Financial infidelity is the term for hiding financial details from your spouse or partner. These secrets can include debts, an extravagant purchase, an investment loss, missed payments, a low credit score, and repossession. For example, a survey from Money magazine found that 22% of respondents admitted to spending money they did not want their spouse to know about.
Financial transparency is a sizable portion of relationship trust. You cannot make sober joint decisions unless you both know all of the details of your real financial situation. Problems arise when partners have very different financial spending priorities. One common method to bridge this gap is to allow each partner to have their own discretionary (or off-books) money as a “relief valve” to spend money without accountability or anyone judging over their shoulder. This must be a known and limited amount to each partner, say $20-$250 per month (depending upon your level of income) that is added into each partner’s off-books fund. Whatever this amount is, it must be a budgeted and an affordable amount that you both agree upon.
Relationship-financial bumps occur when a partner discovers that the other spent money without notifying or asking the other partner. I separate these into minor or major issues. A minor issue might be an annoyance – some hundreds or low thousands on a selfish item. Examples of this would are likely (for women) clothing, shoes, handbags, and jewelry, and (for men) electronics, hobby/sports gear. Handling this may include discussions about what is underlying the behavior and how possibly both parties may be contributing to the issues. The next level in financial deception is ongoing behavior with secret bank accounts and credit cards.
A major issue would be a significant financial move that derails future plans. The most common examples I find are: a couple is thwarted from buying a new home when it is revealed that there is a hidden credit card maxed out or an unexpectedly low credit score from secret unpaid bills. Another example is when you open the mail to discover past-due notices for your rent, mortgage, or car payment that you thought were current. Or, the Sheriff’s Deputy rings the doorbell to repossess some items that you didn’t know were financed and past-due. I know two different people that became suspicious and looked up their home at the County Clerk’s office to discover that their husbands had secretly taken out large second mortgages to fund secret addictions (one was gambling and the other was drugs). Both families were left in financial ruin with crushing debts to pay down.
Marriage and communication problems can leach into financial problems. Plus, these minor and major financial issues can be the side-effect or symptom of other problems, such as: fallout from expensive hobbies, addictions, a problem within the relationship, or a psychological issue. Some secret debts may begin small (a drop in pay that a partner hopes is temporary), then snowballs when business doesn’t turn around, and is now too large to come clean to the other partner. Therapist Carleton Kendrick says the chief reasons people lie about money to their partners are pragmatism (secretly planning to divorce), control (revenge spending), guilt (from irresponsible behavior), and fear (afraid of partner’s reaction to the truth).
When someone has been “busted” on financial infidelity there is a common prescription: fully coming clean, address deeper issues by both parties, come to a resolution, make a plan to pay off the debt and the commitment for transparency in the future. (Of course, this can take many days and several thoughtful conversations when both can be calm). However, if a partner continues making infractions, there is a deeper issue that may require professional counseling to work through emotions – a shopping addiction, sexual infidelity, an emotional outlet of stress spending, self-image issues, differing expectations on lifestyle, etc. When there is a major financial issue, or many repeat incidents, it is time to pause and evaluate – is this person “relationship worthy?” Do I want to spend the time, effort, and money to turn this relationship around? There are marriage counselors that specialize in financial issues, but that may not be enough if the spender is unwilling to change or address their issues. At that point, it is time to consider separation options or divorce in order to financially protect yourself.