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Latte Factor Calculator
Enter a recurring expense and see its true long-term cost — and what investing that money could build.
Your Habit
Frequency
Investment
Annual investment return
%
Time horizon20 yrs
Results
You spend 55K/yr on this habit. Over 20 years that's 1.1M spent — invested at 7%, it would grow to 2.3M.
Annual cost
55K
Total spent
1.1M
Over 20 yrs
If invested
2.3M
Over 20 yrs
Investment gain
1.2M
Over 20 yrs
Invested valueSpent
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This is a free side project I built in my spare time. If it saved you time or helped you think through a decision, buying me a coffee keeps the lights on!
The Latte Factor Calculator puts a number on the long-term cost of small, habitual spending. Enter an expense — a daily coffee, a streaming subscription, a weekly lunch out — choose how often you spend it, and set an investment return rate. The tool calculates how much you spend annually, the total over your chosen horizon, and what that money would grow to if invested in a broad market index fund instead. The striking gap between 'total spent' and 'invested value' is the opportunity cost of the habit — not a reason to deprive yourself, but context for deciding whether the expense is worth it. All calculations are local to your browser.
Frequently Asked Questions
- What is the Latte Factor?
- The Latte Factor is a term coined by financial author David Bach. It refers to the small, seemingly insignificant purchases we make every day — a coffee, a streaming subscription, a daily snack — that add up to a surprisingly large amount over time. The key insight is not that you should never enjoy your latte, but that being intentional about small recurring expenses can dramatically affect your long-term financial picture.
- How is the investment value calculated?
- The calculator assumes you invest the same amount you would have spent, monthly. It uses compound interest: each month's deposit earns the specified annual return, compounded monthly. The formula is the future value of a monthly annuity: FV = PMT × ((1 + r)^n − 1) / r, where PMT is the monthly deposit, r is the monthly rate, and n is the number of months.
- Is this telling me to give up my coffee?
- No — the Latte Factor is about awareness, not deprivation. The goal is to see the real cost of habitual small spending so you can decide intentionally. If you genuinely enjoy your daily coffee and it improves your life, keep it. Use this tool to find recurring expenses you don't value as much as their long-term cost — subscriptions you forgot about, daily purchases that are more habit than enjoyment.
- What investment return should I use?
- A globally diversified index fund has returned roughly 5–7% real (inflation-adjusted) annually over long periods. Use 7% for a historical S&P 500 baseline, 5% for a more conservative balanced allocation, or 3–4% for bonds. The calculator uses nominal returns (not inflation-adjusted), so the purchasing power of the final number will be somewhat lower.
- Why does the invested value grow so much faster than spending?
- Compound interest. Each month your investment earns a return not just on what you originally put in, but also on all the returns you've accumulated so far. Over 20–30 years, this compounding effect becomes dramatic — which is the main point of the Latte Factor concept. Even a modest recurring amount, consistently invested, grows exponentially.
This calculator is for educational purposes only. Results are illustrative projections and do not account for taxes, inflation, investment fees, or personal circumstances. Consult a qualified financial adviser before making any investment decision.
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