The other side of the incremental perspective, however, could be the
cost associated with smoking. Cigarettes usually come
in a package of 20. They may be purchased with a variety of
prices; a name-brand package costs more than a generic brand, so the
price varies. For the purpose of this article, an average price is
used. An average cost of a package of cigarettes will be
approximately $5.20. The following incremental breakdown of the cost
If a person smokes one package of cigarettes per day, it will cost
$5.20 in that one day. That does not seem like a lot, and if it is
only an incidental cost, it is not that much. However, in the
incremental perspective at the end of a week, the cost of smoking a
pack a day is $36.40. Examine the following table:
Month = $156.00
Year = $1,900.08
5 years = $9,500.40
10 years = $19,000.80
15 years = $28,501.20
20 years = $38,001.20
25 years = $47,502.00
Hmm ... one pack a day costs $47,502 in 25 years. That is
assuming that the government will not increase the tax on cigarettes
over the next 25 years. Over $47,000 could go a
long way toward paying off a mortgage. Remember, incrementally is
only one cigarette at a time.
Of course the cost has to include the health aspect as well.
Lighting up a cigarette and inhaling the smoke into our lungs has
been shown to be directly linked to significant health risks. One
day for the pack-a-day smoker is of course 20 cigarettes. The number
increases to 140 in a week. Examine the following table:
Month = 600
Year = 7,308
5 years = 36,540
10 years = 73,080
15 years = 109,620
20 years = 146,160
25 years = 182,700
[to top of second column]
Wow! In 25 years the smoker has burned up $47,502 and has
also smoked 182,700 cigarettes.
Another cost to consider is the loss of potential investment
earnings. Consider the magic of compounded interest, especially from
the incremental perspective. Any calculation table will demonstrate
the potential earnings of saving the cost of a package of
cigarettes. By saving the $5.20 per day in a compounded savings
account at 3 percent compounded interest, it will yield approximately
$70,382.58 in 25 years. Of course the potential savings
could be even greater if the $5.20 per day were invested in other
forms of earning potential such as stocks or bonds.
By quitting smoking, a person can earn and save at the same time over
the next 25 years of their life. By not smoking any more
cigarettes and instead investing the cost of the package of
cigarettes over the next 25 years, the smoker will have ...
Not smoked 182,700
cigarettes and will likely be much more healthy.
Not spent and burned up $47,502 over the same period of time.
By investing the cost of cigarettes that would have been spent by
continuing to smoke, the nonsmoker will have approximately
$70,382.58 to spend on other things.
What could be more of a motivation to quit smoking and avoid the
incremental effects of loss of money and health, and at the same
time gaining the incremental effects of compounded interest
[By JIM KILLEBREW]
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