While less infamous than its sinister cousin, financial infidelity is a common source of both marital strife and unintended financial damage to a marriage community. This poorly understood phenomenon lurks in the background in as many as 20% of all marriages, making it one of the top subjects of concern for those beginning the process of divorcing their spouse.
There is a reason this form of infidelity is so insidious despite being the underlying cause of any number of problems within a relationship. Thanks to the relative ease of hiding money and other financial information, financial infidelity is often only unearthed deep into the divorce process, when that information is forced out into the open.
To help you identify when financial infidelity is occurring in your relationship, we’ve created a helpful guide on the most common forms we’ve seen during our practice. By identifying early clues, you may be able to stop financial infidelity in its tracks before it causes greater harm to both your relationship and your financial health.
Example #1: Having A Separate, Secret Bank Account
During the entirety of your marriage, you and your spouse have exclusively used Bank of America for your financial needs. The bank’s logo is a common sight while going through your daily pile of mail, and you’ve become accustomed to their weekly requests and offers. Then, suddenly, you notice that you have started intermittently receiving statements from Wells Fargo addressed to your spouse regarding an account you have no knowledge of.
There are a number of perfectly innocent reasons why a spouse may open up an account without consulting you, like putting aside money to buy a surprise gift for you. That being said, while this may not be evidence of any wrongdoing, it is an anomaly that should be investigated. Opening a secret account can be an early warning sign that other, more significant kinds of financial infidelity may be occurring or will be soon.
Example #2 – One Spouse Is Secretly Sending Money To A Trusted 3rd Party
A surprisingly common form of financial infidelity is one party in a marriage secretly siphoning off small amounts of money and sending it to a trusted third party, like their parents. This is often performed by the party who is primarily responsible for paying bills in the relationship, as they know their partner is less likely to look into their financial records.
Example #3 – Credit Cards Secretly Taken Out In Other Spouse’s Name
This is yet another shockingly common phenomenon that we have run into during our practice. During the divorce process, couples must go through what is called ‘discovery’. Discovery involves the full disclosure of all relevant information to the other party in order to facilitate civil action. For divorces, this involves a deep dive into each party’s financial information.
There have been a number of times when we’ve found during discovery that one party had opened at least one credit card using the other’s name without their knowledge. A good preventative measure for this form of financial infidelity is to obtain a regular credit report to ensure that no one is using your social security number and name to open up accounts and new lines of credit without your knowledge.
Example #4 – Hiding Debt
Debt is a terrifying subject, and getting too far into the red or getting saddled with bad debts from shady actors can cause untold damage to a couple’s relationship and financial health. Debts can range from gambling debts to more ‘legitimate forms’, like using an LLC that your spouse owns to take out loans that you may not know about but may nevertheless be personally liable for. Whatever the form of debt may be, taking it on while your spouse is unaware of it is a common form of infidelity.
Example #5 – Lying about income
If a person has a job that brings in irregular forms of income, like bonuses or commissions, they can very easily lie about or obfuscate the real amount of money that they’re making. When their spouse doesn’t know the nature of their work and the amount of extra income it could produce, it’s a simple matter to siphon off that extra money into a hidden account (refer to our first example!).
Why Commit Financial Infidelity?
So why do people commit financial infidelity despite the damage it causes to the relationship and to their spouse?
It may surprise you to learn that the typical reason doesn’t involve malicious intent. From our experience in all our years of mediating divorces, the real reason is usually a fear of confrontation with their spouse or their disapproval in the choices that were made.
This fear of conflict or disapproval causes a broken line of communication between the parties, which can lead to further trouble in the union thanks to negative spirals of guilt and fear of discovery. By arming yourself with the knowledge of what financial infidelity entails, you can quickly head off problems before they arise and reopen that line of communication.