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Latte Factor Calculator
See what a small daily habit could grow to if you invested it instead. Enter your daily spend, how often, an expected return and a time horizon, then press Calculate.
Written by TopicDrill Editorial Team·Updated June 2026
Growth over time
Balance Money in
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How the latte factor works
The latte factor takes a small, repeated expense and asks a simple question: what if you invested that money instead? On its own, five dollars feels trivial. Spent most days for years, and invested at a steady return, it can compound into a surprisingly large balance.
This calculator converts your daily spend into a monthly contribution, then grows it month by month. The chart separates the cash you actually redirected from the growth earned on top, so you can see how much of the final number comes from compounding rather than saving.
A quick example
Skip a five dollar coffee five days a week and invest it at 7 percent. That is about $108 a month. Over 30 years it could grow to roughly $130,000, of which more than half is growth rather than the money you set aside.
Things to keep in mind
Returns are not guaranteed and this estimate ignores taxes and inflation. The point is the power of consistency, not the exact figure. For broader money habits, the Consumer Financial Protection Bureau is a reliable source. Compare with our compound interest calculator.
Frequently asked questions
What is the latte factor?
The latte factor is the idea that small, frequent purchases add up to large sums over time. Popularized by author David Bach, it uses a daily coffee as a stand-in for any small habit you could redirect into savings or investments.
How does this calculator work?
It turns your daily spend into a monthly amount using 52 weeks a year, then invests that amount each month at the return you choose. It compounds monthly and shows both the total you put in and the growth on top.
What return should I assume?
A long-run figure of 6 to 8 percent is a common assumption for a diversified stock portfolio before inflation, though real results vary year to year and are never guaranteed. Use a lower number if you want a more conservative estimate.
Is cutting small expenses really worth it?
Small cuts help, but they work best alongside bigger wins like negotiating a raise, lowering rent or interest costs, and avoiding high-fee debt. The latte factor is a useful illustration of compounding, not a complete financial plan.
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