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The Latte factor was coined by a certain David Bach who brought out the simple idea that the trivial things we spend on every day matters add up to a large sum over the period of a year.  The Latte factor is the unconscious spending on the little everyday things that do not add value to our lives and because the daily costs of these things are very small you do not consider it really as an expense.  Most of us will not notice the €1 or €2 we spend daily during our working day on a sandwich or a cappuccino, particularly if we use loose coins.  These, however, accrue over 12 months.  For example: a daily cappuccino taken at a coffee shop before work at, say, €1 daily, will over the course of a year cost you approximately €220.

This is what the ‘Latte’ factor means:  money that you could otherwise use more productively or wisely. This calculator allows you to identify the cost of purchasing lunch and coffee as against preparing your lunch at home or for example, pooling with your colleagues at work on a cappuccino/coffee machine.  As you get a bird’s eye view over the longer period, say a year, of your daily spending you will have a clearer understanding of your personal finance habits and how small amounts of money add up very quickly.  As the example shown above, small habit based spending done consistently over a year will put a reasonable dent in your finances.

The purpose of the Latte Tracker is to help you understand how a little change in your habitual daily behaviour – preparing your work lunch at home rather than buying it from a caffe during the lunch break – will leave you with more disposable income to allow you to meet your financial goals.