The idea
The “latte factor” says that a small repeated expense can become a meaningful annual total. Multiplying a daily cost by the number of purchase days gives the cash cost. Adding an assumed investment return gives a possible future value.
Why the headline can mislead
Future returns are uncertain, taxes and fees reduce them, and most people do not invest every skipped purchase. Housing, transport, debt interest, insurance, and income usually have a larger effect on long-term finances.
When it is useful
Recurring costs are worth reviewing when they no longer provide enough value. The useful question is not whether a purchase is morally good or bad; it is whether you prefer it to the realistic alternative.
Try your numbers
Use the Subscription Ledger for repeated costs or the True Cost calculator for a single purchase.