What is 'Financial Infidelity'

Financial infidelity occurs when couples with combined finances lie to each other about money. For example, one partner may hide significant debts in a separate account while the other partner is unaware. Another common example is when one partner makes large discretionary expenditures without discussing the matter with their partner.

BREAKING DOWN 'Financial Infidelity'

Money can be a big point of contention among couples, so it is important for each partner to be open about his or her financial situation, expenditures, and attitudes toward money. A good idea is to go over both partners' financial pictures before combining finances. Also, setting up a mutually agreeable system for handling expenditures can help avoid many fights down the line. For instance, many couples set up an allowance system, which allows each partner to spend a set amount each month without having to consult the other. This allows for partners to maintain part of their financial independence while still working toward mutual financial goals.

Signs of Financial Infidelity

It's pretty easy in this age of online bill pay and free-flowing credit card offers to hide mounting debt. Every card issuer offers the option to have bills sent over email rather than the postal service, so spouses won't see the monthly statements. From there, people who have trouble managing money can amass tens of thousands of dollars of debt without their partner ever knowing, at least for a time.

Excessive spending on gifts, trips, or gambling with unexplained withdrawals from joint accounts is a classic sign of financial infidelity. Larger than normal cash withdrawals or checks made out to cash may be another sign. 

Defensiveness or stonewalling when one partner raises the subject of money is common among couples struggling with financial infidelity. The list goes on, from hidden income to secret shopping and trips to casinos, to hiding bank statements and cutting a partner from joint accounts.

What Can Be Done

The best thing is to come clean, and counselors can help facilitate that hard conversation. Experts say it's important not to accuse, but to gather the facts and discuss priorities and what to do about them. All accounts must be opened to both parties for scrutiny and discussion. Try to find shared goals that you'll both work toward. If there's a lot of debt, make a plan to pay it off and a plan to stop new debts from popping up. 

Also, consider making and sticking to a budget that both partners can agree on. 

RELATED TERMS
  1. Active Partner

    An active partner is an invested person that takes on duties ...
  2. Carried Interest

    Carried interest is a share of any profits that the general partners ...
  3. Guaranteed Payments to Partners

    Guaranteed payments to partners are payments meant to compensate ...
  4. Cross-Purchase Agreement

    A cross-purchase agreement is a document that allows a company's ...
  5. Limited Partnership - LP

    A limited partnership (LP) exists when two or more partners jointly ...
  6. Debt Financing

    Debt financing occurs when a firm raises money for working capital ...
Related Articles
  1. Managing Wealth

    Key Questions to Ask Before Moving in Together

    Moving in together is a big step. Here are some key financial questions to ask your partner before you make the move.
  2. Small Business

    How to Create a Business Succession Plan

    By creating a succession plan, you'll help make sure the business you built continues to thrive long after you've left the helm as the owner.
  3. IPF - Banking

    Should You Open A Joint Bank Account?

    Joint finances may not be romantic, but it's an issue that serious long-term couples will have to confront at some point.
  4. Personal Finance

    When Couples Have Different Financial Opinions

    When offering financial advice to couples it is important to recognize their differences.
  5. Personal Finance

    Financial Conversations to Have With Your Spouse

    Having these financial conversations with your spouse will ensure you're on the same page.
  6. Personal Finance

    Don't Let Financial Differences Lead to Divorce

    Take these steps to build financial health as a couple and avoid relationship issues.
  7. Personal Finance

    The Most Important Conversation Before Marriage

    To help avoid financial issues, couples should be talking about money before getting married—for a variety of reasons.
  8. Managing Wealth

    What to Do Before Marrying: Saver vs. Spender

    Couples can have different philosophies toward money. But before you and your partner tie the knot, follow these steps to ensure financial bliss.
  9. Personal Finance

    Top 6 Marriage-Killing Money Issues

    Strengthen your marriage by discussing these financial pitfalls.
  10. Taxes

    3 Big Financial Mistakes to Avoid in 2016

    Here's how to avoid these three big and costly financial mistakes in 2016.
RELATED FAQS
  1. Do joint ventures need an exit strategy?

    Understand why an exit strategy is important for a business partnership such as a joint venture, and learn the options partners ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center