Are you cheating on your spouse? What you need to know about 'financial infidelity'

Mature couple doing family finances at home (iStock Photo)

You’ve probably heard about financial infidelity – where a partner or spouse hides or lies about money in a relationship with combined finances.  He could be hiding a new set of golf clubs in the trunk, a credit card bill or a wholly secret brokerage account.  She could be lying about how much money she makes, how much debt she has or how many credit cards she owns.

Lest you point any fingers at gender stereotypes, financial infidelity is an equal opportunity event.  Men and women commit it against each other at the same rate.

And it’s getting worse, according to new Harris Poll data released by the National Endowment for Financial Education. In January 2016, 42 percent of Americans had committed financial infidelity, compared to just 33 percent just two years ago.

Chances are good that it has touched your life, either as victim or perpetrator. I still remember how I found out it was happening to me.

Early in our marriage, my husband and I agreed to a weekly allowance of $20 each for work food, doled out every Monday from the ATM machine.  It never dawned on me that not seeing his gas receipts was a problem; he drove up to 200 miles a day and turned them in for company reimbursement.

Until the day he left one on the kitchen counter.  He was buying sodas, cookies and candy bars along with unleaded gas – effectively doubling or tripling his $20 food allowance on the sly. Until then I had seen only the total charges on his credit card statement when I paid the bill.

Money was tight – we were saving for a house – and literally his financial infidelity was nibbling away at our down payment.  There was a tense discussion, promises to reform, and eventually we bought a suburban split-level on a tree-lined street.  But the trust was irreparably damaged. And this was one of more devious incidents that, several years later, led to our divorce.

In fact, 75 percent of people surveyed said financial infidelity impacted their relationships.  Although 10 percent said they became closer after working through the crisis, everyone else said it started arguments, eroded trust, and led to separation and even divorce.

One-third (32 percent) of those who commit financial infidelity do so because they feel their finances should be private, even from their partners or spouses.  But by far the greatest reason people lie about money is fear of their partners’ disapproval and embarrassing themselves.  Ironically, people would rather risk divorce than the wrath of their spouse when it comes to money.

Resetting your financial zeitgeist can mitigate the risk.  Here are five steps to get you started:

1. Think “we” not “me.” Have you set financial goals as a couple?  Are you confident that both players are committed to those goals?  Did you listen, discuss and compromise, or did one of you impose your will on the other?  Not buying into a “joint” goal makes it easier to disregard later.

2.  Make sense of your partner’s financial behavior by taking the LifeValues Quiz

3. Although you can’t make your partner care about a $10,000 cruise when he wants a $10,000 bathroom remodel instead, you can use what you learn to set a financial path you both can support, given your values about money.

4. Get excited about harnessing your financial horsepower.  Couples who pool their money can reach bigger goals faster.  Celebrate your progress as a team, which is so much more uplifting than undermining each other.

5. Go ahead and earmark some discretionary spending money for each person.  Agree on no recordkeeping and no accountability for how each person spends their money.  Resist the urge to comment on what they bought, especially if you don’t have anything nice to say. Banish disapproval of financial events that don’t even affect you.

6. Agree on the terms of a “get out of jail free” card when you need to confess a misstep, particularly one with minimal financial impact on your household.  Create a climate of forgiveness instead of disapproval and the need to lie about money to protect yourself will fade.

Although it’s possible to recover from financial infidelity, it’s healthier to stop it before it even starts.  While not the same as a dozen roses, financial fidelity can be pretty darn romantic in its own right.