Latte lovers rejoice: Your daily pilgrimage to Starbucks will not financially doom you, despite what you've been told.
The idea goes that if you had the discipline to forgo regular, small indulgences like your $5 Flat White, you could save all that money, invest it, and retire a millionaire.
The concept, popularized by savings guru David Bach, feels good because it's pointed, controllable and concrete.
Yet as personal finance author Helaine Olen explains in her book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, the numbers behind the idea just don't add up.
"Bach, whether by design or true belief, had concocted a catchy slogan that appealed to our desire for a quick and easy fix," Olen writes, "but one that bore little relation to economic reality."
Americans buy more than 4 million drinks at Starbucks every day, and Bach put forth that the savings from a daily $5 Starbucks order could amount to nearly $2,000 a year. If invested in stocks at at an 11% average annual return, Bach figured one could turn that coffee money into more than $2 million by age 65.
Cut coffee, invest money, make millions. Could it be so simple?
As Olen notes, the math here is murky. An 11% average annual return is generous when the average yearly rate of return for the Dow Jones Industrial Average showed 9% through much of the last century, she said, and taxes and inflation aren't factored in, either.
The team at Lifehacker used an actual "Latte Factor Calculator" to run its own numbers, and the results were less impressive. Five dollars saved daily and invested at an 8% annual return over 30 years comes to about $225,000.
That's a lot of money, but not enough to retire on.
All savings add up, of course. But Olen argues weve fixated on our $5 lattes - easy, if insufficient targets - over more consequential and unforeseeable costs like hospital bills, job losses and divorce.
So sip from that white and green cup in relative peace. It alone likely isn't enough to make or break your financial future.
Follow Josh Hafner on Twitter: @joshhafner