By Wilfred Castro and Kevin Hanff, Integritas³
Roses are red, and so is your bank account when you find out your partner made a large purchase without telling you.
It’s Valentine’s Day and love is in the air. Leave it to an unexpected purchase from your partner to ruin your day—or worse. You could be a victim of financial infidelity.
Financial infidelity occurs when one partner in a relationship hides financial information, decisions, or transactions from the other. This can include secretly spending money, lying about income or debts, hiding accounts, or making large purchases without discussing it first. Financial infidelity often damages trust and can lead to significant relationship issues if discovered. Worse, financial infidelity can subject one partner to binding debt they’re legally obligated to satisfy – even if they were unaware of it.
According to a US News & World Report survey done in 2022, 33.3% of respondents experienced financial infidelity. Of those respondents, only 8.5% found out via a confession from their partner. In a separate survey, conducted by CreditCard.com, more than half surveyed felt that this form of infidelity was just as bad, or worse, than physical infidelity.
Signs of financial infidelity include:
Hiding Accounts - Having or opening bank accounts, brokerage accounts, credit cards, or getting a loan that the other partner is unaware of. In some states, this can affect partners differently than other states (community property states). Furthermore, depending on the level of financial infidelity, one partner can coerce the other partner into signing documents he or she does not fully understand. Forgeries can occur in some situations.
Withholding Information - Did you forget to tell your partner about that raise you received? Not sharing changes in your income, hiding those financial statements your partner may not know about, or not sharing your income tax returns with each other. Vices (gambling, prostitution) and crimes (embezzlement, illegal drug use) are often withheld from a partner (for obvious reasons) and can have serious consequences for both.
Secretive or Addictive Spending - Hiding purchases, lying about costs, or accumulating debt as well as spending money on gambling, material items, drugs, or other activities without informing your partner. Sometimes secretive or addictive spending is “supported” by fraudulent documentation made to look “official” or real.
Addressing financial infidelity typically involves open communication, financial transparency, and sometimes professional help, like therapy or financial counseling, to rebuild trust and establish a solid financial foundation.
So what can you do to help yourself?
Avoiding financial infidelity involves establishing clear communication, transparency, and a mutual understanding of financial goals. Here are practical steps to help prevent financial secrecy in relationships:
Set Up Regular Financial Discussions - Schedule monthly or quarterly “money check-ins” to discuss income, expenses, savings, and investments. Regular updates help avoid surprises and maintain open communication. Financial accounting software can provide assistance to achieve this goal and enable partners to spot trends more quickly.
Create Shared Financial Goals - Identify short-term and long-term goals together, like saving for a vacation, paying off debt, or planning for retirement. When both partners are aligned on shared goals, financial decisions become more cooperative.
Agree on Spending Boundaries - Establish thresholds for purchases that require mutual approval. For example, agreeing that any purchase over a certain amount needs to be discussed can help avoid financial shocks. Again, financial accounting software can provide insights to flag amounts over an agreed upon threshold. Furthermore, alerts can be set up with online banking and credit card issuers to send a text and/or email message if a threshold has been exceeded.
Keep Financial Transparency - Both partners should be aware of all accounts, debts, and assets, even if some are separate. Access to financial statements or a shared budgeting app can help track spending together. Online access is better than paper documents as paper documents can be altered; online access cannot.
Discuss Financial Values and Attitudes - Money attitudes can vary significantly. Discussing each other’s views on spending, saving, and debt can reveal potential conflicts and prevent misunderstandings. Often, couples don’t understand what “money” is and how to manage it. There are many books available to explain what money is and how to use it.
Consider Separate and Joint Accounts - Some couples find that maintaining a blend of separate and joint accounts helps them retain financial independence while also managing shared expenses transparently. Sometimes maintaining a separate account can boost the credit score of a spouse without a significant income history – so separate accounts can be beneficial to BOTH partners. Also, some partners want to feel a sense of equality in managing some portion of joint assets.
Make Honesty a Priority - When mistakes happen, it's crucial to be open about them. Discussing financial missteps or temptations honestly can prevent them from becoming hidden issues.
Seek Financial Counseling if Needed - If either partner has experienced financial infidelity or has lingering money-related anxieties, financial counseling or therapy can provide tools for building trust and financial harmony. Don’t wait until it’s too late to discuss a well-intentioned mistake which has an unfortunate negative financial outcome.
Review Documents - Review your tax returns together, review your monthly bank statements and credit card statements. Many people consider both these items a tedious process but understanding where you are financially can avoid either partner being put in this situation.
Gain Access - Both partners should have access to any shared accounts. This includes having access to online bank statements, brokerage statements, and credit card statements. These should be reviewed periodically, and it would not hurt to keep a copy of these statements electronically. Many people we talk to regarding financial infidelity do not have access to any of these documents making it difficult to piece together what the other partner has done, how much they have spent, or where other hidden funds may exist. There are rules for how long certain financial documents must be kept and who can access them. Don’t go years and years without reviewing documents; they may NEVER be available, depending on how long ago the transactions occurred.
A combination of open communication and shared financial accountability can go a long way in preventing financial infidelity and keeping your relationship financially healthy.
***If you feel you are - or were - the victim of significant financial infidelity, reach out to us here at Integritas3 so we can walk you through the path to financial redemption.
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