Here’s something to think about: A record number of Americans are cheating on their partner or spouse—not with someone else, but with money.
From secret credit card purchases to hidden bank accounts, a January 2014 online survey by the National Endowment for Financial Education (NEFE) found that financial infidelity is on the rise. In fact, 35 percent of adults with combined finances admit to having hidden a purchase, bank account, statement, bill, or cash from their significant other, up from 31 percent in 2011. Thirteen percent of respondents said they’ve committed more severe deceptions, like lying about the amount of debt that they owe or even the amount of income they earn.
Those financial lies could be more damaging to a relationship than you may think. The NEFE survey found that when money deceptions occur, 76 percent of respondents say there was an effect on the relationship in some way. In fact, two thirds (67 percent) of couples said that money issues caused them to argue, and 16 percent reported that financial infidelity ultimately resulted in divorce.
This isn’t the first time a study has found a link between financial disagreements and marital unrest. In 2012, researchers out of Kansas State University found that arguing about money is a top predictor of divorce. Their study Examining the Relationship Between Financial Issues and Divorce underscores not only how important it is for couples to be honest about their spending, but also how important it is for them to maintain an open dialogue with one another.
How do you know if you or your partner isn’t being totally honest about money? Some red flags to watch for include when you or your partner:
- Becomes resistant to talking about finances or becomes argumentative about money issues.
- Makes a big purchase without consulting the other first.
- Uncovers hidden cash either in your home or in a bank account that you didn’t know about.
- Finds bills for items you didn’t purchase.
- Discovers new credit cards or lines of credit opened in the other partner’s name.
- Has unexplained gaps between your family income and expenditures.
- Insists on keeping online banking passwords secret or having separate credit cards.
Although financial infidelity can strain trust in a relationship, you can live happily ever after, financially speaking, if you’re careful not to let financial issues come between you. While every couple is different, the following five simple tips for talking to your spouse about money might serve as a good place to start.
1. Start with a positive approach. Money can be a major source of tension in many relationships. However, if you and your partner want to have a financially secure future, it’s important to work out any financial differences as soon as possible. To begin, have a financial heart-to-heart—in other words, a basic understanding of how much each of you is spending and where you are financially as a couple. Gather your most recent credit scores, banking and credit card statements, student loan summaries, and retirement plan statements to gauge where you currently stand. The key is to look at the numbers but not to judge. Your aim is to set a tone that opens the door to a calm, productive discussion. For many, it can help to talk about your individual values as they relate to money. NEFE’s Life Values Quiz can help you and your partner identify the values that drive your financial decisions.
2. Agree on some goals. Maybe you’ve realized that you’re not saving as much as you need to or that your credit card bills are becoming too high. Or maybe you’re thinking about starting a family or buying a home. Sit down with your spouse and make a list of the goals you’d like to reach, both in the short and long term. Then prioritize those goals and agree to work toward them. As you write down your goals, it will become clear that you can’t do them all at once. You may have to compromise on some. But that’s the point—by making a list and setting priorities for your money, you can start thinking about spending in terms of the goals that matter most to you.
3. Create a road map. Once you’re on the same page about your financial goals, follow up with action. Keeping a budget, which includes tracking your spending, is an essential part of clearing up debt and creating financial security. For example, do you need to cut down on Starbucks visits? Eat out less often? Find a less costly place to vacation? Postpone buying a new car? When you set spending goals and stick to them, you can quickly see how often small changes can have a big impact on your bottom line.
4. Give and get equal access. Whatever plan you come up with, both parties need to work on this together. Access to all accounts needs to be given to both spouses so that each of you can check on balances and make payments on any debt you may have. That doesn’t mean every account has to be a joint one. Many couples also have separate checking accounts for “play money,” with an agreed-upon limit on spending. That way, if you want to buy a gift for your partner or splurge on a pair of new shoes or a bottle of wine, you can do so without feeling guilty.
5. Make a monthly money date. Agree to review your finances regularly. This way you and your partner can stay on top of your plan, track your progress and discuss any spending issues before they become a problem. And don’t forget to celebrate when you reach important milestones in your plan, such as paying off your student loans or reaching a savings goal.
Most important, keep the lines of communication open. If you or your partner deviates from the budget, talk through the circumstances that led to that spending decision. Being honest in your financial choices, rather than hiding them, is an essential part of healing wounds and rebuilding trust. That way, you’ll be doing all you can to help ensure you come out of the experience with a stronger marriage and the tools you need to build financial security together.
The Northwestern MutualVoice Team is a group of professionals who share insights and opinions from experts and industry leaders across the enterprise. Our vision is to inspire others to take action and plan for their financial future through topics ranging from financial planning, retirement planning and distribution strategies, wealth accumulation and preservation, to leadership, philanthropy and innovation.
