You’ve probably heard the adage: “It’s not what you make, but what you keep.” Chances are that this statement resonates with you. After all, it makes sense to “keep” and save your money when you can, right?

But when we say “it’s not what you make, but what you keep,” does the “keep” part only refer to your savings? Spoiler alert: It doesn’t.

What you “keep” can include a lot of things outside of your savings. For example, it can refer to the money-draining traps we all face—like those pesky fees that are hidden in your everyday accounts, transactions, and retirement. And, some of those fees are ticking time bombs—which is why it’s so important to deal with them right away. Plus, these fees are not only costing you money right now, but the losses compound over time. 

For example, who would think that your average 30-something would unsuspectingly lose at least $500,000 in fees over 30 years? You’d think that person would notice $500,000+ missing from their accounts, right? But what if that loss occurred in small amounts over 30 years? Theft like that is so much harder to identify and track.

Well, that unsuspecting person was me in 2011! I was set to lose almost $500,000+ before reaching retirement for one reason only: I didn’t know better. And, I learned some pretty important lessons from this, which I’ll share below—along with the two-step process I adopted to eliminate these fees. This will help you to see how fees are threatening your wealth build so you can something about it!

The two-step process to break up with fees

After I noticed that I was set to lose more than half a million dollars to fees, I adopted a two-step process to rid myself of these money drains. If you want to follow suit, here’s what you should do:

Step 1: Research what fees you are paying in the categories:

1. Bank accounts fees
   1. These include account maintenance fees, checking fees, statement fees, overdraft fees, and ATM fees. 
   2. These fees are inexpensive, but why not keep your money instead? Inexpensive fees can still add up over time.
   3. These fees are typically posted on the bank website—or you can contact your branch manager for a list of these fees.
2. Transaction fees on credit cards and loans—including student, car, and property loans
   1. These include everything from the application fees, annual fees, transaction fees, and origination fees to the points used to buy down the rate, the prepayment penalties, and the junk fees.
   2. These fees can add up quickly over time. While these fees are generally not a wealth destroyer, losing the compounded growth on this capital can be detrimental to your wealth build.
   3. These fees should be disclosed on any loan estimate you receive—so make sure to take a very close look at these documents. 
3. Investment and retirement fees 
   1. There are many fees and expenses associated with your retirement accounts. Here is a glossary of retirement- and investment-related fees from the Securities Exchange Commission to help you in your research:
      1. Expense ratio: 0.25% to 1.5%
      2. Sales load (front and/or back end loads)
      3. Redemption fee
      4. Exchange fee
      5. Purchase fee
      6. Account fee
      7. Distribution fee (12b-1 fee)
      8. Management fee: The average is 1.4%
      9. Plan administration fee: 1% to 5%
   2. These fees are simply wealth eroding and are a ticking time bomb in your investment and retirement accounts.
   3. Unfortunately, these fees are the hardest to research, even though they have the largest impact on your accounts. The best bet is to contact your benefits manager, plan administrator, or brokerage for a full list of fees you’re paying for these accounts. 

Step 2: Eliminate or reduce as many fees as possible

Once you’ve identified the fees you’re paying out for little to no reason, it’s time to do something about them. Here’s what you can do to eliminate or reduce each type of fee:

1. Bank account fees 
   1. If you’re being charged copious amounts of fees, your best bet is to choose a bank that has free checking, no statement fees, low or no overdraft fees, and reimburses ATM fees. Yes, this may require you to switch banks—but the work will be worth it in the end.
   2. Here is a helpful link to a NerdWallet article with the best banks and credit unions if you’re ready to switch. Try to pick one with fewer or no fees so you can avoid these types of smaller charges adding up over time.
2. Transaction fees on credit cards and loans
   1. Before securing any line of credit, you should take the time to compare and negotiate the application fees, annual fees, transaction fees, origination fees, points to buy down the rate, prepayment penalties, and junk fees wherever possible.
   2. If I’m securing a loan, I like comparing the best program from at least three lenders. You can sometimes get a deal if you negotiate between lenders for your business. In fact, I recently did this with a property loan and got a deal that was 0.5% under the going rate with $0 points. This will keep your cost to transact as low as possible. 
3. Investment and retirement fees 
   1. These fees can be very hard to eliminate or negotiate. As such, this can mean taking a radical approach to opt out of the “system” entirely—and then finding a better option for building your wealth. 

If you have a 401K account with your current employer, you are kinda stuck paying the fees for the plan. What is in your control is the ability to choose investments that perform well and have a low expense ratio. As such, you should be sure to review your 401k every year at open enrollment to find out what fees you are paying compared to your employer. Believe it or not, employers can shift fees to you as long as they disclose them—even in fine print. 

If you separate employment (i.e. you get fired or resign), you can roll your portfolio over to a brokerage and/or self-directed IRA. (Yes, you can do both.) While you might have the option to roll your account over to your new employer, keep in mind that you are locking those funds up in another 401k. What many people don’t know is that you can have a brokerage IRA and a new 401k if you desire. This keeps at least part of your retirement within your control. 

Regardless, empower yourself, and model how these fees impact your portfolio with Personal Capital Retirement Analyzer. (TD America and FNIRA have great tools, too).

You can find a simple example of how corrosive fees can be to your retirement portfolio below, which shows that the investor has a nest egg and is contributing $5,500 a year. Their employer is matching 50% of that, and the market is averaging 7% growth with a 1.5% total fee being charged—which is pretty low for an administered account.

As you can see, this investor is losing 31% of their retirement to fees. Don’t believe it? Create an account and be in the know!

Final thoughts

I realize that seeking out and destroying fees in your transactions and portfolio isn’t as sexy as buying your next cash-flowing property. However, going through this exercise can turn your ability to build wealth around.

It comes down to knowing what fees you are paying, what they are costing your future self, and taking ownership of eliminating or reducing your fees now. If you don’t have a plan for your money, I guarantee that someone else does.