How to Bounce Back From Financial Infidelity

When Katherine’s* husband was laid off, he wanted to take the leap into owning his own business. After talking and crunching the numbers, they agreed that Katherine would continue working full time while her husband pursued his new endeavor, using a recent inheritance and home equity line of credit as a $75,000 safety net, plus his seven months’ severance pay. 

About 10 months later, though, Katherine’s husband asked her to put groceries on her credit card — something they never did — and she got suspicious. After asking some questions, she found out the reason: Her husband’s own credit card was maxed out. The inheritance was gone. The home equity line of credit had been used.  

“I felt worse than betrayed: I felt stupid. Duped. Tricked,” says Katherine, who describes the financial deception as just as damaging to their relationship as a physical affair.  

Like extramarital affairs, financial infidelity is alarmingly common: 42% of respondents to a 2016 poll admitted to a financial indiscretion.  

WHAT IS FINANCIAL INFIDELITY? 

The term refers to any money-related secrets kept from a partner. These can be major, like in Katherine’s case, or smaller omissions, like a credit card your partner doesn’t know about, or hiding the occasional shoe purchase. And it can have serious effects.   

“Financial infidelity is highly damaging in relationships, which are based on teamwork, communication and trust,” says Talia Wagner, a marriage and family therapist based in Los Angeles. “When a partner is dishonest or deceptive about money, it can lead to extreme trust violations and real-life consequences of loss and debt, resulting in separation and even divorce.” 

But financial infidelity doesn’t have to end a relationship. If you or your partner are guilty of hiding a money secret or two, here's how to handle it.  

1. GET IT OUT IN THE OPEN.

Whether you’ve discovered a partner’s secret or want to reveal your own, keep the interaction calm and rational, says Maggie Germano, a financial educator.  

“Don’t throw wild accusations or go into the conversation angry,” she says. “Try to stay calm and allow your partner (or yourself) to explain.” 

2. ACKNOWLEDGE THE SIGNIFICANCE.   

Often, the betrayed spouse might feel guilty for making a big deal out of infidelity that didn’t involve sex or love.  

“I struggled mightily with the ‘it's just money’ concept,” Katherine says. Since her spouse hadn’t physically cheated, she felt she should be able to get over it. “If I was focusing on the money, did that make me materialistic ... someone who only cared about the dollars? I felt disoriented.” 

In order to move forward, both partners need to recognize the impact of the financial lies on their relationship.  

“Money can be representative of deeper emotional needs, where attitudes and behaviors about money are equated with things like love, power or security,” Wagner says.  

3. IDENTIFY THE UNDERLYING CAUSE. 

When Emma’s* husband told her two weeks after the fact that he had agreed to work unpaid at his family’s business, she was livid.  

“I felt betrayed and hurt that he would make a decision of this magnitude without even discussing it with me first,” says Emma.  

However, in couple’s counseling she began to understand that her husband saw the situation differently: He thought by announcing the change he was asking her opinion. In addition, he felt caught between his wife and children (who needed him to have a paying job) and his extended family (who couldn’t afford to pay him). This helped Emma let go of her resentment and allowed the couple to work through the issue.  

Often, financial infidelity is tied to a bigger issue, whether it’s insecurity, an addiction or financial illiteracy. Understanding why one partner was misleading can help the couple address the root cause and avoid repeated behavior in the future, explains Wagner.  

4. ESTABLISH A NEW NORMAL. 

Couples coping with financial infidelity should rebuild their financial relationship from the ground up by talking about their goals and restrictions, advises Germano. 

“Put it all out on the table. If your financial goals differ, how can you compromise? Is there a way that all your goals can work together? Being in agreement means you can be more honest and communicative with each other moving forward.” 

Part of this conversation involves discussing what it will take to rebuild trust. Having a weekly “money date” to look at finances or using a spending tracker might help the betrayed partner feel more confident.  

5. KNOW WHEN IT'S A DEAL BREAKER.   

Unfortunately, some financial slip-ups can’t be recovered from, especially if the behavior doesn’t change. In Katherine’s case, despite couple’s counseling, her husband’s reckless spending continued, and she ultimately decided to file for divorce.  

“Sometimes the only option is to walk away,” Germano says. “If you know you could never trust your partner again, it’s OK to admit that.” 

*name has been changed