Financial Infidelity – How to Spot it and How to Avoid it
A few years ago, just before Valentine’s Day, Credit Canada hosted a social media contest asking Canadians to share their stories of financial infidelity. The responses revealed the diverse and often devastating impact of financial deceit.
“A woman asked me on a date to a very expensive restaurant. She asked me to dinner, so I at least thought we would be going Dutch. She ordered a few bottles of expensive wine. Her meal cost a fortune. Then she got up to go to the bathroom and never came back. She left me with a $500 bill!”
“An ex secretly used my credit card to make online purchases shortly before a breakup. He even used my computer to make the purchases. Because I did not know and he accepted the deliveries and hid the items, I was on the hook for the payments.”
“My ex-husband left me with a lot of debt. He drained the bank accounts and maxed out the credit cards before we separated. It was a hard road to get out of debt, but I am well on my way!”
Understanding Financial Infidelity
“Financial infidelity, simply put, is keeping money secrets from your partner,” explains Sophie Blais, President of WealthCo. “This can occur in ongoing relationships or during separation and divorce.”
Types of Financial Infidelity
Financial infidelity can involve opening secret bank accounts, hiding income or assets, or making financial transactions without a partner’s knowledge. This deceit erodes trust and can have serious consequences for relationships, potentially leading to separation or divorce.
According to Leger’s 2018 Financial Infidelity Report, 36% of respondents had been victims of financial infidelity from a current or former partner. The leading types of financial infidelity include:
Running up a credit card balance without disclosure (14%)
Contributing less than they should based on their income (13%)
Lying about their income (8%)
Making a major purchase without consulting their partner (7%)
The report also indicates that the age group most likely to engage in financial infidelity is 35-44, with neither gender nor household income significantly affecting the likelihood of financial deceit.
Common Signs of Financial Infidelity
“Financial infidelity shouldn’t be mistaken for a couple’s mutual decision to keep their finances separate with clear agreements on managing their financial matters,” Blais points out.
However, several red flags could indicate financial infidelity:
Hiding debts
Excessive spending without consulting a partner
Lying about financial matters
Denying or avoiding conversations about spending
Missing or misplaced important financial documents
Bills or statements redirected to a new address or email
Hiding income or gifts
Doctored statements
Secret shopping or hiding purchases
Irrational behavior or acting out of character
Anything that triggers suspicion warrants further investigation.
How to Avoid Financial Infidelity
“As with most things, an ounce of prevention is worth a pound of cure,” Blais shares. She outlines five proactive steps couples can take to avoid financial infidelity:
1. Communication: Avoid assumptions. Regularly review and discuss finances. Establish a check-in cadence that suits your situation, and work with your financial planner to build a net worth statement both partners understand.
2. Education: Don’t leave financial management to one spouse. Both partners should access and be involved with all financial accounts and understand the financial situation.
3. Cooperation: Work as a team. If money is tight or unexpected expenses arise, collaborate to adjust and positively impact your finances.
4. Support: If you suspect or struggle with financial infidelity, seek help. Consider counseling and engage your accountant and trusted advisors.
5. Pay Attention: Diligently review documents before signing and take an interest in your family’s financial health.
The Bottom Line
Ensuring proper financial health as a couple or family requires working with your financial planner to align all parties towards the same goals. If you think your relationship could benefit from a financial plan review, reach out to your Integrated Advisory team today!
About Sophie Blais
As President, Sophie Blais drives WealthCo’s ‘WOW’ client experience, ensuring our CPA partner firms receive best-in-class service at every level. Sophie provides inspired leadership and sound management, establishing credibility and promoting an entrepreneurial team culture. She embodies WealthCo’s core values of respect, teamwork, leadership, accountability, and passion.
The Integrated Advisory Community consists of a network of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help clients reach their goals.