Are You Guilty of Financial Infidelity?

Money and infidelity are said to be the top two reasons for divorce. If you are hiding purchases from your partner you may be guilty of both: financial infidelity. This may represent a larger problem or a lack of trust in your relationship. Here are some examples of financial infidelity and resources to help you work through it.

A 2016 survey by the National Endowment for Financial Education found that 42% of Americans admitted to “financial deceptions” against their partner or spouse. Worse yet, 75% acknowledged that financial infidelity had a negative affect on their relationship.

Marriage is a Legal Relationship

Regardless of your religious or cultural beliefs, the fact is that marriage is a legal relationship between two people. Once you become married, you may be held legally responsible for financial decisions made by your spouse during the time you are married. And they can be responsible for your financial decisions.

Cohabitation is not the same as marriage. When a couple lives together, they do not have the same liabilities or protections as a married couple.

For this reason, I believe that it is in their best interest for an unmarried couple to keep their finances separate. However, for a married couple there should be complete transparency when it comes to money.

When a couple marries later in life, combining finances or getting on the same page about money may be more challenging. This may be particularly so when children, child-support, or alimony from a previous marriage are involved. Regardless of whether it is your first marriage or fifth, the commitment and responsibility you have to your spouse should be (and legally is) the same.

Sadly, if you divorce and fail to close or have your name removed from shared accounts that have your name on it (e.g., mortgage, vehicle loans, credit cards), creditors may come after you for your ex-spouse’s debt decades after the dissolution of marriage, ruining your credit and your future plans.

Examples of Financial Infidelity

Financial infidelity can take many forms. Here are examples of a few:

Running Up Credit Card Debt

A common form of financial infidelity is running up credit cards and not telling your spouse (or other card holders). It’s so easy to put something on credit that it is easy to lose track of how much we spent. Some people become so accustomed to having credit card debt that they don’t think twice about charging something.

The truth is, if you cannot pay for something in full, then you cannot afford it. Buying things you cannot afford without telling your spouse is one form of financial infidelity.

Not Paying Bills

A co-worker once left the office to find that her car was not where she parked it. She called the police and was told that her car had been repossessed. She was livid! Her husband had been telling her that he was making the payments. This was a horrible way to find out that he had been lying.

Having a Secret Account

A secret account of any kind (e.g., credit card, bank, trust fund for your kids) is a huge red flag.

If you want to set up an account for your children or send money home to support your family, that is perfectly understandable. However, the fact that you are doing this and the amount that is being diverted from your household should be discussed with your spouse.

Taking out a Home Equity Line of Credit (HELOC)

Some people view a home as an asset. I view it as a place to live. Every month I get a letter from the mortgage company suggesting I take out a HELOC and listing all the things I can do with the money, including buying a boat or taking a vacation. Really?

I would not risk the roof over my children’s head for any amount. If my spouse were to take out a HELOC, that would be an ultimate betrayal of trust.

Borrowing Against or Cashing out a Retirement Account

Some people don’t realize that if you cash out your 401K before retirement age, you pay penalty fees and taxes. That is, they don’t realize it until a huge tax bill is due at the end of the year. And if you borrow against your retirement, be sure you read the fine print – that money must be repaid!

This happened to a friend. She and her husband always kept separate bank accounts. When he left one job for another, instead of rolling over his retirement he cashed it out. Because he deposited the money in his bank, my friend never knew. That was, until she was faced with a huge tax bill that she did not have the money to pay.

Hiding Purchases (big or small)

Even if you pay in cash, hiding purchases from your spouse is a form of financial infidelity.

Why do you feel the need to hide? Are you living with a shopping, gambling, or substance addiction? Do you and your spouse have different values when it comes to where you spend money?

Regardless of the reason, the fact that you are hiding purchases from your spouse may be a sign of a larger problem.

Not Disclosing Your Debt

Any debt accrued before your marriage will likely not become the responsibility of your spouse. However, the debt you bring into a relationship can still affect your life together. Because marriage is about trust, it’s important that one is transparent about how much debt s/he has.

I do not view having debt as a deal-breaker for getting married. However, it’s important to know exactly how much and what kind of debt.

Do you owe money to the IRS and are in danger of having your income garnished? If you have student loan debt, how much of your income will be going to repayment and for how many years? Did you rack up credit card debt you can’t repay and fear being sued? Do you have crushing medical debt and need to file bankruptcy? Are you behind on your car payments and in danger of having your car repossessed? Do you owe back child support and face mounting legal fees, jail time, wage garnishment, or your driver’s license being suspended? Are you behind on your mortgage and facing foreclosure? Or maybe you only have a small amount of debt, but you’ve not been able to get out from under it.

Debt can have serious consequence. If you are married or thinking about getting married, complete transparency is needed so that you can be on the same page about how you are going to deal with it.

Not Disclosing Your Income

It’s disturbing to see how many people will devote their life to someone who they will not trust with their wallet.

If your spouse has a mental illness or addiction that is putting you and your family at risk financially, that is a different thing. Consider a consultation with mental health professionals and/or an attorney about how you can best help your spouse and protect yourself.

But without a legitimate reason for not disclosing your income, hiding money from your spouse is another form of financial infidelity and is a glaring sign of a lack of trust.

Secretly Borrowing Money

Whether taking out a Parent PLUS loan for your kids’ education, asking for money from your own parents, or borrowing from a friend, this should not be kept from your spouse.

I had a friend whose husband borrowed $100,000 from her father to start his own business – and didn’t tell her. This was obviously a sign of a larger problem, as he also secretly took out (and maxed out) credit cards without her knowledge. When she found out the scope of his deception, it was clear that she could not trust him. Sadly, his lies cost him his marriage to a truly beautiful person.

Final Thoughts

My husband and I have lived together for 20 years (3 years cohabitating and 17 years married). When we first met, we had very different approaches to money (he was a spender and I a saver) and we both entered the relationship with debt (he had credit card debt and I had student loan debt). But we worked through our differences before we got married and continue to have regular discussions about our spending and saving.

We have had ups and downs in our relationship, but one thing we never argue about is money. Transparency and partnership about money has helped us maintain a healthy and happy marriage.

Resources

The most important part of any relationship is trust. Financial infidelity may be one sign of a lack of trust, and should be addressed.

If you are experiencing relationship distress because of difficulty communicating about money, consider seeking counseling. A licensed marriage and family therapist, clinical or counseling psychologist, licensed clinical social worker, or pastor may be able to help.

If you are living with mental illness or addiction, please do not suffer alone. Consider the following resources:

 

Are you guilty of financial infidelity?

 

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2 thoughts on “Are You Guilty of Financial Infidelity?”

  1. We have been married for forty years and all our accounts are joint except for the tax advantaged ones because those cannot belong to two people. All accounts are linked to Personal Capital with a joint password so that every transaction either of us makes is visible to both of us. Neither of us will spend more than $40 on something discretionary, typically, without letting the other know of our plans and we are pretty frugal. She did not inherit much from her parents but I came into a large (seven figure) estate a few years ago. While it was inherited by just me, and none of it went to her, I immediately put it into a joint account so that it is as much hers as mine. Marriage is a lifetime partnership and everything we own we own jointly. If she ever got tired of me, fortunately she is a patient woman, then she’ll get at least half of everything we have and it would be the least she would deserve. She is the better half of the partnership!

    1. Hi Steveark! I agree that marriage is more than a relationship, it’s a lifetime partnership. Congratulations on 40 years together! I am always inspired to hear stories of couples who have stayed together. It sounds like being on the same page financially has been important for your marriage. Thanks so much for sharing!

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