Real talk: I’ve been cheated on.
I’m guessing many of you have, too.
My partners have strayed both physically and emotionally, and I know I’m not alone in thinking the latter hurts more.
But recently, I learned about a type of cheating I’ve never experienced: financial infidelity.
Though I bet the act itself has existed as long as relationships have, this particular term has grown in popularity the past few years; Google shows few searches for it prior to 2011.
It’s a big deal.
Money matters in relationships, and hiding financial problems or habits from your partner can lead to distrust, hurt, anger — and, eventually, breaking up.
I decided to do a little digging and see what I could learn about this specific brand of unfaithfulness.
Here’s what I discovered…
What is Financial Infidelity?
Financial infidelity involves lying to your partner about your income, purchases, bank accounts, bills or debts.
And it’s a growing problem here in the United States.
Recent data indicates 42% of Americans admit to committing financial infidelity, according to the National Endowment for Financial Education (NEFE).
That’s up from 33% just a year ago.
Why It Matters
If you’re thinking, “What’s the big deal?”, remember that trust is paramount in relationships. Even if its breach doesn’t involve another person, it can be incredibly hurtful.
Of the people NEFE surveyed, 75% said financial deceptions had affected their relationships.
“Financial infidelity hurts regardless of its scale,” says Ted Beck, president and CEO of NEFE. “Hiding or lying about small amounts of money can damage a relationship just as effectively as a high-dollar deceit.”
More specifically, here are three reasons it matters:
It Reflects Your Money Habits
At its core, financial infidelity can mean you and your partner have different views of money.
And we all know that’s not usually the hallmark of a successful relationship.
“The way someone manages and spends his or her money is a direct reflection of his or her priorities,” writes Kayla Albert, who eventually ended a relationship due to financial infidelity.
“If this person’s concerns don’t align with yours, it’s important to take note of that now, not once you’re considering combining financial lives.”
Money Issues Usually Lead to Relationship Issues
I think we should replace the phrase “Happy wife, happy life” with “Happy money, happy marriage.”
“We like to think that love transcends money, but money is a key player in our relationships,” writes Melanie Lockert of Dear Debt.
“People are scared to talk about it. Money becomes a symbol of power, oppression and privilege,” Lockert writes.
“People use it to fuel secret desires, hidden addictions and foolish hobbies. Money can be the demise of your relationship, because unfortunately, sometimes love isn’t all you need.”
It’s Sometimes About More Than Money
Though it’s not always the case, financial infidelity can sometimes be the tip of the iceberg — and can signify dishonesty in other parts of the relationship.
“We may all lie to some degree, but those who habitually lie about one area of their lives generally aren’t discerning when it comes to lying about other things,” Albert writes.
“His money lies were just the beginning… money was just a physical representation of the deceit present in all other areas of our relationship.”
How to Prevent Financial Infidelity
So, it’s clear financial infidelity is a problem. But what can you do about it?
Here are a few suggestions.
1. Communicate Openly
When you start to get serious in a relationship, make it a habit to talk openly about your finances.
“Set the pattern from the beginning,” writes Suzanne McGee for The Guardian. “Be open with your partner about your finances — and expect the same from him or her.”
“When you decide that you’re going to combine your lives, talk openly about what it means to combine your finances,” McGee writes. “That’s the point at which all the skeletons should come tumbling out of the closet.”
2. Combine and Conquer
Most experts agree you should have a joint account to fund shared expenses, but it might also be wise to keep some of your money for yourself.
That way, each of you still feels like you have the independence to buy the things you want — without judgment.
“Give each person sole control over a set amount of discretionary spending money,” writes Beck in the Wall Street Journal. “Keep all negative thoughts about how they spend their money to yourself.”
He also recommends setting a “maximum individual transaction amount.” Anytime you want to spend more than that, you must run it by your partner first.
3. Regularly Review Your Finances Together
One way to stay on the same page?
Set a monthly money date to review your finances together.
Travis Pizel, who racked up $109,000 of credit card debt without his wife’s knowledge, recommends including your credit reports.
“Those in committed relationships can build and reinforce their foundation of trust by reviewing their credit reports together,” he writes for MoneyNing.
“Not only will they ensure that there isn’t any fraud occurring, but it can help keep both parties on the same page with their finances as they build a future together.”
4. Allow for Mistakes
Both you and your partner are human, so it’s essential you create an environment that makes it OK to admit to mistakes.
“Agree on the terms of a ‘get out of jail free’ card to invoke when you’ve strayed financially — a safe zone for transgressions with relatively minor financial impact to the household,” suggests Beck.
“If you can banish the risk of disapproval and embarrassment from your household, you will find that combining finances is a powerful advantage for couples.”
What If It’s Too Late?
If you’ve already committed or fallen victim to financial infidelity, it’s vital you put all cards on the table now.
After assessing how much damage has been done, it’s time to create a debt repayment plan, says MP Dunleavey, former editor-in-chief of DailyWorth.
If you need credit counseling, she recommends the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies.
And if you want to salvage your relationship, she suggests getting professional help.
“Few relationships can survive this kind of strain without counseling,” she writes. “If you’re both invested in staying together, then it’s worth spending some money on a therapist.”
I’ve never been a victim of financial infidelity, and after reading these stories, I definitely don’t want to be.
Heartbreak sucks — but at least you don’t have to pay anyone back for your partner’s mistakes.
So next time you get serious in a relationship, make sure open and honest money talk is a priority.
I know it’ll be one of mine!
Your Turn: Do you have a story about financial infidelity to share?
Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.