Your bank account is leaking money, and you might not even notice.
For many young people, taking control of their finances for the first time can feel like trying to fill a bucket with a hole in it. You’re working hard and bringing in a steady income, but at the end of the month, you’re often left wondering where all the money went. The problem is often not a single, large expense, but a series of small, recurring, and often forgotten financial leaks.
1. The “subscribe and forget” streaming services are a major culprit.
In the golden age of streaming, it’s incredibly easy to accumulate a large number of subscriptions. You sign up for one service to watch a single hit show, another for its library of movies, and a third for live sports. The small, individual monthly charges can seem insignificant, but when added together, they can amount to a surprisingly large bill.
The business model of these companies relies on the “subscribe and forget” phenomenon. A crucial first step is to conduct a full audit of your subscriptions. Go through your bank and credit card statements, make a list of every service you are paying for, and cancel any that you are not actively using on a regular basis.
2. Free trials that automatically convert to paid subscriptions are a trap.
The “free trial” is one of the most common and effective marketing tools used by subscription-based companies. It’s a risk-free way to try out a service, but it’s also a trap for the forgetful. Many people sign up for a free trial, use the service once or twice, and then completely forget to cancel it before the trial period ends. The company then begins to charge their card automatically.
These forgotten conversions can go unnoticed for months, quietly draining your account for a service you have no intention of using. A great practical tip is to set a calendar reminder on your phone for the day before a free trial is set to expire, which will prompt you to make a conscious decision about whether to keep or cancel the service.
3. Bank account maintenance and overdraft fees can add up.
Many traditional checking accounts come with a monthly maintenance fee unless you meet certain requirements, such as maintaining a minimum balance or receiving a certain amount in direct deposits. If you are not careful, you could be paying a fee every single month just for the privilege of having a bank account. Overdraft fees, which are charged when you spend more money than you have in your account, can also be incredibly costly.
It’s essential to understand the fee structure of your bank account. A simple step is to consider switching to a modern online bank or a local credit union, as these institutions often offer truly free checking accounts with no maintenance fees and better overdraft protection options.
4. An unused gym membership is like throwing money away.
A gym membership is often purchased with the best of intentions at the beginning of the year. However, if your attendance starts to slip, that recurring monthly fee can become a “guilt tax”—a payment for a service you are not actually using. This is a classic example of a financial leak that can persist for months or even years simply due to inertia.
Be honest with yourself about your workout habits. If you are not regularly using your gym membership, cancel it. There are many more cost-effective ways to stay in shape, from fitness apps to outdoor exercise, that don’t require a binding monthly contract.
5. App subscriptions billed through your phone can be hard to track.
It’s incredibly easy to subscribe to a service or a premium feature directly within an app on your smartphone. These small subscriptions, which are often billed directly to your account with Apple or Google, can be very difficult to keep track of. A 99-cent monthly charge for a photo editing app or a few dollars for a game can seem trivial, but a dozen of these small charges add up.
A crucial piece of financial maintenance is to periodically go into your phone’s settings and review your active app subscriptions. You may be surprised to find that you are still paying for apps that you deleted from your phone months ago.
6. “Buy Now, Pay Later” payments are a new kind of recurring fee.
“Buy Now, Pay Later” (BNPL) services, which allow you to split a purchase into several smaller, recurring payments, have become extremely popular. While they can be a useful tool when managed carefully, they can also create a confusing web of small, recurring debts. If you use these services frequently, you can easily end up with multiple payments coming out of your account every week.
It can be very difficult to keep track of these small but numerous obligations, which increases the risk of a missed payment and a costly late fee. A good rule of thumb is to limit your use of BNPL services and to keep a central list of all your active payment plans and their due dates.
7. You may be paying for multiple software and cloud storage subscriptions.
In our digital lives, we rely on a host of software and cloud storage services. You might be paying for extra storage on Google Drive, a premium subscription to a note-taking app, and a monthly fee for a password manager. Many of these services offer similar features, and you may find that you are paying for redundant services without realizing it.
It’s a good idea to conduct an audit of all your digital and software subscriptions. See if you can consolidate them. For example, if you are already paying for Microsoft 365, you might be able to use the included OneDrive storage and eliminate your separate Dropbox subscription.
8. A credit card’s annual fee can be a nasty surprise.
Many rewards credit cards come with an annual fee that is charged to your account once per year. This fee can be easy to forget about until it suddenly appears on your statement. If you are not getting enough value from the card’s rewards and benefits to justify the fee, then it is a significant and unnecessary financial leak.
A key annual task is to review each of your credit cards that has an annual fee. Do the math to see if the value you received from the card over the past year was greater than the fee you paid. If it wasn’t, you should consider calling the bank to see if you can downgrade to a no-fee version of the card.
9. Food delivery service memberships require a cost-benefit analysis.
Membership programs for food delivery apps, which offer free delivery for a monthly fee, can seem like a great deal if you order frequently. However, they can also encourage you to order delivery more often than you otherwise would, and you are still paying for service fees and tips. It’s important to analyze if the membership is actually saving you money.
Look back at your order history and calculate how much you would have spent on delivery fees without the membership. Compare that to the annual cost of the membership itself. You may find that you are better off paying for delivery on a case-by-case basis rather than being locked into a monthly fee.