pack because of taxes. In most states, the average ends up around $6-8 a pack.

At $8 a pack, a pack a day habit costs you $56 a week. And $240 a month. $2,920 a year.

That’s $3,000 a year that you are literally lighting on fire.

Think of the opportunity costs:

  • Wouldn’t you rather go on a nice vacation with that money?
  • Or fund your IRA and head for early retirement?
  • Pay for a home improvement project in cash?

WalletHub calculated out the lifetime costs of smoking by state. At the low end is Kentucky, at $1.1 million. At the high end is New York at $2.3 million.

If you dumped all of that straight into a retirement account, you would have $45,460 a year in retirement income in Kentucky (4% withdrawal rule). Just on the cost of smoking. Over $92,000 in New York.

Think of the early retirement you could have if you just stopped smoking!

Jill Stopped Smoking In Order To Fund Risky Investments

If you smoke, you are literally lighting your cash on fire. Isn't a better FIRE the retire early kind of FIRE?My friend Jill decided to stop smoking earlier this year. Actually, earlier this summer. So far, she’s done a great job of it.

Jill was committed to stopping, but wanted some help. So she headed over to our friends at Amazon and bought the Nicoderm patches. She bought all the patches for steps 1 through 3 she would need at once.

But here’s the cool thing she did – she started a separate savings account. Every day that she doesn’t smoke, she moves the money she would have spent on cigarettes into that savings account. It’s starting to grow now that she’s been at it a few weeks. Jill also found out that she didn’t need all those patches. So she is going to return the unopened boxes, for steps 2 and 3, for a refund. That money is going into the savings account too.

What is she going to do with this new found money? She’s going to invest it in all the risky investments. Penny stocks.

Worse comes to worst, she loses the money. But she would have lit it on fire before and now she’s saving her health. But if something good happens and she can turn some profits on these risky investments, then bonus!

If you are a smoker, what would you do with the extra money you saved from stopping smoking?

2 thoughts on “Lighting Your Cash on Fire: Smoking is Bad on Your Finances

    1. I’m glad I never picked up the habit. I figure I do enough bad stuff to my body (drinking and not exercising), I don’t need to add to it by smoking. And of course, it is an expensive habit, made more so by governments that add taxes to discourage the habit and take care of the associated health costs.

Leave a Reply