How can Quitting Smoking Help You Achieve Your Savings Goals?

Smoking has become almost unaffordable in many parts of the world, including India. A single cigarette costs between Rs10 and Rs35. If you smoke a pack a day (around 20 cigarettes), your habit will cost you Rs21,000 per month. If you are battling stress and you’ve been saving up for a vacation, you’d love to spend more on fashion or skincare, or you simply wish to set more money aside for a rainy day, kicking the habit is one of the most logical (and useful) ways to do so.

Smoking has Short- and Long-Term Financial Benefits

The psychology of quitting smoking is complex and varies greatly from individual to individual. People who are great savers and who are motivated by long-term financial planning, can consider investing annual amounts saved. Those who seek quicker gratification, meanwhile, can plan on spending what they save on cigarettes in a week, or a month. Regardless of which option works for you, it is important to work out how much you can save when you quit smoking, and to make a spending or savings plan for this amount. You can therefore note  the extent to which your quality of life has improved from a financial perspective.

The Hidden Costs of Smoking

The cost of a pack of cigarettes is merely the tip of the iceberg. For instance, you may think you are keeping costs down by smoking inexpensive cigarettes like bidis, yet have you considered the big medical costs your habit entails? A recent (January, 2019) study published in the journal Tobacco Control – undertaken by Dr. Rijo M John of India’s Center for Public Policy Research – found that bidi smoking cost India INR 805.5 billion in one year alone. Around 21% of this amount can be attributed to diagnostic tests, medications, doctors’ bills, hospitalisation, transport to and from medical centres, etc. Indirect medical costs, meanwhile, include loss of income owing to smoking-related illnesses, and the cost of accommodation for those caring for sick patients. The researchers noted that around 15 million people in India live in poverty because of cigarettes and related medical costs. Many people, they stated, spend money on tobacco that should be spent on food and education.

Smoking Could Become More Expensive in India

Studies have shown that higher tobacco taxes actually do decrease smoking rates, with one proviso: the tax increase must be large (around 100%) to reduce adult smoking rates by around 5%. Still, many governments have significantly increased taxes. One of the highest rates can be found in Bosnia and Herzegovina (where taxes stand at 86% of cigarette prices). In India, tobacco manufacturers pay different excise duties depending on the product. That is, cigarettes are charged at 64%, bidi at 22%, and chewing products at 81%. However, as noted by Clear Tax India, “ There has been an increasing demand for a higher tax burden on the tobacco manufacturers.” This in turn would result in consumers paying higher prices.

Tobacco can put a big dent in your financial quality of life, both directly and indirectly. Bearing in mind that the cost of tobacco is already incredibly high and that taxes could cost a further price hike, quitting now makes sense. Not only can you start saving for a short- or long-term plan, you can also enjoy almost immediate benefits to your physical and mental health and wellbeing.