Question. My husband and I have been married for a few years, and things are generally going well. But I’ve noticed recently that he has another credit card and bank account that I didn’t know about. I was really upset when I found out, and now I’m wondering what else is he keeping secret from me? I haven’t spoken to him yet because I don’t really know how to handle this. Do you have any advice for me in this situation?

Answer. If you think that infidelity is reserved for the bedroom, you’d better think again. According to the experts, financial infidelity occurs when couples lie to each other about money. In particular, financial infidelity is the secretive act of spending money, using credit cards, holding bank accounts, or obtaining loans, all without your significant other knowing about it.

Although all financial dishonesty between couples is bad, some forms of dishonesty are worse than others. For example, saying you spent $100 on a pair of new boots, when in reality they were $200, wouldn’t be nearly as bad as taking $10,000 out of your kid’s registered education savings plan (RESP) to go gambling or buy some penny stocks. Financial infidelity can include “bending” the truth, intentionally leaving out relevant information, or outright lying.

#1 Cause of Divorce

Money can be real sticky topic for some couples, and lying about money can have disastrous effects on your personal relationship. In fact, according to a study conducted by the Bank of Montreal (BMO), money is the #1 cause of divorce. The poll indicated a whopping 68 per cent say that money would be their top reason for divorce. Clearly, being dishonest about your finances is not the basis for a stable, long-term relationship.

In order to have a healthy relationship with your significant other, it is therefore critically important for each partner to be honest about his or her own financial situation. Yet, sadly, financial infidelity may be much more common than you may think. The Leger survey for Credit Canada, and the Financial Planning Standards Council (FPSC), found that “36 per cent of Canadians surveyed have lied about a financial matter to a romantic partner, and the same number of participants had been victims of financial infidelity from a current or former partner.”

When it comes to keeping money secrets, whose worse – men or women? Rich or poor? Interestingly, the same poll suggests that neither gender, nor income, play a significant role in financial infidelity.

Top 3 Warning Signs of Financial Infidelity

How can you tell if your significant other is being less than honest with you? Some of the most common warning signs include:

• Suspicious spending – You may notice your partner wearing a lot of new clothes, using a new phone or computer, or generally enjoying a higher than usual lifestyle, and yet none these purchases had been discussed. Note that you may also find yourself also being showered in similar expensive gifts, as this is often an attempt to make you happy, while deflecting your attention away from the key issue of spending.
• Missing mail – Banks and investment firms are typically required to send statements via postal mail, so a partner who is “financially cheating” may often become unusually protective and diligent in safeguarding the mail. A similar warning sign is when you notice new credit card or bank account statements for accounts which you were previously unaware.
• Defensive demeanour – One of the most common examples of this behaviour is when you ask a simple question, and get a completely disproportionate and overly defensive response. For example, you make ask something as simple as, “Did you pay the phone bill?” and, in response, your partner explodes at you. Similarly, your partner may become aggressive regarding your spending habits, and put your on the defensive by requiring you to account for every cent you spend.

What Should You Do?

So, if you find out your partner is financially cheating on you, what should you do about it? In short, open and honest communication is the key. Some useful tips and best practices include:

• Each partner should discuss any significant purchases before those purchases are made. Rather than simply stating the purchase, it is generally helpful to discuss the reason for the purchase.
• Joint bank accounts and credit cards, and joint online account access can help promote openness and financial transparency between partners. Also, when both partners can see each other’s transactions, this can help build trust and minimize the potential for future disputes.
• Identify each partner’s financial responsibilities – who is responsible for buying groceries, paying bills, and making mortgage or rent payments? When it comes to household expenses, it’s generally a good idea to have both partners involved, so that neither is “in the dark” regarding joint living expenses.
• Commit to a regular household financial review – set a regular time and stick to it. For example, you and your partner could agree to set aside an hour at the end of each month to discuss your household finances. This will help keep your family finances on track, and identify any issues early before they become severe.

Take the Quiz

Are you being honest with your partner when it comes to finances? How does your behaviour hold up? Take this quiz to find out: Financial Shades of Grey: What are you hiding from your partner?

Bottom Line

Financial infidelity, like any other form of infidelity, is dishonest, and can ruin an otherwise healthy relationship. On the other hand, being open and honest with your partner can help foster a healthy, stable, long-term relationship.

If you have any other questions about household finances, or about any of our other products and services at ModernAdvisor, just ask us.