Many of us are well aware of the emotional strain caused by infidelity in a relationship, but not as many are aware of the emotional strain caused by financial infidelity. However, this seems to be a growing problem in the United States. The National Foundation for Financial Education® (NEFE®) conducted a poll in early 2016, digging into the details of the presence of financial infidelity in households across the nation. “Among U.S. adults, 42 percent admit to financial infidelity compared to 33 percent just two years ago. The survey also finds that when financial deceptions occur, 75 percent say there is an effect on the relationship.” (Source)
You may be asking yourself, “What exactly qualifies as financial infidelity?” Financial infidelity has been defined as “…the secretive act of spending money, possessing credit and credit cards, holding secret accounts or stashes of money, borrowing money, or otherwise incurring debt unknown or unwilling to one’s spouse, partner, or significant other. Financial infidelity in a relationship may also include any financial decision(s) made by a partner that may effect, burden, strain or set back the financial planning of the relationship.” (Source)
So what’s the big deal? From a relationship standpoint, the lack of transparency can cause distrust between partners. From a financial planning standpoint, one partner can quickly derail the couple’s financial plans. The implications could be as simple as increasing credit card debt or as complicated as delaying retirement or facing bankruptcy.
It’s common and healthy for couples to have a dollar value threshold to spend without the other person’s consent. According to AmEx, the average threshold at which couples agree to consult with their partner is on purchases above $275. However, issues can arise when one person is withholding information above and beyond the previously agreed-upon terms.
Why is this happening? According to the same NEFE® poll, among those who committed one of the listed financial deceptions in current or past relationships, 55 percent said they had tried to discuss finances and received disapproval from their partner or were embarrassed or fearful about their finances and didn’t want their partner to find out. These responses offer a big step towards answering the question “Why?”.
To help avoid these potential pitfalls, we suggest having a continuous open and honest conversation about finances in your partnership. We would be happy to help you and your partner establish and work toward your long-term financial goals together. Please call Sharkey, Howes & Javer at 303-639-5100 to schedule a complimentary consultation with a Certified Financial Planner®.