Money talk: Prize for kicking the butt - Rs 8 crore!

May 31 was World No Tobacco Day. The tobacco usage statistics in India are grim. As per a 2018 survey conducted by the ministry of health and family welfare, 266 million Indians aged 15 or above use tobacco. That’s the equivalent of the entire population of Indonesia, the world's fourth most populous nation! The results of tobacco usage are terrible. As per World Health Organization statistics, tobacco usage kills 1 million Indians each year-nearly 10% of all deaths-out of which 48% die of cardiovascular diseases and 10% through cancer.

COSTS OF BAD HABITS
Tobacco is an expensive habit to sustain. A popular brand of smokes cost Rs 94 for a pack of 20 in June 2009. Today the same pack costs Rs 300. The price has grown at over 12 per cent per annum over 10 years-well above the average rate of inflation. It indicates that cigarettes are getting expensive at a rate faster than the growth of your savings and income. Assuming the prices will continue to grow at the same rate, you will pay Rs 600 for the same pack in 2029, or Rs 30 per stick. Assuming you smoke 15 packs a month, you are spending Rs 4,500 a month or Rs 54,000 a year. By 2029, you will be spending Rs 1,08,000 a year to sustain your habit. You must assess how much of your income this habit is eating up and whether the habit will be sustainable in the long term.

THE REAL LIFE COSTS
Beyond the monetary costs of your tobacco habit, you must also assess its impact on your overall quality of life. When you smoke, your risks of getting cardiovascular diseases, strokes and cancers increase. You are less immune to infections and prone to pulmonary problems. With a loss of quality of life, your productivity will diminish. A serious illness will also strain your family. A single hospitalisation for a critical illness may set you back in your career and also deplete the savings and investments that may have been created to meet family goals such as home ownership or higher education for the children.

THE ALTERNATIVE
Clearly, there are dire consequences of tobacco usage. Assuming you maintain your current level of smoking while the price of cigarettes continues to inflate at the same rate that it has since 2009, you will end up spending a whopping Rs 1.3 crore over 30 years on a disastrous habit. But this cost will pale before the life costs you may end up paying. So what’s the alternative? There certainly are monetary incentives for you to kick the habit. Consider this plan: if you simply diverted your tobacco spends into a monthly mutual fund Syste-matic Investment Plan (SIP) for 30 years, you would not only enjoy a healthier life but also meet your wealth creation goals, retire early and lead a financially fulfilled life. The money that you would have literally burnt away would become a corpus ranging between Rs 2.89 crore or Rs 8.27 crore.

STAYING INSURED
Risky behaviours call for risk management. If you are unable to kick the habits that harm your health, the least you could do is insure yourself. Buy yourself a sturdy health insurance policy that will protect your family’s wealth against hospitalisation. Do note that as a tobacco user, your insurance premiums will be higher compared to a non-user.  In summary, replace your unhealthy habits with healthier ones in order to achieve your life goals. And where you struggle to motivate yourself, ensure adequate insurance coverage for yourself.

– The writer is CEO, BankBazaar.com