How does Tobacco use Negatively impact Personal Finances?

Using tobacco is a personal choice. Isn’t it? The most known way of using tobacco is smoking. Do you know about Cigarettes and cigars and the economic and financial cost of smoking them? Did you know that Cigarettes and cigars don’t come cheap? Even the government charges extreme taxes on them to discourage their use. Keeping all that aside, we are here to know how does Tobacco use Negatively impact Personal Finances? Let us know what are some financial consequences of using tobacco (aka smoking).

P.S. If you don’t use tobacco, then this post is not for you, but you can read on to understand the financial implications of such a choice. Please note that Your Rich Freedom does not endorse the use of tobacco including smoking.

1. Long term opportunity cost

Using tobacco in any form is an expensive habit. Do you agree? Let me explain
For example, If a pack of cigarettes per day on an average costs 5. If you consume on an average 4 packs per week. It will cost you 20 per week. That is 80 per month. That is 960 per year. You can assume the currency is $ or your local currency.

If this 960 was invested and if you were able to get a minimum of 5% returns (depending on the market conditions and your country). That is a loss of yearly interest of 48. Let us take the effect if you had steadily invested this over a 10 to 25 year period. How much wealth would you have accumulated?
10 year = 1564
25 years = 3251 (Did you notice how your money could have tripled?)

What’s on your mind now? Did you understand the point I am trying to make? The point is the usage of tobacco, cigarettes, is a personal choice. But this choice will add to set you back financially. In other words, you will take a longer time to achieve your goal of financial freedom. The numbers never lie.

2. Daily habit cost

Habits can be good or bad. Some add money into your pocket. In my case, it is stopping to check what offers I have before making a purchase. I end up saving a lot through discounts, buy 1 get 1 free deal, cashback, etc. What is a habit of yours that puts money into your pockets? Do let us know in the comments. Moving on, some habits can remove money from your pockets. You don’t need me to elaborate on this for sure.

Like I said before, Cigarettes are an expensive habit. It’s almost like my Starbucks latte habit. Guilty as charged. Although I limit it to weekends only, it still is a habit that is setting me back towards my FIRE (Financial independence retire early) goal.

It takes 14 days to build a habit they say. Let us try to avoid or limit our expensive habits

3. Diseases or health conditions

Do you want to live long? I am sure everyone does. Long term usage is known to have a great deal of effect on health. Some of the diseases or health conditions caused are cancer, heart disease, stroke, lung diseases, diabetes, etc.

Once diagnosed by any of these, let us not even touch upon the cost of a hospital’s medical care. This will result in you diminishing a lot of your savings. Let us not even think about the mental anguish your family will have to go through. And don’t get me started about the time you and your family would spend in this crisis. Also, is the mental peace you and your family would lose over the outcome worth it? These are just some nonfinancial implication that I wanted to highlight.

4. Healthcare expenses from diseases.

As discussed in the previous point, we are only highlighting the expenses that would result from the consequences of using tobacco through cigarettes or other means.

Have you heard of the quote “health is wealth”? I am sure most of you have. Our health is indeed our wealth. Do you understand why now?

5. Insurance

Insurance is the biggest tool in protecting you from risks. Risks of life, risks of health, etc. Did you know your premium would largely vary based on your lifestyle? When hospitals run medical tests for the insured, smokers tend to be charged extra on their health insurance. Because the risk of you making a claim is higher. This is so because you have a higher risk of tobacco diseases as opposed to others who don’t use it. So, remember, your expensive habit is ensuring you have an expensive life.

6. Employment

Did you know that some organizations prefer not hiring people who smoke at all? Although, this policy is seen in very few organizations. It may directly have an impact on your ideal dream job. This may not be true for all industries.

Although, it is your own personal choice to use tobacco. it is important to be aware of the cost of your habit. Hope this article helped shed awareness on How does Tobacco use Negatively impact Personal Finances?. After all, knowing that this habit is slowing down your financial freedom goal is important, so you can take action to reach your goal, “Financial Independence Retire Early” (FIRE).

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