Strong marriages are built on a foundation of communication, trust, and honesty. But when these principles begin to break down, things can quickly head in the wrong direction. One type of marital conflict that stems from dishonesty is financial infidelity, which can tear apart otherwise happy marriages.
So what is financial infidelity? What are some common signs of this type of infidelity, and what can you do if you suspect your spouse or partner may be hiding information from you? Below, we discuss the ins and outs of financial infidelity with Tracy Coenen—as a forensic accountant at Sequence, Inc., Tracy spends her days investigating fraud and tracking down evidence of financial infidelity.
What is Financial Infidelity?
At its most basic level, financial infidelity is dishonesty surrounding money. This type of infidelity occurs when couples who share finances hide financial transactions or lie to each other about their income or spending habits.
Financial infidelity can include things like:
- Spending without the other spouse's knowledge or consent
- Spending outside the agreement you've made with your spouse
- Hiding information
- Spending money on things your spouse wouldn't approve of
The categories of spending can also be an indication of financial infidelity. “The bad areas are easy,” Coenen explains, “spending on affair partners, illegal drugs, or illicit gambling.” Often, financial infidelity can go hand-in-hand with other types of infidelity, especially sexual infidelity.
But in other cases, financial infidelity can be more innocuous—a daily coffee habit, an expensive hobby, or pricey clothing or shoes. At its core, financial infidelity involves dishonesty or overspending in a way that harms your family.
And sometimes, financial infidelity can cross over to financial abuse—that is, one spouse using money to exert control over the other spouse. Financial abuse can be just as serious as other types of marital abuse, including physical abuse. The victim of financial abuse may not feel free to leave the relationship.
Financial Infidelity Risk Factors
Financial infidelity isn't always black and white. It all starts with your personal relationship and how you define honesty (and dishonesty).
For example, if you and your spouse have an agreement that you'll discuss any purchases of $100 or more, and your spouse spends $500 on hobby equipment, this could be an example of financial infidelity. Meanwhile, spouses that don't have that rule may not consider a $500 purchase to be anything out of the ordinary.
Some of the biggest risk factors for financial infidelity include:
- Poor communication
- Lack of trust
- Having different approaches to spending and saving than your spouse
- Sexual infidelity
- A hands-off approach to finances
- Untreated mental illnesses, including bipolar disorder and schizoaffective disorders
Although infidelity can happen without any of those risk factors, marriages that feature one or more risk factors may be more likely to fall victim to financial infidelity.
How Prevalent is Financial Infidelity?
As many as one in three U.S. couples deal with financial infidelity at some point during a marriage. Both men and women can be vulnerable to this type of infidelity; it's not exclusive to either gender.
But not all financial infidelity is created equal—in some marriages, financial infidelity can just involve a little extra hidden spending here and there or someone who tends to go overboard on gifts during the holidays. In others, it can involve a spouse who liquidates investments or cashes in retirement plans without the other spouse's knowledge, spends money on harmful vices, or quietly takes out a second mortgage.
How is Financial Infidelity Hidden?
In the past, financial infidelity often required the “unfaithful” spouse to intercept credit card bills or bank statements to prevent the other spouse from discovering hidden spending. But today, with online bill pay and instant-approval credit cards, it can be easier than ever to hide the evidence of financial infidelity.
The unfaithful spouse may set up an entirely separate email account to handle their financial transactions or even purchase a P.O. box to ensure no debt-related mail is sent directly to the house.
One way to reveal financial infidelity—or, at minimum, to get a handle on your spouse's debts—is to request a copy of your spouse's free annual credit report. This report will include all your spouse's credit accounts, including credit cards, home equity loans or lines of credit, mortgages, student loans, auto loans, personal loans, and other types of debt. Request a copy of your own credit report as well to see what debts are attached to your name.
You may also want to take a look at the last few months of bank statements to see whether any unusual spending patterns emerge. Ask yourself whether there's anything obvious you should be worried about, and pay attention to your gut instinct.
Red Flags of Financial Infidelity
The signs of financial infidelity can vary from person to person. “Look for things like changes in behavior,” Coenen says. Red flags can include “becoming more controlling with the money, more secretive with the money, more secretive with their behavior.”
Other signs of financial infidelity might include:
- Excessive or unusual spending on gifts or trips
- Unexplained withdrawals from joint bank accounts
- Larger-than-normal cash withdrawals
- Multiple checks made out to cash
- A significant increase in the number of credit card offers you receive in the mail (which can indicate someone in the household is applying for credit)
- Defensiveness or evasiveness when financial topics are raised
- Removing a partner from joint accounts
Some signs of financial infidelity can be harder to spot, however. Some individuals may use hidden income from a second job to fund their secret lifestyle. Others may make regular trips to the casino but conceal the amount they're betting (and losing).
And if one spouse isn't involved in the household finances, this concealment can go on for years, even decades.
What's more, in relationships with separate accounts, it's more difficult to get this information. “If your name isn't on a bank account, you don't have legal access to that account,” Coenen says.
What To Do About Financial Infidelity
Financial infidelity doesn't need to be the death of a relationship. With time, effort, and a commitment to honesty, couples can work through financial infidelity and emerge even stronger.
If you really want to save your marriage and are willing to rebuild trust, seek the advice of a marriage counselor. “I don't feel like it's ever too late to save a marriage if your heart is in it,” Coenen said.
How Should You Approach Your Partner if You Suspect Financial Infidelity?
Step 1: Gather Information
The first thing anyone who suspects financial infidelity should do is gather information.
Look for red flags—has your partner been more controlling lately? Do they seem evasive when you discuss money or spending issues? How does your partner respond to direct questions about finances?
Step 2: Assess the Excess Spending
Next, gather information on the spending itself. Analyze bank statements and pull copies of your credit report. You may even want to look at prior tax returns. Then, you can make sure the reported income matches what your spouse claims to earn. After you have more information about the scope of the problem, you'll be in a better position to broach it with your partner.
Step 3: Seek Outside Help
If your partner has been concealing excessive spending or otherwise lying about their finances, it's important for them to be fully honest with you. A counselor or therapist can help get this conversation started.
You may also want to talk to a counselor before this conversation. That way, you know what to expect and how to keep things on track. It's important not to accuse your spouse. Instead, discuss your needs, your priorities, and how your spouse can meet them.
If your spouse is willing to seek help from a professional, this is a good sign. Whether the excessive spending is the result of an untreated or improperly treated mental health issue or simply used as a coping mechanism, a counselor or therapist can help get to the root of the problem and figure out the best path forward.
Talk to a Divorce Attorney
If your spouse is unwilling to meet with third-party professionals and open lines of communication, you're at the ultimate decision point—stay or leave? Your next logical step is to talk to a divorce attorney.
Additionally, the process of “finding the money” can be cumbersome and expensive as forensic accountants can cost $10,000-$15,000. Coenen put together a Divorce Money Guide to support struggling women and men in the divorce process.
Even if you and your spouse ultimately stay together, it's crucial for anyone who has been impacted by financial infidelity to understand the laws in your state and the options you may have to recoup any money that was spent without your knowledge. For example, if your spouse spent $50,000 on gambling and you end up pursuing a divorce, you may be able to recover an additional $50,000 from your share of the home equity.
Make and Follow a Budget
Counseling can help your spouse assess the reasons behind their financial infidelity. However, it won't do anything to solve an overspending problem. One of the ways you can get back on track is by creating a detailed budget, then sticking to it.
It's important for this budget to be something that both you and your spouse agree on. While there may not be much flexibility when it comes to utility costs or mortgage payments, if one of you is fine with a $1,000-per-month car payment while the other insists on having a paid-off vehicle, you're likely to run into conflict.
Don't be afraid to compromise on certain spending categories so long as any concessions you make won't force you to go over your budgeted spending amount.
Schedule Regular Catch-Up Meetings
Communication is essential in all strong marriages. If you're trying to prevent or overcome financial infidelity, it becomes even more important. However, in many marriages, the financial responsibilities tend to fall on one spouse, leaving the other largely in the dark when it comes to income and spending patterns.
You and your spouse should both be aware of your household spending level in general. Additionally, you should be on the same page when it comes to large transactions. One way to accomplish this is by scheduling regular meetings with your spouse. You can discuss the current state of your finances, chat about future purchases and expenditures and hopefully connect in a meaningful way about your family goals together.
Final Thoughts on Financial Infidelity
It can be hard to repair marriages after the solid bridge of trust and honesty has been damaged. Knowing that great marriages require action and resilience, you and your spouse can repair the damage. Seeking support from a third-party financial therapist or marriage counselor is a smart place to start. This may open crucial lines of communication in your relationship.
If your spouse is unwilling to communicate with you or seek help, divorce may be your next solution. Resources like Tracy Coenen's Divorce Money Guide can support you on this difficult path.
With either route, having someone to speak with can help during these unfortunate times in your relationship. Touch base with friends and family and find community as you navigate these unfamiliar waters in your life.
Are you dealing with financial infidelity in your marriage? How do you and your partner stay on the same page financially?
Please let us know in the comments below.
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