As part of the Five Ten Twenty Club’s on-going efforts to help its members understand how small daily money decisions can add up to big savings, we are highlighting how spending on simple things can block us from attaining wealth.
Smokers across the world know what it feels like to want a cigarette.. to need a cigarette. It’s one of the hardest habits to break, and while thousands of Americans quit smoking ever year, millions of others wish they could. In fact, a 2012 Gallup survey found that 88% of smokers wished they had never started smoking. After all, smoking wrecks your health, right?
It could also bust your chances at $1 million.
Let’s run the numbers with some quick back-of-the-envelope calculations. For simplicity’s sake, let’s imagine you started smoking at the common starting age of 16 and smoked until your death at around 65 years old. (The CDC says that the average life expectancy for a US man is about 75 years old and also that smokers live 10 fewer years on average than American non-smokers.)
Let’s say you also smoked a pack of day through your years of smoking. Gallup found that about 30% of smokers smoke one pack a day, and that number makes for easier math, so let’s go with it.
The gas station near my home is currently selling a standard pack of Marlboros at $3.79. For simplicity’s sake again, let’s say that this price stays constant through your years of smoking. (Actually, that price will probably go up over time, but let’s not complicate the math further.)
If you smoke a $3.79 pack of cigarettes each day for a year, you’d spend about $115 each month and $1,383 each year on cigarettes. All other things being constant, by the time you were 65 years old, you’d have spent almost $68,000 on cigarettes.
That’s a lot of money, sure, but that’s not the surprise here.
If you had instead invested that same $115 each month for the 49 years that you smoked, assuming an average of 10% per year market returns, that money would’ve grown to over…
So next time you feel the urge to smoke, ask yourself, “Who can afford that?”
What do you spend money on regularly that you wish you didn’t?