It seems innocent enough: apply for a credit card without telling your spouse, so you can get that amazing deal on the dress you’ve been wanting — without having to involve your spouse in the decision.
However, all too often, that innocuous little side step escalates into all sorts of complications — and not just financial.
Experts refer to the habit of keeping money secrets from your spouse as financial infidelity. Financial infidelity can be as simple as hiding a new sweater you bought on sale because you’re afraid your spouse will disapprove of the purchase. Or it can be as serious as secretly tapping into the home equity loan on your house in order to make an investment or cover a gambling debt. Opening a secret credit card account falls somewhere in between, say experts, but it can easily turn into a serious problem — particularly if your credit card balances begin to get out of hand.
Financial infidelity is also surprisingly common. According to a Harris Interactive poll taken a few years back, 29 percent of U.S. adults aged 25 to 55 who were in a committed relationship admitted to lying to their partner about their spending habits. Women were the most likely to have withheld information — with 33 percent admitting that they had lied to their partner about their spending habits at some point. 26 percent of men said the same thing.
And unlike other forms of infidelity, most people initially have no clue they’re doing something that could damage their relationship.
“Financial infidelity is a subtle form of cheating, but it’s so subtle, people don’t even realize they’re doing it,” says Dr. Bonnie Eaker Weil, a relationship therapist in New York City and author of “Financial Infidelity—Seven Steps to Conquering the #1 Relationship Wrecker.” “It’s easy to just omit information, but people don’t realize that omitting information is also a form of lying. And like any kind of deception, if trust is eroded, it interferes with intimacy.”
The fallout from financial infidelity is often twofold, say experts: financial and emotional. If there’s not complete honesty around finances, it will be very difficult for couples to create effective financial plans around their long-term financial goals. And in the worst case scenarios, one partner’s bad spending habits can lead to credit card debt and other financial problems that affect both partners.
At the same time, the emotional fallout from financial infidelity is often severe and long-lasting. “When you deceive a person, it very often leads to deception in other areas,” says Dr. Weil. “Once a cycle of financial betrayals become entrenched, it is often just a matter of time before other areas of the relationship are damaged.”
In addition to causing problems in the relationship, financial infidelity can also be a sign of already existing problems. For example, in the survey from Harris Interactive, unsatisfied significant others were two to four times less likely to experience financial honesty than those who were satisfied in their relationship.
It can also be triggered when one partner engages in harmful or addictive behaviors. Dr. Weil notes that compulsive behaviors like gambling or shopping addictions often lie at the root of more serious cases of financial infidelity. People driven by the need for a quick fix use the high of betting or buying new things as a way to avoid having to deal with problems in their life.
Of course, like all addictions, once the high wears off, people repeat the behavior, eventually maxing out their credit cards or emptying their bank account. In some cases, couples have been brought to financial ruin before the other party finds out.
Unfortunately, there is no simple, instant cure for the problems caused by financial infidelity; but the first step is always to reestablish openness and trust.
“It’s time for transparency. If there has been financial infidelity in the past, you need to be very willing to be transparent moving forwards,” says Kim McGrigg, Community and Media Relations Manager at Money Management International. “Share your account passwords, credit card and bank statements and pull each other’s credit reports. You need to start over from both of you knowing where you are today.”
McGrigg also says that to avoid future problems, both partners must get involved in managing the couple’s finances. Each person should know how much money they have and where it’s going — especially if one person has had spending problems in the past. It’s also useful to set a target amount for how much each can spend using joint funds before clearing it with the other spouse.
If the financial infidelity is linked to compulsive behaviors like shopping or gambling addictions, counseling may be in order. And keep in mind that while playing the blame game may seem warranted, it won’t really solve your problems.
The key is to work together to address the issue and create a damage containment plan to pay off credit card debt, rebuild your credit and repair the financial damage. Working together to solve your financial issues is the best way to slowly rebuild trust and heal the emotional damage to the relationship.