What would you do if you discovered that your spouse had a secret credit card and that he/she racked up over $30,000 in charges? Money problems are often cited as a leading reason for divorce. Let’s explore one money problem in particular—financial infidelity.

Secrets, Secrets are No Fun

Financial infidelity is when one partner lies to the other about money in a harmful way. Deception can come in a myriad of forms. Often, financial infidelity presents itself in the way of hidden debts, secret accounts, or undisclosed purchases. It can also appear in the form of misrepresentation. For example, some individuals commit financial infidelity by lying about their earnings, the amount of an expense, or the balance of an account. Any way you slice it, a lie is a lie.

There are plenty of reasons as to why someone might conceal information or deceive their partner. For instance, a high-earning spouse may tell their partner they earn less because they fear their partner would spend more. Or, perhaps one partner made a poor financial decision leading them into credit card debt long before they met their now spouse. A person with credit card debt may feel embarrassed about the amount owed. Another common reason behind financial infidelity is addiction. Sports betting has expanded rapidly across the U.S., causing some fans to empty their pockets to feed the addiction. As a result, financial infidelity is very real and more common than you think. 

Secrets, Secrets Hurt Someone

Romantic relationships are built on trust. Lying about money can cause an enormous breach of trust, especially when couples have already combined finances. If you’ve committed financial infidelity, don’t wait to come clean until you get caught red-handed. Be forthcoming with the truth, open to questions and criticism, and honest with your responses. It is possible to mend and repair the broken trust. Understand that a solution may involve complete transparency moving forward.

On the flip side, if you’ve discovered financial infidelity or your partner has come forward with their truth, try your hardest not to judge. Those who commit financial infidelity often do so out of shame or embarrassment. Instead, get to the root of the cause and discuss how you can amicably manage finances together. Careful conversation in deriving resolution could ultimately salvage a challenged relationship.

Be Financially Faithful

According to a 2022 survey conducted by Personal Capital, 39% of adults avoid talking about money with their romantic partner. It’s no wonder that financial issues are a leading cause of divorce. If you’re in a serious relationship, getting comfortable talking about money is important. It can be awkward to ask about your partner’s balance sheet or income statement. 

Instead, start the conversation by discussing values, experiences, or goals. Our attitudes around most topics begin developing during childhood, so questions like “What was your first experience with money?” or “What was your relationship with money growing up?” can lead to insightful conversations without prying. 

One healthy practice among couples who combine finances is to set some ground rules. For example, some couples decide on an amount of money that can be spent without consulting their partner. This gives each person autonomy, sets boundaries, and establishes accountability.

It’s also helpful to define if and how expenses will be divided. Many couples default to a 50/50 split, but when there is a major discrepancy in pay, the lower income earner might be stretched too thin. 

Another successful strategy is for both to share responsibility when managing finances. Many families designate one family member as the “family CFO.” But without checks and balances, this can easily open the door to financial infidelity. Sharing responsibility can mean several things, from reviewing credit card statements together to only scheduling review meetings with your financial advisor when both parties can attend. 

Conclusion

If you’re concealing the truth, there’s never a better time than now to be honest about the skeletons hiding in your wallet. If you’ve been lied to, try to be non-judgmental and find a solution. If you’ve got a clean slate, get comfortable talking about money with your partner.

Kate Arndt, CFP, is a Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Kate at karndt@bedelfinancial.com.

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