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Latte factor calculator: Just $5 a day could cost you a million bucks

Take the $5 you would normally spend every day on coffee or other small expenses and invest it early on to see how it can grow over time using our calculator.

Can $5 be enough for you to retire on? Of course not. That’s ridiculous. 

But – take that $5 you spend every day on small expenses – and invest it early on in your life – and you could have a half-million dollars by the time you’re ready to retire. For just five dollars a day. It’s not complex or magical. It’s basic math.

That’s the concept that David Bach popularized in his books, “Automatic Millionaire” and “The Latte Factor”. Small and automated micro-investments can turn into big dollars for retirement.

How the calculator works

Plugin your expense amount – $5, $10, $20 or whatever it is – and market rate (8% is the average assumption), and you’ll see what that invested amount looks like if you spend it daily, weekly, or monthly.

Play around with the numbers, and consider your real-world habitual spending habits. With $5 a day, you’ll have over a half-million dollars in 40 years.

What if you started carpooling to work?  That’s a few more dollars in gas savings that you could use. What about buying generic instead of name brand household products? There’s a few more dollars.

You can go from saving $5 extra dollars a day to $10, $15, or $20 a day just by making small simple choices on what you spend your money on.

What the latte factor focuses on

The genius behind the click-baity name is the automation of small amounts of money plus compound interest. 

Latte sounds fairly pretentious, but the key is to figure out what “latte” means to you. Replace “latte” with “gum” or “lottery tickets” or “gas station soda” or any of those small impulse items you buy when you’re cashing out of a store.

The idea is that while $5 or $10 alone can’t do much, over time it definitely can add up. Small expenses pile together. Then you add the awesomeness of compound interest.

Why investing is a better use of your money

Compound interest is what allows you to retire. If you just saved $5/day for forty years – no interest –  you’d only have $73,000. That’s definitely not enough to live off of. 

But, add in interest, and your saved money starts working for you. Interest on your money accumulates while you are eating, sleeping, working, and just living your life. That interest adds to your money pile, and then even more interest is gained on that new amount. It compounds. That’s how $73,000 can go to over $500,000 in 40 years.

The best advice? Make it easy by automating your investing. Make it so simple that you don’t even have to think about it. Try an automated investing service that takes your small change and invests it for you.


Perfect for beginners, Acorns is a spare-change investment app that rounds up every expense you make with a linked debit or credit card.

Start with just $5 and pay as little as $3 a month in fees (depending on your plan).  You can pick your portfolio style ranging from conservative to aggressive, so you never have to take on more risk than you’re comfortable with.

» MORE: Check out our full review of Acorns.


Also great for beginners, the Stash app allows you to have more control and easily pick the companies you want to invest in.

Stash breaks whole investments down into smaller, more affordable pieces called fractional shares. That means, even if you don’t want to pay a ridiculously high price to invest in stocks like Netflix or Disney, you still can! All you need is $5 to start.

Other small expenses to cut


Millennials have been bucking the trend of subscribing to cable tv for years now. But, if you’re still spending the money on it, ask why you’re doing it and what you can do to reduce cost. It just might be a habit. Try cutting it for a month. You can always get it back if the separation is too painful.

If there’s a particular show or sport you like, consider splitting the cost with a friend or only getting cable for the length of the sport’s season. Look into live streaming services like SlingTV or buy an antenna to get local channels.

The best news with this expense is there are a lot of options beyond traditional cable that can save you a bit of money every single month.

Going out for lunch

It’s incredibly easy to fall into the habit of buying lunch every day at work. Almost no matter where you go, it’s $10 a meal, and costing you $50 a week. Yeesh

Try to get ahead of the peer pressure of going to lunch with your friends. Organize a “bring your lunch to work day” once a week with your coworkers. Get away from your desk and eat in a conference room or outside if the weather is nice. 

Cell phone

If you have to be with the big guns, AT&T or Verizon, a family plan of three or more people is the best way to save money. Of course, this only works if everyone pays their share of the monthly bill on a family plan. Otherwise check out a no-contract phone plan at Ting, Cricket, or Red Pocket Mobile just to name a few.

Monthly subscriptions

Spotify. The New York Times. Netflix. Amazon Prime. Individually, all of these subscriptions are just a few bucks a month. But if you’re not using them, they’re costing you a lot of money over time.

Reflect on your habits. Even if you go through months or seasons without watching Netflix or listening to Spotify, unsubscribe! If you feel like you’re missing out, then you can always resubscribe. 


Does this mean you need to stop drinking your favorite coffee? No. Let’s repeat: NO. This is the most incorrect presumption about the latte factor. If you love your daily coffee, keep drinking it!

Instead, think about all the other things that you don’t love so much and are keeping because it’s a habitual expense. Cut what you hate, keep what you love, and invest the difference.

» MORE: Head over to our list of the best robo-advisors for a simple way to invest without managing it yourself.



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