Small amounts, big totals
A coffee to go, a snack from a vending machine, a ride-share instead of the bus: each purchase is small, but repeated hundreds of times a year it adds up. Author David Bach called this the latte factor. The calculator shows both what you spend and what that money could have become if you had invested it instead.
The formulas
- Monthly spending = price × purchases per week × 52 ÷ 12
- Total spent = monthly spending × number of months
- Value if invested = monthly spending × ((1 + r/12)^n − 1) ÷ (r/12), with n months and annual return r
Worked example
A $6 latte five days a week for 30 years, compared with investing the same money at 7%:
- Per year: 6 × 5 × 52 = $1,560, or $130 a month.
- Spent over 30 years: $46,800.
- Invested monthly at 7%: about $158,600.
- Investment growth given up: about $111,800.
How it scales
| Daily habit (5 days a week) | Per year | 30 years invested at 7% |
|---|---|---|
| $3 | $780 | $79,000 |
| $6 | $1,560 | $159,000 |
| $10 | $2,600 | $264,000 |
| $15 | $3,900 | $397,000 |
Keeping it in perspective
Critics of the latte factor point out that small purchases matter less than big decisions. Saving 10% on rent, keeping a car three more years or cutting investment fees from 1% to 0.1% often frees far more money than giving up coffee. The useful lesson is broader:
- Recurring costs compound. Subscriptions, phone plans and insurance deserve the same scrutiny.
- Spend on what you value. If your morning coffee matters to you, keep it and cut something you care less about.
- Automate the saving. Moving the money into a retirement account or index fund on payday works better than willpower.
Inflation
The calculator uses nominal amounts. With a 7% return and inflation around 2.5%, the real growth is about 4.4% a year, so the $158,600 would be worth roughly $76,000 in today’s dollars. To see results in today’s money, enter a real return such as 4% to 5%.
This calculator gives estimates for education and planning. It is not investment, tax or legal advice; for decisions about your own situation, talk to a qualified financial professional.