Money is an uncomfortable topic for many people, but it’s an important ongoing conversation to have in your relationships. Financial secrecy undermines trust. And for many, it may even feel like a betrayal.
More than two in five U.S. adults (43%) think keeping financial secrets is at least as bad as physical infidelity. At the same time, nearly half (45%) of Americans in a committed relationship (defined in this study as marriage, cohabitation, or civil partnership) admit that they don’t know everything about their spouse or partner’s finances.
These findings aren’t surprising to Rhonda Nordijk, a certified divorce financial analyst and CEO of the Women’s Financial Wellness Center.
“For the most part, people don’t sit around and sing Kumbaya thinking about money,” she says.
While it may be common not to discuss all your credit card transactions, bigger secrets can affect your relationships and your life. According to the same study, nearly one in ten Americans (9%) in a committed relationship keep their debts, expenses, and major sources of income secret from their partner. In his practice, Mr. Nordijk has seen people secretly draw down home equity, reveal their true circumstances on credit card statements, and spouses use financial secrecy as a means of power and control.
Learn what financial secrets people tend to keep and why they do it.
38% think financial infidelity is just as bad as physical cheating
Almost two in five Americans (38%) think financial infidelity is just as bad as physical cheating, and 5% think it’s worse.
Nordijk says this is due to the “trust factor.” When someone realizes that their lover is hiding financial secrets, they may begin to doubt their partner’s honesty in other areas of the relationship.
Additionally, certain secrets may be harmless, while others are downright toxic.
Nordijk remembers participating in a mediation with a client who was considering divorce. During negotiations, the topic of life insurance and retirement benefits came up, and it turned out that her husband had changed the beneficiary of his life insurance. Throughout their 20-year marriage, the wife considered herself the beneficiary and was completely unaware that this had changed.
The client asked Ms. Nordijk what would have happened if her husband had died. She responded that all that money was supposed to go directly to the people he named as beneficiaries. My wife would have gotten nothing.
“And I just remember the look on her face,” Nordijk says. “It was like being punched in the stomach.”
Almost half of Americans don’t know everything about their spouse or partner’s finances
Most Americans in a committed relationship (55%) believe they know everything about their partner’s finances, but nearly half (45%) believe they don’t.
What isn’t shared isn’t necessarily a big secret. One in four (25%) say they keep only a small number of sources of their debt, expenses or income secret. And about one in ten (11%) say they don’t talk about their credit score, credit history, or sources of savings or investments. However, around one in ten (9%) say they keep secret what they consider to be their main sources of debt, expenses and income.
Ms. Nordijk, who works primarily with women, said her clients often say they wish they had been more involved in their partner’s or spouse’s finances and knew what was going on.
“They wish they had asked more questions,” she says.
In one divorce case she handled, the husband tried to control his wife by not providing her with any cash and limiting her monthly credit card usage. He made her an authorized user so he had full visibility into her spending, but did not reveal his own spending. She did not have access to the statement.
“I think it comes down to power and control,” Nordijk says. “There’s an element of entitlement… there’s a desire to have power, and money is a great tool for them.”
Among people who don’t share financial information with their spouse or partner, more than one in four (28%) say they should be allowed to keep some information to themselves. Additionally, 15% said they “don’t want the other person to know,” and 14% said they would be embarrassed if the other person found out. However, most (43%) think their spouse or partner won’t care if they are told.
Most baby boomer couples say they know everything about each other’s finances.
The survey data also reveals differences between generations. In other words, baby boomers are more likely to say they know everything about their spouse or partner’s finances. By comparison, 64% of Boomers (ages 62 to 80) in committed relationships say they know everything about each other’s finances. In contrast, 53% of Millennials (ages 30-45), 51% of Gen
Nordijk hypothesizes that this generational disparity is not because younger people are more likely to be secretive about their money.
“I don’t know necessarily if they’re actually keeping secrets or if it’s just the nature of how they handle their finances,” she says.
Young couples are more likely to keep their household finances separate, Nordijk explains. This naturally results in less access to your spouse or partner’s information.
How to protect yourself from financial infidelity
You don’t need to be aware of every little transaction on your lover’s credit card statement to create awareness and honesty about your shared finances. Here’s how to achieve it:
identify common goals
“This conversation is not about complete transparency, but about identifying what their common goals are,” Nordijk said.
Talk with your spouse or partner about your long-term and short-term financial goals and how you can work together to achieve them.
Create a safe space for questions
Noordyk recommends finding a way to set up financial information for both parties. Additionally, “there has to be an opportunity for them to ask questions without being fired.”
Stay alert
While you protect your relationship from financial secrecy, try to protect yourself as well. Even if you haven’t fully integrated your finances, there are always risks involved in merging your money with someone else’s.
Nordijk recommends:
- monitor your credit. That way, you can find out if an account has been opened in your name without your knowledge.
- Considering a joint credit card. Co-ownership of an account, as opposed to being an authorized user, gives you complete transparency. However, keep in mind that very few issuers offer joint credit cards. Additionally, both cardholders are responsible for any debts on such cards.
- Make sure your name is on important purchases. cars, houses, etc. This gives you some protection even if the relationship ends.