Updated on 10.07.14

Are You Guilty of Financial Infidelity?

Finances and cheating are amount the most common reasons for divorce. And what happens when you merge the two? You get a case of financial infidelity, but there’s a twist: a third party doesn’t have to be present to cause a problem.

In a nutshell, it’s the practice of concealing assets, debt obligations or conducting transactions behind your partner’s back that could have a major impact on your financial well-being as a unit.

And apparently, financial infidelity is somewhat commonplace. According to the results of a poll published by National Endowment for Financial Education, one-third of adults involved in a relationship where finances were combined admitted to some form of financial deception. Among the list of qualifying offenses were:

  • Hiding a purchase, either major or minor, from their significant other
  • Hiding a bank or account statement from their significant other
  • Hiding an outstanding bill from their significant other
  • Lying to their significant other regarding a financial matter
  • Concealing an outstanding debt from their significant other
  • Concealing actual income received from their significant other

For quite some time, I didn’t understand how it’s possible to engage in infidelity with money matters until I got married.

If there was something I strongly desired to purchase but my husband was against it due to budgetary constraints, I had to make the decision to follow his advice or go against the grain and make a purchase off the record. Over the years, I’ve learned there are many levels of financial infidelity, some of which are serious enough to warrant a divorce.

Your significant other may easily forgive you for a miniature shopping spree, but wiping out a savings account that once carried a $60,000 balance to be used for a down payment on a home could have more severe consequences.

How about that pay increase that you rerouted to your personal account to fund personal wants instead of contributing to the joint account to further assist your partner with meeting the financial obligations of the family? This situation can be even more detrimental if your partner is struggling to make ends meet while you’re withholding funds that could be used to eradicate outstanding debt balances.

Underlying Issues

Exactly why do people commit financial infidelity? Here are a few possible explanations:

1. Addictions

When you initially decided to spend the rest of your life with your significant other, did you vow to stop partaking in a particular activity because they were strongly against it? Whether it was smoking, excessive dining out, binge drinking, weekly spa visits, or some other activity you couldn’t seem to live without, the expenses wreaked havoc on your bank account so it was in your best interest to agree with your partner and quit.

But what happens when life gets a little rocky and you anxiously crave one of those addictions? Do you stick to your guns or give in? For some, it’s the latter even if their decision will have long-term negative effects on their relationship.

I’m no stranger to binge spending for comfort. Before transitioning to the world of freelance writing, I was stuck in a job that I absolutely loathed and the only thing that got me through the day without having a nervous breakdown was dining out for lunch. And while we must all eat for our physical well-being, there was a major problem with my approach; not only was I failing to address the underlying issue, I was also impeding the progress of saving for larger long-term goals by spending a substantial amount of cash on lavish lunches with coworkers. When I reached the point where I could no longer continue to suppress the issue, I confessed to my husband and he handled it much better than I expected. We were also able to devise and action plan to keep the spending to a minimum going forward.

2. Emptiness

We’ve all experienced rough times in our lives, some which leave an everlasting void. How have you chosen to fill the emptiness that lingers inside of you? Is it through some sort of positive activity or the almighty dollar bill?
Several years ago, I lost my mother unexpectedly and instead of searching for the proper outlets to seek healing, I turned to money. While I am by no means proud of my actions, I don’t regret them because I learned a valuable lesson: money really doesn’t buy happiness. I know we hear that phrase time and time again, but I assure you that it’s true.

I wasn’t a millionaire sitting around searching for ways to blow a few dollars, but I did have a handsome sum of money at my disposal during that depressing time of my life. And since I had practically lost hope and didn’t feel worthy of living now that both of my parents were gone, I figured if I indulge in all of life’s little pleasures that I didn’t have access to beforehand, everything would be OK.

Boy, was I sadly mistaken. I purchased thousands of dollars in material possessions and took quite a few lavish vacations, but that empty feeling still lingered inside. Not even an expensive handbag or two hour spa session could erase the pain.

Perhaps you’re struggling with some form of depression, and are unsure of how to cope so you resort to money you really don’t have to wash all your pain away? If these excessive spending habits carry over into your marriage, they could easily result in financial infidelity if your partner insists that the your curb your unhealthy financial actions.

3. Financial Illiteracy

Courses on personal finance are not commonplace in the high school curriculum. According to Council for Economic Education, only 17 states mandate the inclusion of personal finance topics into the curriculum.

So teens are either forced to learn what they can from their parents, who may or may not be financially responsible, or let life and the school of hard knocks be their teacher. Both are potentially dangerous scenarios for a number of reasons. For starters, who’s to say  you grew up in a financially responsible household? Your parents may have provided a fabulous life for you before adulthood, but do you really know what their finances looked like behind closed doors?

I see it time and time again; parents living in grand homes, driving expensive cards, dressing to impress and giving their children the best of everything. But a quick glance at bank, retirement college fund and credit accounts clearly indicates financial mismanagement. They’ve robbed Peter to pay Paul each month for a number of years, each car was leased and accompanied by an exorbitant interest rate due to poor credit history, their savings and retirement accounts were practically depleted and college funds were non-existent.

Assuming you attempt to follow in their ‘perfect’ footsteps, you will quickly learn the truth and face the dilemma of cutting back to appease your spouse and finances or keeping it up by committing financial infidelity.

On the other hand, if you weren’t given the talk or lessons you need to lay the proper foundation at home, the only way to learn is by making mistakes. And sometimes, it’s too late to make things right once you’ve taken that first step.

4. Poor Decision Making

We all make poor decisions for various decisions. And one bad move has the ability to turn your finances upside down, forcing you to turn to financial infidelity to get yourself out of a bind before your significant other finds out. For example, opening a credit card with an exorbitant interest rate and maxing it out without having a means to make the minimum payment is a recipe for disaster.

Warning Signs

Wondering if you fit the bill? Here are a few ways to tell if you’re guilty of financial infidelity:

1. Vanishing statements

When bank or other account statements arrive in the mail or electronically, do you review them with your partner or quickly place them in a secure place that only you are aware of? If the latter is true, is there something you’re trying to hide from your significant other? Perhaps you’re afraid to let them know where you all stand financially or worried that they’ll have an adverse reaction.

2. Phantom (or understated) income

Do you always have a way of making income magically appear when money’s tight and your spouse begins asking questions? Whether you use a credit card cash advance, savings account or borrow funds to cover the gap, lying about income is never a good idea.

On the other side of the fence are those individuals that generate a healthy amount of income, yet disclose a substantially lower number to mislead their spouse.

3. Unexplained spike in expenses

This may be the result of additional debt you’ve incurred or excessive fees from past-due accounts or late payments, just to name a few.

4. Dwindling account balances

Once you’re way in over your head, it’s not uncommon to find yourself struggling to make ends meet. And as a result, the well soon begins to run dry.

5. Random bills

Have you subscribed to random services that your partner has no knowledge of, and now you’re on the edge and afraid your spouse may find an invoice and begin to ask questions?

6. ‘Closed’ accounts

If an account was beginning to spiral out of control, did you communicate to your partner that you paid the balance in full and closed it out when all you really did was remove his or her from the account so they’d be unaware of the actual status?

7. Calls from debt collectors

Maybe things started off on the right foot, but now you’re drowning in bills and the debt collectors have begun calling non-stop to collect payment? Have you gone as far as removing your significant other’s contact information from the list so they’ll be kept in the dark?

8. Absence of activity on frequently used accounts

To hide transactions from your partner, have you resorted to a separate account to handle business so they won’t grow suspicious?

9. Purchases that are unaccounted for

Has your significant other raised concerns about shopping bags or other deliveries that entered the home, but were clearly absent from the bank statements?

10. Nervousness when discussing finances

When your partner wants to have the money talk, do you welcome communications with open arms or quickly change the topic?

11. Constant stress

Are you constantly searching for ways to generate extra income in an effort to patch things up?

12. Withdrawal

Depending on how severe the financial condition actually is, maybe you’ve begin to withdraw emotionally from your spouse of out fear that they’ll discover what you’ve done and immediately file a divorce before you can plead your case?

13. Constant shielding from monthly bills

Do you insist on handling the finances each month even when your partner offers to help? Or maybe you find an excuse to avoid sitting down and having the money talk when it’s proposed?

Moving past the ‘infidelity hurdle’

Step 1: Plan ahead

If you’re extremely nervous about the thought of coming clean, which is to be expected, have a plan of action intact to prevent things from going left in a matter seconds.

Step 2: Put it all on the table

Tossing and turning at night or can’t seem to get money matters off your mind? It’s time to come face your partner regarding the actual state of the finances.

My suggestion: propose a time and explain to him or her that you’d like to have a budget meeting. Request that they bring along any pay stubs, income sources, bank statements, credit reports, tax returns (if married filing separately) and credit card or other account statements.

Step 3: Relax!

Once the meeting is in session, reveal the infidelity, admit responsibility and communicate your willingness to be more transparent and make things right moving forward. And remember, if you’re on the defensive, your partner may shut down and be unwilling to hear your perspective.

Step 4: Discuss triggers and potential solutions

Express the reasons for your infidelity and what changes you’d like to see made to improve the situation moving forward. For example, if your partner insists that you only visit the spa once per quarter but you insist on monthly visits, try to reach a happy medium. Just don’t play the blame game because it won’t resolve the issue.

And if things take a turn for the worst, marriage counseling is always an option.

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