If you smoke a packet of cigarettes a day for 40 years, then the amount of money you will spend on your habit will be enormous.

In financial terms, this is an Annuity, which can be calculated as follows:

where:

- FV = Future Value

A = The Payment amount

R = the interest rate per payment period

N = the number of payment periods.

Example:

You purchase a pack of cigarettes every day for 5 years. Each pack costs $10. If, instead of smoking, you had invested the money in a bank at 6% interest, how much money would you have at the end of 5 years?

- A = the payment amount = $10

R = the interest rate per

A = The Payment amount = $10

R = the interest rate per payment period = 6% / 365 = 0.01644%

N = the number of payment periods = 365 / year * 5 years = 1825

Using our annuity formula, we can calculate the Future Value as follows:

- FV = 10 * ((1 + 0.01644%) ^ 1825 1) / 0. 01644%

= $10,641

So, if you had invested the money in the bank, instead of spending it on smokes, then you would have an investment worth around $10,641.

If you invest the money over a longer period, then the numbers can grow very large. Below is a table of similarly calculated values, for various packets per day, interest rates, prices per packet, and lengths of time.

In order to illustrate how to use this table, the shaded values above can be understood as follows:

If instead of smoking 1 packet of $10 cigarettes per day for 30 years, you had invested the money at 12% then you would have an investment worth around $1.08 million.

If instead of smoking 2 packets of $15 cigarettes per day for 50 years, you had invested the money at 12% then you would have an investment worth around $36.7 million.

The above calculations prove that the direct financial costs of smoking are potentially enormous.

In addition to the direct costs of your habit over time, then you (or, if you are on welfare, the tax payers who support you) may also incur additional medical expenses to treat the conditions that are caused by your smoking and/or expenses related to you trying to quit smoking.

The people around you, who are subjected to your second-hand smoke, may also incur medical expenses to treat their conditions that are caused by your smoking.

As a result of this, you may be subject to law suits as a result of the damage inflicted on other people because you subjected them to your second-hand smoke.

Such lawsuits could run into millions of dollars, and rightly so. For example, how much money do you think would be fair compensation if you were a non-smoker and someone else’s dirty habit caused you to develop lung cancer at the age of 25?

Not only could your smoking cost you your health and the health of those around you, it could also cost you everything you own and all of your life’s savings.

As you can see, the financial costs of smoking can be enormous.

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