Financial advisers identify the quiet money drains that may be keeping you from saving more

Advisers point to hidden money drains that can quietly chip away at your budget

Many Americans say they do not earn enough to live the life they want, and a significant share also say they are unable to cover all of their monthly bills. More than half are also not building an adequate emergency fund, according to a recent Pew Research Center report, leaving them more exposed to costly debt. (See top savings account rates here, from our ad partner Bankrate.)

So what are silent wealth leaks? “Some are related to habitual consumer spending that does not add to quality of life, [and] some are related to recurring expenses a client is unaware of or even may unknowingly have duplicates for,” explains Autumn Knutson, a certified financial planner and CEO of Styled Wealth.

Jeremy Shipp, founder and president of Retirement Capital Planners, says an even larger problem often comes from broad financial oversights rather than small everyday purchases. “The leaks that matter are four figures and up, and they come from one decision made once and never revisited,” he says.

Here are some wealth leaks you may be paying for without realizing it, and which can reduce your ability to save:

Medicare and taxes

One of the biggest blind spots Shipp sees involves Medicare. Since premiums are tied to income from two years earlier, a new retiree’s Medicare bill can still reflect a full working salary even after income has fallen sharply. “Form SSA-44 exists for exactly this, and retirement is a qualifying life-changing event,” Shipp explains. “Most people pay the surcharge for a full year without knowing they could have asked for a redetermination.”

He also points to other major set-it-and-forget-it leaks, including tax withholdings that are never updated after retirement and property and casualty insurance premiums that creep up year after year for anyone who does not compare rates.

Flavio Landivar, a CFP at Evensky & Katz Wealth Management, adds that estimated tax payments are another area where people can get caught off guard when income changes significantly. “Oftentimes, with year-over-year income shifts, this can alter what the client had budgeted or withheld for taxes and can come in as a surprise,” he says. (If you’re looking for a financial adviser to help with these issues, you can use this free tool to get matched with fiduciary advisers from our ad partner SmartAsset, as well as sites like CFP Board and NAPFA.)

Portfolio drain

Investment accounts can also lose money in ways that are not obvious. “Eliminating just 0.5% over 30 years can offset significant healthcare expenses, when compounded at 7%,” says Edward Mahaffy, a CFP, president and senior portfolio manager at ClientFirst Wealth, Legacy & Estate Planning.

For many consumers, these costs are hard to spot, especially in products such as annuities or load mutual funds, where higher operating expenses can hide ongoing commissions. Investors should check a fund’s prospectus for the expense ratio, look for 12b-1 fees — marketing, distribution or shareholder service fees charged directly to the fund’s net holdings — or ask a fiduciary adviser for a detailed, itemized breakdown of all internal product costs.

Idle cash

Another major leak is simply leaving money where it is, Mahaffy says, especially idle cash sitting in low-yield brokerage accounts that could be moved into a higher-yield money market fund.

Knutson says fear of the stock market can also hurt long-term wealth. “I also have the opportunity to work with a lot of people who are so uncomfortable with risk that they unintentionally erode their wealth by being too conservative in a way that does not keep up with inflation,” she says.

Funding with high-interest credit cards

A Federal Reserve report on the Economic Well-Being of U.S. Households (SHED) found that 15% of adults say they would put a $400 expense on a credit card and pay it off over time.

“The one I see most is repairs and other unplanned expenses, and what makes them expensive is what happens after,” says Juan G. Hernandez-Ariano, a CFP at WealthCreate. “A $1,500 AC repair in August goes on a card, the card is at 22%, and a one-time cost becomes a payment that is still there two years later.”

To reduce that risk, experts recommend building an emergency fund. (See top savings account rates here, from our ad partner Bankrate.)

“Add up what the house, the cars and the kids’ medical bills actually cost over the last two years, divide by 24, and fund that as a monthly line instead of treating it as an emergency every time,” Hernandez-Ariano says. By setting aside money each month in a dedicated sinking fund for inevitable repairs, you can avoid relying on credit cards and keep more of your cash intact.

Food delivery and dining out

DoorDash and Uber Eats are also draining household budgets, says Catherine Valega, a CFP and founder of Green Bee Advisory, who calls it a “lazy, bad money decision.”

And the food itself is only part of the expense. “Delivery apps typically add service fees, delivery fees and tips, while many merchants also increase prices on the platform to offset their own costs,” says Ciano Villaquiran, a CFP and partner at CURO Financial Planning.

‘Phantom’ purchases and subscriptions

When asked about the biggest wealth leak his clients face, Glenn Downing, a CFP, co-founder and principal of CameronDowning, says the answer is obvious: “Amazon. Without a doubt. Point, click and it is at your door tomorrow, if not today. Just too easy.”

Because the purchases are often small, they can easily go unnoticed. Beyond habitual spending, Knutson says these leaks often come from recurring charges clients simply forget they are still paying — including duplicate subscriptions.

Many people brush these off, but the total can still add up to thousands of dollars over a year, Landivar says. To stop the drain, experts recommend reviewing credit card statements every quarter and canceling any “phantom” subscriptions.