When we think of infidelity, secret trysts and forbidden rendezvous come to mind — not hidden credit cards and secret bank accounts.
The latter, however, is a very real thing, and it’s called financial infidelity. In fact, Toni Coleman, LCSW, CMC, a psychotherapist and relationship coach, says she sees financial infidelity often in her practice.
“Usually it’s on a relatively small scale — hiding purchases, not disclosing the full amount of a credit card bill, buying something your partner asked you not to and then hiding it from him or her,” she said. “However, I have worked with couples who had to refinance their home to pay off a debt one ran up without the knowledge of the other, folks who went into foreclosure due to gambling, people with a long history of excessive spending and hiding of significant bills, and/or those who had to declare bankruptcy due to hidden spending and related debt by one of the partners.”
It’s scary to think about, but a little forethought on your part could keep you from becoming a victim in the future.
What Constitutes Financial Infidelity?
While there are a number of different things that could fall under this category, Rebekah L. Rini, an attorney in Henderson, Nevada, says that most financial infidelity tends to fall into one of five categories:
1. Spending on unacceptable things
This is where one spouse spends money on illicit activities like drugs and gambling or other forms of trysts. “In other words,” she said, “things that in and of themselves undermine the relationship.”
2. Spending on otherwise acceptable things, but in secret
An example of this might be someone with a shopping addiction. “I had one case where the wife would go to the grocery store and purchase Nordstrom gift cards for herself each week for $50 to $100 which would be wrapped up in the grocery bill,” Rini said. “She did this so her husband wouldn’t know how much she was shopping. This added up to thousands of dollars over the years.”
3. Having secret accounts
Rini says this is the type she sees most often, when one spouse has a secret credit card or bank account.
4. Violating the agreements that the partners made regarding money
When a couple sets a budget, it is expected that both will abide by it, but that’s not always the case. “For instance, if you both agree that you will not spend more than $50 per week on work lunches, and one partner is going out for expensive lunches every day, this is financial infidelity,” said Rini.
5. Lying about the assets/debts you’ve accumulated prior to the partnership
Even though technically this is not community property, it is part of the picture that should be included in your overall financial discussion, says Rini. And yes, this goes for debt, too.
Know the Signs
While for the most part our trust in our partners and others in our lives is a leap of faith (an educated one, at that), there are some things you can be on the lookout for if you suspect financial infidelity in your own relationship. For starters, you should always expect full disclosure of each person’s finances in a committed, financially combined relationship, as well as access to the accounts, at least for viewing purposes, says Kathleen Grace, CFP, CIMA, managing director of United Capital and author of Prince Not So Charming. If this isn’t possible, Grace says the following are obvious red flags:
- Finding previously undisclosed bills, credit card statements or bank statements
- Big changes in spending patterns
- Large purchases made without consent
- Gambling with no advance disclosure
- Defensive, disengaged or withdrawn responses to your request for a discussion regarding finances
How to Hedge Your Bets
The best way avoid having to deal with financial infidelity in your own life is to be open and honest about money prior to merging your lives together. How much you want to spend, how you want to save for retirement, how often and what kinds of vacations you would like to take and even whether or not you want to buy or lease cars — these are all things you should be talking about. “Do yourself a favor and have the discussion now,” says Rini. “Formulate a plan.”
Rini also suggests agreeing to full disclosure when it comes to finances. “You may think it’s harmless to have a credit card with a small balance that you use for ‘your things,’ but even something small like this elicits severe feelings of betrayal in a spouse,” she said. “It’s better to be open and honest with each other.”
At the end of the day, for all the systems you put in place and all the conversations you can have, your gut can really tell you a lot, as well. “If something doesn’t feel right, doesn’t add up or gives you a bad feeling, do not wait to check it out,” says Coleman. “If your spouse is evasive or refuses to talk about a money concern you have, check it out yourself. Go through all the documents, check for any unpaid bills, overdrawn and secret accounts, evidence of a post office box or safety deposit box you have not been told about. These are all additional red flags that, if ignored, could lead to financial ruin.”