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Someone who wouldn’t dream of betraying their spouse or partner by having an illicit affair is risking the relationship in another way: by committing financial infidelity. Being financially unfaithful to a partner can be just as damaging to the relationship as being emotionally or sexually unfaithful.
The following are examples of behaviors that may constitute financial infidelity:
- Hiding money from your partner. This might involve lying about your income or net worth, hiding bank accounts or investments, or accepting secret money gifts.
- Overspending and either hiding the purchases from your partner or lying about what they cost.
- Secretly spending money on or giving money to children or other relatives. A habit of slipping children $20 with the warning, "Don't tell Mom," encourages them to be manipulative and also teaches them destructive financial habits.
- Going behind your partner's back to ask parents or other family members for emergency loans or gifts.
- Risking joint resources for investments or business purposes without your partner’s knowledge or agreement.
- Spending a significant amount from joint funds without first discussing the purchase with your partner.
Financial infidelity is defined more by the secrecy than the amount of money involved. Nor do all money secrets add up to financial infidelity. There's a big difference between saving on the sly for a special anniversary gift and lying about a clandestine and costly visit to a casino. Partners shouldn’t need to account to each other for every penny they spend. Secrets cross the line into infidelity when they are for the purpose of protecting oneself from the consequences of one's financial behavior.
These are some of the situations in a relationship that might foster secret spending and financial infidelity.
- Not talking about money. For a couple to work together as trusted financial partners, they must be able to talk about priorities, goals, needs, and difficulties. They need to know one another’s income, liabilities, and net worth.
- One partner choosing to stay ignorant about or uninvolved in family finances. While this certainly doesn’t justify cheating or lying by the other partner, it is an abdication of the responsibility to be an equal partner in the financial aspect of the relationship.
- One partner being a financial bully. If one partner is controlling and abusive around finances, the other may see little choice but to hide spending and keep money secrets.
- An unequal financial relationship. This goes beyond simply one partner earning significantly more than the other. Even with such a disparity, the inequality is often more about the emotions than the paychecks. Inequality may also be a "parent/child" dynamic around money where one partner controls the funds, a situation that can foster resentment and lead to secret spending on either side.
- Ignoring evidence and inconsistencies. Financial infidelity leaves traces. Secret spending has to come from somewhere and go somewhere. Unexplained cash withdrawals, large credit card balances, or household bills that seem unrealistically high may be signs of financial infidelity. A partner who doesn’t seem to notice such clues might be carefully not asking difficult questions that could lead to a painful confrontation about money.
- Unresolved conflict. In a painful relationship, one partner might use secret spending as a distraction, a way to feel better, or an attempt to get even with the other.
Financial infidelity often develops over time and grows out of or is part of other problems in the relationship. The bottom line for identifying financial infidelity is this: it's a money secret that one partner would feel embarrassed, ashamed, or otherwise uncomfortable with the other partner finding out.
Rick Kahler, MS, CFP®, CFT-I™, CeFT®, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
Read more articles by Rick Kahler
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
