Have you ever cheated on your significant other? Monogamy-minded people might be quick to say, "Of course not!" Not so fast. There's another kind of infidelity that can erode your relationship as quickly as a one-night stand – and have a negative impact on your finances too.
It's called financial infidelity, or those little (or maybe not so little) money secrets that people keep from their significant others. Several surveys have been conducted on the subject, but the findings rarely change: financial infidelity is not rare, and when it comes to financial matters, couples have a tendency to do some sneaking around. A 2007 survey by PayPal found that money is the No.1 issue that couples fight about. And it's no wonder – in the same survey, more than 80% of respondents admitted to lying about their spending.
Are you guilty of financial infidelity? Take our quiz to find out.
- Do you gamble or make speculative investments without your partner's consent?
Putting your money into high-stakes ventures without consulting with your partner is a major betrayal, both emotionally and financially. Here's why: Once you get married or move in with your partner, shared expenses mean that your financial lives are no longer separate. After all, you're sharing the expenses, right?
So, in order to move forward financially - and perhaps in your relationship as well - a certain amount of transparency is required. If you're making big bets with money that you can't afford to lose, it could affect your ability to pay your bills, contribute to savings or pay off debt. If you're planning on staying with your partner for the long haul, this will affect both of you. (For insight on common misconceptions that often lead to big losses, see The 5 Biggest Stock Market Myths.)
- Do you have bank accounts or credit cards your partner doesn't know about?
Ideally, you should sit down with your partner and discuss your salaries, savings and debt at an early stage in your relationship. The next step is to agree on a common strategy for paying the bills and meeting other financial goals you may have, such as travel, buying a house, paying for a child's education or preparing for retirement. If you and your partner are not honest with each other about personal finances, it will be very difficult to combine your financial lives in an effective – and harmonious – way. (For related reading, see Marriage: For Richer Or Poorer?)
If you have deliberately chosen to not reveal aspects of your financial picture to your partner, the question is: why not? This suggests a lack of trust and communication, which may not bode well for your relationship with your partner. Your partner might also take a financial hit as a result of your infidelity. For example, suppose that you are secretly saving or spending money without your partner's knowledge, but your partner is under the impression that the two of you are working toward saving to buy a new car or upgrade your home. In a sense, you're being unfaithful to your partner by pretending to be on his or her side, when you're really putting yourself first and then lying about it.
Similarly, if you have a secret credit card and are racking up debt, you could also be eroding your partner's credit score if you share joint accounts. (For more insight, read Does marrying someone with bad credit affect my credit score? and Combining Credit For A Happy Financial Ever After.)
- Do you cover up market losses, rather than bringing them to your partner's attention?
In investing, taking a loss now and then is inevitable. You don't have to rush to tell your partner every time your portfolio dips a point or two, but if you have to eat a major loss, it's time to fess up.
After all, if you're truly committed to your financial relationship with your partner, this is really a loss for both of you, and one that could affect your ability to achieve future financial goals. (Learn how to cope with losses in Taking The Sting Out Of Investment Loss.)
- Do you hide purchases from your partner or fib about how much you actually paid for them?
Suppose that you spring for a high-end leather jacket without telling your partner, and when you come home sporting your new purchase, you are asked the dreaded question: "How much was it?"
If you lie because you know your partner will be angry if you admit the real sticker price, you are already guilty of financial infidelity. After all, if you know you'll have to lie about your purchase, you've essentially decided to do something that you know will upset your partner.
This doesn't mean you have to consult your partner every time you pull out your debit card, but if you often find yourself either lying about your purchases or fighting about them, it's time to come clean and establish a spending limit that both of you are comfortable with. You can assume that any purchase below this limit is relatively insignificant, and will not upset your partner by threatening derail your supposedly mutual financial goals. This spending limit will depend on how much money you make and what goals you have set with your partner; perhaps picking up a few new DVDs is OK, but you should consult with your partner before bringing home a big-screen TV.
- Do you put off or avoid discussing financial topics with your partner?
This one isn't financial infidelity, per se. However, while facing up to financial reality isn't always fun, if money's on your mind, you should share the burden with your partner.
Why? Because being upfront with your partner will lead to fewer misunderstandings down the road, and less reason to commit financial infidelity in the first place. For example, if you tend to handle the finances in the family, you might find yourself fuming when your partner makes a relatively reasonable purchase on your joint credit card. You might not fail to ream your partner out for being so careless, when what you've really failed to mention is that you've been worrying all week about a big upcoming bill that you're not sure you'll have the funds to cover. (To learn more about sharing the financial burden, read Teaching Your Partner About Household Finances.)
Be honest with yourself. Are you one of the 80% of people who lie to their partners about finances? If the answer is "yes", you could be eroding your finances – and your relationship. Telling the truth is never the easiest route, but when it comes to talking about money, it always pays the biggest dividends.