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Your Money > Personal Finance Articles > What you can...
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By Sarah Modlock
On 1 July 2007, the smoking ban already in force in several parts of Europe, the US and the rest of the UK, came into effect in England. After smoke-free laws in Ireland, cigarette sales fell by 15%, in Norway by 14% and in New York 100,000 people According to the Office of National Statistics, more than a quarter of adults - around 13 million people - are smokers. That number is almost certainly quite a bit higher once you include the under-16s who are puffing illegally. The price of a packet of cigarettes has more than tripled over the last 15 years. This means that the cost of smoking has increased by more than any other commodity - rising by an incredible 204% since 1989 on the Retail Price Index, according to the Halifax. Only personal services such as dentists' charges came close with an increase of 164%. In contrast, the price of electrical goods such as computers has fallen by 74% in the same period. Someone, somewhere is making a ton of money out of smokers. Your savings As the UK's smokers mull the ban on lighting up in public, one incentive to stub out their last fag is the potential profits to be made from investing their ciggy money in the markets instead. "With the typical packet of fags costing £5.40, a twenty-a-day smoker is blowing around £165 a month - and that's assuming the matches are gratis," says F&C's Jason Hollands. "Just storing the cash in a piggy bank would collect a tidy sum of £1,980 a year but had the money had been invested in a monthly savings scheme with Foreign & Colonial Investment Trust over the last 12 months, you'd now be sitting on a pot of £2,460. That's more than enough to buy plenty of patches and a subscription to a fancy health club." Quit the wicked weed and you could save almost £2,000 by switching to a regular savings habit, according to research carried out by Alliance & Leicester which shows that even current social smokers, who smoke up to 20 cigarettes a week, could save approximately £280 in a year. Male smokers spend approximately £100 more on cigarettes each year than women say A&L. Many people have stated that they want to kick their smoking habit now the smoking ban has come into effect, with some 70 per cent of current smokers saying they want to give up. Ross Dalzell, manager for savings at Alliance & Leicester, said: "The English population spends billions of pounds on cigarettes each year - money which could be going towards that new kitchen you've dreamed of, a two week holiday in the sun, or simply kept as a nest-egg for the future." He added: "By investing the money saved in a high interest account each month and working towards a long term goal, smokers will hopefully find the will power to permanently kick the habit." Make sure that you're getting the best savings rate Your mortgage Charcol says that Someone with a 25 year repayment mortgage could save over £29,000 in interest and shave over 8 years from the term of their loan if they used the money saved by quitting smoking to overpay on their mortgage. Drew Wotherspoon of Charcol comments: "When smokers look at what quitting can do to their finances it may provide that added incentive to finally stub out the habit. A 20-a-day smoker can save around £2,016 a year by giving up which, in itself, is incentive enough. Yet when you look at what overpaying by this amount can do to a mortgage, it is even more of an enticement. Even someone with a relatively small mortgage of £100,000 will pay £29,378 less in interest." The figures naturally get even more convincing the more a borrower smokes each day. The following shows the potential savings:
Wotherspoon continues, "There is clearly a lot to be saved if potential quitters take this approach. Coupled with savings on life assurance premiums and even some home contents insurance policies, there really is a great financial argument for not lighting-up, as well as the obvious benefit to your health. Life cover of £100,000 for a twenty five year term would cost a 35 year old male smoker £17 a month, whereas for a non-smoker it would be around £9."
Get a life insurance quote You could also save money on home insurance. More than half of all fire claims in the home are caused by cigarette-related incidents say Churchill Insurance. Their research found the average claim was £471 and usually related to burnt sofas, carpets or fires started by cigarette ends in dustbins. Smoker-related claims are four times more common than the second biggest cause of fires - chip pans, at 13%. The third biggest source is electrical appliances, which account for 12%. 'These incidents are more likely to happen in the evening or at night as many accidents are sleep related,' says Churchill's Greg Dawson. 'Smokers need to refrain from smoking in bed or in any situation where they are likely to fall asleep'. Government figures also deliver an even starker warning that fires started by cigarettes kill more people than any other kind of fire - accounting for one third of all fatal fires in the home. Find out which home insurers best match your profile If you want to know more about smoking and how to quit then call the ASH freephone helpline on 0800 169 0 169 or log onto www.ash.org.uk. |
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