Financial Infidelity Can Spur Positive Action

As Valentine’s Day approaches, the perennial personal finance survey that grabs headlines is about financial infidelity. This year’s version from Bankrate finds that “23 percent of Americans in relationships are keeping a money-related secret from their significant other” and “39 percent have been financially unfaithful,” defined as having a secret credit card account, stashing money in a hidden checking or savings account, amassing undisclosed debt or spending more than a partner would be OK with.

In my experience, many who keep financial secrets struggle with honesty because they are either ashamed of their actions, scared that their partners will lose it upon discovering the news, or both. How can they disclose the infidelity and regain the trust that will undoubtedly take a hit with the big reveal?

Psychotherapist Tonya Lester, LCSW, says while “It’s common to have a fantasy that there is a way to come clean that will cause minimal damage and anger,” there is little chance that fantasy will morph into reality. After all, “you have broken a contract and caused pain. Your best option is to be direct, concise, and apologetic. Don’t make excuses or provide endless context.” In other words, the first step is the hardest: FESS UP.

Once the information is out, the real work begins. As a couple, commit to a plan to get back on track, which starts with scheduling a specific time and place to discuss your financial situation. It is imperative that you agree to ground rules for these conversations that push aside judgments and embrace open dialogue that allows you to share information.

This advice also applies to those couples who are faithful: one reason that problems can emerge is that one person in the couple either feels shut out of the process or has removed themselves from taking financial responsibility. To address that situation, start with quarterly meetings, where you will create/review your balance sheet (what you own and what you owe). If you are carrying debt, highlight the interest rate of the loan and the maturity debt, if applicable. Then tackle how you spend money by agreeing to a system to track your cash flow. Early meetings about your finances should be about gathering information, not throwing down hard, fast rules.

Then you will need a series of conversations that will help determine your joint goals, how you plan to accomplish them and who will manage various financial tasks, like bill-paying and investment management. There is nothing wrong with working toward each partner’s strength. If one has a good system to manage the day-to-day bill paying, that’s great. If the other wants to oversee retirement accounts; that’s fine, but you need to share information and the best way to do so is to keep tabs on your progress by meeting quarterly. Once the system is up and running, feel free to reduce the number of meetings, maybe one after the tax filing season and then another at the end of the year.

What if after all of the best efforts, you are still stuck, or one of you commits financial infidelity again? I have often advised people who call the podcast with relationship issues that center on money that they may need a therapist, not a financial advisor (though a CFP or a CPA may be a big help too). The disclosure of a financial secret does not have to mean the end of a relationship, rather it may be the triggering event to vault to a new place, where each of you takes responsibility now, thereby increasing the odds that you will feel empowered and in control of your destinies later on.