Bad money ideas

Slate’s personal finance editor, Helaine Olen, just wrote a fine piece on financial infidelity and what happens on relationships when partners aren’t honest about their finances. Financial infidelity is much more common than you might expect… and shows up in relationships more often than not.

So what is financial infidelity, anyway?

Despite the name, financial infidelity doesn’t have much to do with conventional cheating. Instead, this form of infidelity is all about one partner hiding assets or debts from the other partner… or doing things in secret, like opening credit cards, taking on new loans, or reckless spending.

The spouse doesn’t know that their partner has a secret money life, in many cases, until it’s too late.

Some examples of financial infidelity are spending large sums of money without informing a partner, buying or mortgaging property in secret, lending to family members in secret, borrowing money secretly, or making secret investments without the other person’s consent.

Does financially infidelity matter?

Financial infidelity matters mainly in two cases.

The first is when one partner is diverting money from accounts or funds the spouses share, or when they are putting a shared household in financial danger. This can include everything from hidden gambling debts to reckless spending online, or even secretly embarking on badly planned business ideas.

It also matters when one partner is misrepresenting themselves to the other partner. If a couple has been together for a long time and one partner doesn’t mention excessive credit card debt, student loans or other issues that could be a concern if the partners’ finances merge through marriage or cohabitation…. That could be a big issue as well.

What Slate said about financial infidelity

In the case of Slate, Olen took a question from a reader who was afraid to tell his wife about his stock options. She then used that as an opportunity to both school the reader, and to explain to readers what financial infidelity is.

This part, in particular, stuck out to me:

Do I really need to tell you that holding out financial information from your spouse is a really, really bad idea, even when he or she isn’t particularly good with money? Financial types have a phrase for this sort of stuff—financial infidelity. Instead of two-timing with another person, the unfaithfulness comes by lying about money. And make no mistake, that’s what you are doing by not telling your wife about the opportunity to exercise your stock options. What happens the next time you need to discuss a potentially contentious financial matter with your wife? What will you do then? Hold out financial information from your spouse again? Eventually, she will find something out, because that’s how life works. And rest assured, when she does, you’ll be in big trouble.

Indeed. The worst part is how common financial infidelity is; according to a 2015 survey by Creditcards.com, 6% of Americans have hidden a bank account from a spouse or partner.