James d. Gwartney

Exhibit 24: Don't Smoke—Get Rich!
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
26
36
46
Age of Investor
56
65
$29,200
$40,344
$58,400
$119,707
$87,600
$275,825
$116,800
$582,935
$143,080
$1,106,677
Amount Invested
Value of Investment with Interest
Source: Authors’ calculations. Assumes not smoking one pack per day at a price of $8 per pack, and earning interest of
7 percent per year.
Alternatively, consider what would happen if Honza smoked from age sixteen to
twenty-six, then stopped smoking and started saving the price of a pack of cigarettes every day.
It is good that he stopped smoking, and he will still benefit from the savings. But by
postponing his savings program by ten years, instead of having $1,106,667 at age sixty-five,
Honza will have only $542,070. Delaying a forty-nine-year saving program by ten years costs

---

239
Honza $564,597 at retirement!
You don’t have to completely give up something in order to achieve substantial
savings. Making small sacrifices in consumption can yield equally powerful results. Instead of
buying the premium cup of coffee every morning, purchase the generic one or make the cup at
home. Instead of eating lunch at a restaurant every day, bring your lunch one or two days a
week. Skip the high-priced mineral water offered at a restaurant and drink free tap water
instead (at least in countries where this is safe to do). Walk or cycle to work instead of taking
the tram (which will even reduce your medical care bills). If you have a weekend cottage, can
you get there on the bus or train? Honza gave up smoking to save $56.00 per week and
invested it instead. You, too, can make changes in your consumption habits to save money.