Big little lies: The devastating effects of financial infidelity

If you and your partner have combined all or part of your finances, trust no doubt forms the basis of that relationship. You are trusting each other with each other’s money and the manner in which you, as a team, employ your resources to achieve a common set of goals. But, where one member of the team is secretly ‘throwing the match’ while the other is doing their best to win the game, success is unlikely and, when found out, trust becomes an unfortunate casualty. In this article, we explore the devastating consequences of financial infidelity, what causes it, and how to protect your relationship against it.

We all know that money is one of the main reasons that couples fight, so it’s interesting to note that avoiding a fight is one of the main reasons that partners commit financial infidelity. Knowing that one partner would disapprove of purchase or certain behaviour (such as impulse shopping), the other partner hides the receipt, rounds down the value of the purchase, or claims that the purchase was a gift from a friend. Naturally, avoiding conflict is only one of many reasons for financial infidelity, and some forms of infidelity (such as gambling) are a result of more deep-seated psychological problems that should be dealt with by a healthcare professional.

In the 2021 survey into the prevalence and reasons for financial infidelity, of those partners who had admitted to financially infidelity, 30% stated that they wanted to control their own finances. 25% said that the reason for their infidelity was because they were embarrassed by how they handled their money, while 13% said that they used the money for an addiction. Financial infidelity can also be a result of differing value systems when it comes to money, or an unwillingness on behalf of one partner to compromise. Where one partner earns significantly more than the other, their behaviour when it comes to money may appear controlling or restrictive to the lower-earning partner, who may then spend money as a form of rebelliousness. On the other hand, the higher-earning partner may feel resentment at having to bring in the lion’s share and may spend money secretly because she feels she is entitled to. Where one partner is not fully committed to the relationship or fears that the relationship won’t last, he might set up a secret bank account as protection should the relationship come to an end. Where one partner is having a physical affair, she might commit financial infidelity by hiding travel, restaurant or gift receipts. Whatever the underlying cause of the financial infidelity, it points to some sort of breakdown or imbalance in the relationship which, if not addressed, can lead to a complete breakdown of the relationship.

Another survey on financial infidelity conducted by the National Endowment for Financial Education (NEFE) in 2021, found that financial infidelity happens at all income levels – although wealthier people can afford to employ more elaborate methods of cheating, such as setting up trusts or moving money offshore. 39% of survey respondents admitted to hiding a purchase receipt, bank account or bill from their partner, while 10% admitted to lying about how much they earn. The survey also found that younger couples are more likely to hide money matters from each other than older couples, probably because their relationships are new and have had less time in which to establish trust. Older couples probably have more established and well-utilised channels of communication.

Unfortunately, it’s not always easy for an unsuspecting partner to spot financial infidelity in a relationship, especially with the shift towards online shopping and electronic billing. The likelihood of intercepting a bill or letter of demand in the post is slim and hiding online accounts from a partner has never been easier. Without a partner’s username, password and access to their email account, finding out whether your partner is committing financial infidelity is difficult. Having said that, there are some signs to look out for such as if your partner has unexplained or larger than normal amounts of cash in his wallet, or if there is a notable absence of slips or receipts. When it comes to filing tax returns, your partner may be reluctant to produce her salary slips or bank statements; or your partner may be reluctant to meet to discuss finances or have a joint financial plan prepared. Remember, even suspecting that your partner is committing financial infidelity without any hard evidence means that there are trust issues in your relationship that need to be worked on, so consider what your suspicious mean for your relationship going forward, keeping in mind that it is unlikely that your relationship will come away unscathed if one party is cheating financially. According to the NEFE survey, 85% of respondents said that the financial deception adversely affected their relationship. 42% of those said that it caused an argument, 32% said it resulted in less trust in the relationship, while 16% said it resulted in divorce. If you do find that your partner has been deceptive with the joint finances, it is likely to take an enormous amount of hard work to rebuild the trust and establish new grounds on which to operate financially. This could include steps such as setting up a joint bank account that is open to scrutiny by both parties, sharing online account information and passwords, keeping each other regularly informed of all transactions, and setting aside time to deal with bills, debt, planning and readjusting goals. At the end of the day, rebuilding trust takes time and commitment by both partners to work together as a team to achieve financial success.

For couples starting out together, it’s important to clearly set out the parameters for your financial relationship so that both partners are clear on the expectations and ground rules. According to the results of the NEFE survey, 38% of respondents believed that some aspect of their finances should remain private – so if retaining some aspect of financial privacy is important to you, this should ideally be addressed upfront. Remember, financial infidelity is not always clear cut especially where the terms and parameters of the joint finances have not been clearly communicated and agreed upon. Where one partner may feel cheated or deceived, the other partner may feel perfectly justified in not telling her spouse about a purchase. To protect your relationship against financial infidelity or deception, consider the following:

  • Set clear guidelines as to how your combined finances will work, and whether each partner will retain an element of privacy in respect of certain areas of finance.
  • Circumstances change, so ensure that you keep communicating and revisiting the guidelines to ensure that they remain appropriate to your relationship. For instance, if your partner is retrenched, you will likely change the terms of your joint financial management to take into account his loss of income.
  • Write down your respective goals to determine those areas that are common and those areas that are specific to each partner. Try to find common ground so that there are a common set of goals you can work towards, and then create space for each partner to pursue their personal goals.
  • Develop a household budget that includes room for personal expenditure or spur-of-the-moment decisions so that you don’t feel too constrained or restricted.
  • Share the responsibility of managing the household finances equally so that one partner doesn’t feel isolated and burdened by the responsibility.

Teams have a greater chance of winning when all team members are open and honest with each other, and when one member isn’t pulling in another direction.

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