5 Silent Wealth Drains That Sneak Up On You

Building wealth requires discipline and smart planning. But keeping it is a different challenge. Instead of just big purchases or market downturns, seemingly small, overlooked leaks can silently drain money over time.

Many expenses may not feel dangerous in the moment, but small amounts could compound over the years and, ultimately, add up to thousands or more. Here are five silent wealth drains worth watching:

1. Lending Money to Friends and Family

Giving money to family and friends isn’t simple. While it can feel good to help, it can be a drain on your wealth. This is especially true if you have people in your life who constantly rely on you to bail them out, giving you heightened pressure to reach into your wallet more often.

Andrew Matz, financial planner at Oak Road Wealth Management, says, “Lending money to friends or family is a financial pitfall because it blurs the line between personal relationships and business transactions.” Sometimes it’s hard to say “no,” and you may end up giving in just to preserve family relationships. Accumulating wealth can make people see you as an outlet, which puts you in a tough position.

“The pressure to help someone you care about can be high, but doing so without a clear understanding of the risks is a recipe for disaster,” Matz cautions. It’s not uncommon for loans to friends and family to never get paid back, which can mean a permanent loss and even more strain on your relationship with them.

If you must lend money to people you know, Matz recommends treating it as a gift rather an investment with an expectation to recoup your funds. “If you can afford to give the money away and not get it back, then consider doing so. Otherwise, it’s often better to say no. A difficult conversation now is far better than a broken relationship later,” he says.

2. Lifestyle Creep

Lifestyle creep is another potential drain on your wealth and saving power to keep in mind. This is a financial and emotional phenomenon where your spending rises along with your income, impeding your ability to save, invest, and build future wealth.

“As incomes rise, so do expectations—a new car, a bigger house, more expensive vacations,” explains Matz. Maybe you’ve received a raise, moved to another company, or gotten a good bonus, then you feel that you should live at this new level you’ve achieved. However, this can be a steady and somewhat silent drag on your financial health.

“The danger is that this increased spending becomes the new normal, making it difficult to save or invest for the future,” Matz explains. “Lifestyle creep robs you of your future by convincing you that you need more today.”

How can you curb this trend and become more intentional about your spending and saving? According to Paul Ferrara, CIM^® , Senior Wealth Counsellor and Client Relationship Manager at Avenue Investment Management, two important steps are to set up tangible guardrails and change how you think about your income.

“I recommend that clients consider every raise as an opportunity to increase long term security by investing or paying down debt at least 50 percent of the raise,” says Ferrara. “In the course of ten years, the practice can increase the net worth by over $50,000 and still have the option of a modest lifestyle improvement.”

It’s critical, as Ferrara suggests, to pay yourself first. Then, after investing and saving for future goals, you can consider lifestyle needs and purchases you want to make. You can also set up budgeting frameworks, such as the “50/30/20 rule,” which refers to devoting 50% toward basic needs, 30% toward discretionary purchases, and 20% toward savings.

It can also be helpful to consult with a financial advisor as your pay increases. They’ll be able to help you manage cash flow and align yourself toward both short- and long-term goals.

3. Living on Financial Autopilot

Unawareness can also be a silent cause for wealth erosion. This means losing sight of your spending, how much you’re saving, and progress toward longer-term goals, instead of gliding without financial intention.

A typical sign of financial autopilot is small, recurring expenses that add up and, sometimes, go unused. Consider your streaming platforms (Netflix, Hulu, Max, etc.), apps, gym memberships, and even forgotten magazine subscriptions.  

“A $15-per-month subscription might not seem like much, but over 30 years, that’s over $5,400. And that doesn’t even account for the lost potential gains from investing that money,” says Matz. “Conduct an annual audit of your subscriptions and recurring charges. Cancel anything you don’t use or value,” he recommends.

Autopilot doesn’t always mean overlooking small charges. Rather, it more surrounds the “disconnect between where money goes and what actually matters to the client,” highlights Melissa Murphy Pavone, CFP^®, CDFA^®, founder and financial planner at Mindful Financial Partners.

“For example, people may keep large balances sitting in low-yield accounts, miss out on employer retirement plan matches, or continue paying for insurance or services they no longer need simply because they’ve never stopped to reassess,” Pavone explains, noting that “these seemingly small inefficiencies can quietly cost tens of thousands of dollars” as time goes on.

Staying in “coast mode” with your finances can quietly cut your savings and ability to structure your ideal future. Therefore, it’s good to review your accounts and statements, cancel unused charges, and ensure that your money is aligned with your goals. A financial advisor can also be a valuable resource to help you stay intentional and know what to look at.

“Together, we create systems that make alignment easier, automated savings tied to meaningful goals, clear cash flow buckets that prioritize essentials and future security, and periodic reviews of investment costs, insurance, and estate plans,” says Pavone. “The goal isn’t to micromanage every expense, but to make sure their financial life reflects their priorities.”

4. Poor Tax Planning

Taxes can be one of the more complex parts of your finances to manage—especially if you’re wealthy. However, lacking proper planning is a potentially missed opportunity and can drain your savings more than you may realize.

Poor tax strategy can mean multiple things, including:

• Missing out on deductions.
• Not contributing to tax-advantaged savings accounts (e.g., 401(k), IRA, Roth IRA, or HSA).
• A misaligned retirement withdrawal strategy.

The common trait? They could lead to you paying more than you probably need to, eroding your wealth.

Matz points out that “failing to use tax-advantaged accounts or strategically using asset location can cost you thousands.” He continues, “For example, holding bonds in a tax advantaged account rather than a brokerage account is beneficial because the coupon payments won’t be taxed in the current year.”

To have a better plan for your taxes, it’s essential to meet with a financial advisor or tax professional. They’ll be able to help you understand what you stand to pay, how to optimize your situation, and where to place assets (i.e., retirement accounts, taxable accounts, etc.).

5. Bad Financial Advice

Perhaps the most damaging drain on wealth is receiving poor financial advice. Whether it’s from your friends, family, online influencers, or bad financial advisors, this could throw you off track and prevent you from reaching your goals.

Advice from some sources—like family or friends explaining what worked for them—may begin with good intentions. It can also be the result of conflicts of interest, where an advisor earns a commission from recommending products and investments.

However, no matter who it’s from, bad advice is that which doesn’t account for your financial picture. By taking it, even if it sounds good at first, you can risk investing in assets that don’t fit your needs and plans or being left with expensive mistakes that can take years to rectify.

Therefore, it’s critical to only take advice from trusted professionals and vet them before hiring. Specifically, it’s wise to work with a fee-only, fiduciary financial advisor who can deliver guidance tailored to you that’s in your best interest.

“A financial advisor is the quarterback on your team: watching for both opportunities and threats,” says Matz. “We bring an objective, expert eye to your financial situation, helping you identify and protect against these hidden wealth drains.”

You can use tools such as the SEC’s Investment Adviser Public Disclosure (IAPD) website to research a professional or firm’s background and credentials. Finding a credible advisor is also easy using free matching tools, such as this one. After answering a few questions, you’ll be able to connect with a fiduciary expert who fits your goals.

Bottom Line and How an Advisor Can Help

Wealth drains usually occur in small and sometimes unnoticed ways. Many of them, including those outlined in this article, can also be patterns of behavior, more than one or two actions, which can make them hard to track alone. The bottom line, however, is that by minimizing them, you can put yourself in a stronger position to protect your portfolio.

As mentioned, it can be highly beneficial to work with a financial advisor. They can give you an impartial view to spot issues and ensure you stay on track toward your goals. This includes both support on the numbers and tangible attributes of your finances and the more intangible, behavioral characteristics (e.g., lifestyle creep and autopilot) that can be easy to overlook.

“When one has a financial advisor, they will get an objective perspective on the areas of their wealth leaks,” as well as access to “the frameworks that will help transfer short term habits into long term capital,” says Ferrara. “When risk management tools, tax planning techniques and review of expenditure are combined, an advisor can ensure that small leaks do not transform into a decade of lost growth,” he continues.