Kick the butt, don’t let your finances go up in smoke

MAY 31 is observed as No Tobacco Day across the world. Tobacco is consumed in two forms — smoked and smokeless. The most common form of tobacco used in India is bidi and cigarette which is also exported worldwide. By lighting ten cigarettes each day, the consumer ends up smoking roughly 3,650 cigarettes or bidis annually. By assuming that an individual chooses low-cost brand, they still spend more than R36,000 each year just on smoking cigarettes each year.

So, by adopting 'no smoking policy', one can invest significantly towards their corpus. Many global studies have found that most individuals pick up the smoking habit during their adolescent age, either from friends or just for thrill, which later they find it difficult to quit throughout their life. The reason cited by many of the smokers for smoking are for relaxation and some claim that it is a stress buster, etc. Therefore, there is not only a risk for various illnesses, but also a toll on the pockets of smokers who smoke regularly. The amount of money a smoker spends on cigarettes affects the family’s monthly budget, which can be invested for higher longterm returns. Let us assume that a person spends Rs 500 per month. By quitting smoking altogether he can save that sum and park the money saved in a mutual fund under systematic investment plan (SIP). In fact, SIPs are like a recurring deposit which enables an investor to buy units on a given date each month and the amount can be automatically drawn from the investor's bank account. One of the biggest advantages of an SIP for a retail investor is that one does not have to time the market and worry about the volatility.

Suppose the fund give a compounded rate of return of 12%, over a period of 10 years, then the total invested sum will be Rs 1,15,019, and if it is for a period of 20 years then the amount will Rs 4,94,628. For 30 years, the amount will be Rs 17, 47,482. While making the above calculation, other costs such as lighters, breath mints additional trips out for buying cigarettes were not considered. Let us take a quick look at indirect costs of smoking. These are all the things that you can't put exact amounts on in your life, but they certainly take their toll. Smoking imposes an enormous economic burden and adverse impact on society.

If a person smokes, you should know that you have to pay more in medical bills as you certainly get sick more often than non-smokers do; pay more in dental bills because of additional cleanings; pay more in health insurance premiums.

Smoking might be hurting your job prospects also as of late, many companies have stopped hiring smokers entirely, and some have even let employees go who refused to quit.

You will lose re-sale value on your home/car if you smoke inside of it. If you are not planning to sell, then you have to spend money on cleaning and redecorating the house/car to get rid of nicotine stains and the smell of smoke.

It exposes your loved ones to the harmful chemicals in cigarette smoke that have negative impacts on their health. It was proven that smokers tend to ear n less money than non-smokers.

While an individual incurs loss of income due to absenteeism and sick leaves at workplace, companies incur losses due to loss of productivity.

Studies found that smokers earn from anywhere between found and eleven percent less than non-smokers. People see smokers to be less attractive and less successful as well. These are just some of the ill effects of smoking. Cigarettepacksareexpensiveand invariably after every budget you buy a cigarette pack, the prices add up. If you try to argue that health is not too high on your list of priorities, but maybe money is. Take a good hard look at all of the real and hidden costs of smoking and you may just think twice before lighting up again. Keep in mind that tobacco companies and government are only ones that benefit from the sale of tobacco.

To conclude, financial security and health are strongly co-related to personal happiness. It means that health and wealth are strongly related and changes in one area of life can have positive effects upon the other. The writer is associate professor of finance & accounting, IIM Shillong