In March 2017, I came across my first case of financial infidelity as a financial planner, and it forever changed the way I view financial planning for couples.
(If you’d prefer to listen to this article, you can get a podcast version of this post here: Money and Marriage Podcast Episode 138 – Preventing, Detecting, and Handling Financial Infidelity.)
I had a call with a married man who I usually call “Doug” who was looking to work with a financial planner (as always, I change names to maintain confidentiality.) I was surprised to see that his wife, who he had mentioned when he reached out to me to schedule the call, wasn’t in the meeting.
We started by going through the usual checklist of topics you’d probably expect to cover with a financial planner. I got the details about his credit card debt, student loans, the house he was hoping to buy in the next few months, and so on—but eventually, I decided to ask.
“Out of curiosity, is there a reason why it’s just you and me here today, and your wife isn’t around?” I remember asking.
Doug paused, and I could tell he was hesitating. After a brief moment, he answered, “She had a work commitment and couldn’t make it.”
To this day, I don’t remember why I got the sense he wasn’t telling me the full story. “Okay,” I replied. “Would you mind if I grabbed her email address so I can add her to our next meeting invite?”
He started shifting in his chair. “To tell you the truth, Bill,” he said quietly after a moment, “she doesn’t know about the credit card debt. And I’m embarrassed to tell her about it.”
I knew right away that there wasn’t a spreadsheet in the world that was going to be able to solve this particular problem. It hit me all at once: financial planning for couples wasn’t just a math equation.
Lies and Secrets
Doug’s secret credit card debt is a textbook example of financial infidelity.
Usually, we use the word “infidelity” when discussing someone who cheats on their significant other, whether that be physically or emotionally. Financial infidelity doesn’t literally involve cheating, but it involves the same sense of secrecy.
Financial infidelity involves engaging in any financial behavior that is expected to be disapproved of by one’s romantic partner and intentionally failing to disclose this behavior to them. This can take many different forms, and some of the most common include:
- Having credit cards, credit card balances, or other types of debts that you’ve hidden from your spouse.
- Having bank accounts, investments, or other financial assets that you’ve hidden from your spouse.
- Keeping income or bonuses secret from your spouse.
- Secretly giving your family’s money to causes or people that your spouse would not consent to give money to.
- Gambling your family’s money without telling your spouse.
- Filing for bankruptcy without your spouse’s knowledge.
Obviously, the context of these things matters. In the same way that one family might not consider mild flirting with a work colleague a case of marital infidelity, you might not consider some of the examples on the list above to be financial infidelity.
The clearest objective sign that something is an act of financial infidelity, though, is if one spouse is intentionally hiding the action or lying about it.
If you or your partner is, a) engaging in a behavior that you know the other spouse would not approve of, and b) is intentionally hiding it – that’s financial infidelity, and it’s a big problem.
Financial Infidelity Is Way More Common Than You Might Think
The most interesting data point on couples and money that I’ve ever seen came from a study conducted by researchers at the University of Southern Mississippi in 2018, subsequently published in the Journal of Financial Therapy. This study found that 27% of people admitted to keeping a financial secret from their partner, and 53% of people reported behaviors associated with financial infidelity.
I find this so fascinating because of the difference between the two figures. This implies a certain level of denial about the degree to which financial secrecy is a problem for your marriage.
Anecdotally, financial infidelity seems to be on the rise in America over the past decade. At a minimum, the situations where financial infidelity can flourish have increased.
It’s much easier to hide financial information – at least temporarily – from your spouse than it used to be. There can be benefits to keeping some separate bank accounts when you’re married, but separate accounts and credit cards create more places for financial secrets to hide.
Fifty years ago, it was common for couples to keep all of their money at one financial institution. With the rise of the internet, high-yield savings accounts, credit unions, and online investment platforms, couples often keep their money in several different places.
Even in innocuous situations, there are just more places for financial secrets to hide than ever before.
Preventing Financial Infidelity
That being said, there are several financial planning strategies you can implement for your family to create a culture of openness and honesty with your finances to decrease the odds of financial infidelity in the long run. Our marriage-centered financial planning process is designed with this in mind.
Here are just some of the strategies you can implement in your family to decrease the odds of financial infidelity issues in your marriage:
Schedule monthly money meetings: Having regular, proactive conversations about your financial progress is one of the most important steps you can take to create a culture of financial transparency in your family.
I recommend that couples set aside about 20 minutes per month to review their finances together, following the process I teach in my book.
This process is designed to minimize fights about your budget, but it’s also designed to review your finances as a whole. Having this process in place can minimize the odds or even the ability to keep financial secrets from one another.
Run credit reports together: It can be difficult to detect secret financial assets or bank accounts, but hiding debts is a different story. All of your debts should show up on your credit reports.
Agree that you will pull and review your credit reports from all three major credit bureaus a few times a year. In addition to helping to avoid financial infidelity, this will also help you stay on top of an important component of your finances.
One note: if you see something on your spouse’s credit report that you aren’t expecting, don’t panic – yet. Errors on credit reports are more common than you might expect. So, before you accuse your partner of financial infidelity, you should work together to confirm that the unexpected item isn’t an error or the result of fraud.
Have a system for financial clarity in place: You don’t necessarily need to combine all of your financial accounts, but you should be able to see a snapshot of your family’s complete financial picture relatively easily.
Some couples use an account aggregator to populate a holistic view of their finances in real-time. Other couples use spreadsheets to track account balances.
Neither system is completely foolproof from catching acts of financial infidelity – your spouse could have an account or debt that isn’t included.
But by having a system in place to share financial information in real-time, you are creating a family culture of financial transparency and, hopefully, decreasing the odds of having financial secrets.
Proactively address desires for financial autonomy: It’s very common for one spouse in a marriage to value financial autonomy more than their spouse does.
This isn’t necessarily a red flag – it usually comes from a spouse’s money scripts about how they manage money. (Stay tuned for the next episode of the Money and Marriage Podcast to learn more!)
It’s important to both validate the desire for some financial autonomy in a marriage without letting this autonomy give way to irresponsible spending, derail your family’s financial goals, or, yes, financial infidelity.
Implementing a system to manage money as a family that helps you define how much autonomy you want your family to have in making minor spending or investing decisions is an important strategy to creating a financial plan that works for both of you. If you want help doing this, I encourage you to schedule a free breakthrough call with me.
Financial infidelity can sometimes occur as a backlash against an overly rigid financial management system for your family. If you or your spouse has a desire for some financial autonomy, proactively identifying how to incorporate this into your family’s financial architecture – without derailing the rest of your goals – can be an important way to reduce the risk of financial infidelity in the future.
How To Handle Breaches of Financial Trust
Beyond just “stopping the financial behavior”, deciding how to respond to cases of financial infidelity when they arise can vary depending on the context.
In general, though, it should always be treated seriously. If you find that your spouse has kept a financial secret from you, don’t just brush it to the side. Doing so runs the risk of letting resentment and distrust grow over time. It’s important to address it.
Financial infidelity is a serious enough problem that it’s worth considering whether you should bring in a third party to help you and your spouse navigate the issue and work past it. For relatively minor cases of financial infidelity, I can be a good resource for this. But for major violations of financial trust, a marriage counselor should be consulted as well.
Here are a few factors to consider to triage financial infidelity in your family and determine how aggressively you should respond:
What’s driving the financial infidelity behaviors? Sometimes, feelings of shame or avoidance can drive a spouse to lie to the other about aspects of their finances. Other times, the motivations can be much more sinister; for example, as a way to exert financial control, revenge, or abuse.
Is the problem a one-off situation, or is it widespread or pervasive? A large, one-time purchase that your spouse hid from you might be something you can work through relatively quickly and implement ways to prevent this in the future. (That’s not to say that it’s not a big deal, though!) But things like regularly maintaining credit card balances for an extended period of time, regularly gambling in secret, or having secret accounts will require a much more intensive response for you to correct and move past the issue.
How easily can the problem be fixed? Some financial mistakes can be unraveled quickly. But if your spouse took out loans or failed to pay their credit cards in secret, you may be living with the ramifications of this deception for years.
Was the financial infidelity voluntarily disclosed, or was it caught? If your spouse comes to you and says something to the effect of “Look, I messed up. I’ve had this aspect of my finances that I’ve been keeping secret, I know that it was wrong, and I want to make things right” – that’s something you can work with. (It’s not something to dismiss or even forgive right away, mind you, but it’s a great start!)
But if you catch the financial infidelity and they haven’t come clean about it, that should automatically be grounds to consider reaching out to a third party to help you address the issue.
Does the spouse who committed financial infidelity realize how big a deal it is? Or put differently, how committed are they to making a change? A situation with a spouse who knows they made a mistake and is ready to change their habits and make it up to you can be handled differently than a spouse who doesn’t see the big deal in keeping financial secrets.
Financial Infidelity Breeds Distrust
Left unresolved, financial infidelity can create severe trust issues in a marriage and often can have similar emotional effects as physical or emotional infidelity. If not properly addressed, these effects can fester over time.
If you are currently hiding a financial secret from your spouse, or if you have in the past, I highly recommend working with someone to unpack this issue, clear the air, and create a path to move your family forward.
Unless the financial infidelity acts in your family are relatively minor, I’m probably not the right person for you to reach out to – at least at first. It’s not uncommon for me to be brought in to help your family chart a financial path forward after a marriage counselor has been involved to help you work through the issue.
If you’re not sure where to turn, or you’re wondering what the next step should be, I encourage you to either email me (bill at pacesetterplanning.com or schedule a free breakthrough call. If I’m not the right resource, I’ll happily help you find a marriage counselor who can get you started!