Plainly stated, most couples fight about sex and money, and it’s important to note that cheating is not always sexual. With wedding season in full swing, many couples may want to have a talk about and make a commitment to financial fidelity before saying their vows.
The National Endowment for Financial Education recently discovered that 42% of Americans admitted to lying to their partners about their finances. Additionally, the same organization found that two in five Americans who have combined finances with their spouse admit to lying to their partner or keeping secrets about money matters. Lying about finances could be as simple as concealing a small purchase, but could also be as major as hiding a secret bank account or a gambling problem. While small “white lies” about finances may seem to be a minor issue, experts warn that financial deception, no matter the scale, can cause damage to or even end relationships in some cases.
Another study conducted by The National Endowment for Financial Education revealed that 39% of people have hid a purchase, bank account, statement, bill, or cash from their partner. Even more shocking was the fact that 16% of people have lied about the amount of debt they owe or even how much they earn.
Financial deception is not limited to one gender – about 46% of men and 38% of women have committed an act of financial deception. While it happens among all age groups, studies have found that financial infidelity occurs more often among younger adults, with 61% of those ages 18-34 admitting to the act.
Everything is Easier in the Digital Age:
It’s difficult to say exactly why financial infidelity is on the rise in recent years. However, one highly plausible explanation is that the digital age makes it extremely easy to conceal financial information. Receipts can be texted and credit card statements can be e-mailed, leaving less of a paper trail. Because of this secrecy created by technology, financial problems often do not surface until a major event such as buying a home or car forces credit rating deficiencies or other fiscal struggles to come to the surface. In fact, some people do not even find out about their spouse’s hidden spending habits and financial challenges until they become embroiled in divorce proceedings or even after their partner dies.
By following the steps below, a couple can recover from and/or prevent financial infidelity. These recommendations can lead to effective financial candor and, thus, reduce relationship stress whether a couple is just starting out or is in an established relationship and trying to recover from a financial infidelity incident.
- Set the pattern from the beginning – it is important to be open with your partner about your finances, and in turn, you should expect the same from your partner. As relationships become more serious, lives tend to become more intertwined and it becomes easier to reveal information such as how much we make, how much we spend on rent or a mortgage, how much we save, etc. Make sure you are aware of your partner’s spending habits when you start a new relationship and, as the relationship matures, purposefully seek out ways to comfortably engage in candid financial discussions.
- Talk openly – when you decide to combine finances with someone else, it is important to talk openly about what combining your finances means to both of you. At this point in the conversation, all of the skeletons should come out of your closet – both positive and negative in terms of impact on financial well-being. For example, if you are going to inherit five million dollars from your parents or if you have a horrible credit rating, your partner should find out about these details sooner rather than later.
- Follow up regularly – following up with your partner does not mean that you need to be aware of every penny they spend. However, each couple needs to find a budgeting and money management system that works for them as partners and holds each person in the relationship accountable.
Separate Bank Accounts are Still Beneficial:
It is important to note that being upfront about your money does not mean you need to pool all your assets as a couple. Some financial professionals even suggest that couples keep their accounts separate for the most part and only have one joint account for merged expenses such as the mortgage or groceries.
Because financial infidelity is becoming so prominent, it is important to recognize red flags within your own relationship. If you spot clues such as unfamiliar bank statements, unusually low bank account balances, or sudden expansion of material assets (fuller closets and the like), make sure to sit down with your partner and have a calm, non-accusatory discussion. If you think your partner may be “cheating” on you financially or have any questions about addressing financial infidelity problems, call the attorneys at Smith Strong at (804) 325-1245 or (757) 941-4298.