If you have never heard the term "Financial Infidelity," it doesn't mean you don't know what it is. In fact, according to a recent creditcards.com survey, 32% of respondents have financially cheated on their partners. Both finances and cheating can be complex subjects to discuss, even with and, sometimes especially with, those closest to you. Not surprisingly, this topic is pertinent to physicians and dentists because they tend to have more money available.
(00:00) Hi, I'm Shane Tenny, managing partner at Spaugh, Dameron Tenny. And, today I want to talk about a really important topic, but also a little uncomfortable one, and that is financial infidelity. Even if you haven't heard the term before, you probably have an idea of what I'm talking about. And in fact, you're probably right. Financial infidelity is really when someone who's in a relationship with combined finances is making secret money decisions.
(00:37) In fact, a recent study has confirmed that about a third of people in relationships admit to making secret money decisions. And almost half of the people surveyed agree that financial infidelity can be as painful and damaging to a relationship as physical cheating. So why are we talking about it today? In hopes that if there are any seeds of financial secrecy in your relationship, you can identify them, you can admit it, and you can begin to weed that garden of your relationship before it gets out of hand. And if you see financial infidelity or the signs of it in a close friend or family member, perhaps you'll be better equipped to help them make decisions to strengthen their relationship instead of destroying it.
(01:34) With that said, let me start at the beginning. Financial infidelity, as I indicated, is really just the process of making secret money decisions. In a relationship where there is the presumption of combined finances, it shows up in a lot of different ways. But one of the key questions is what causes this? Why do people financially keep secrets or financially cheat on each other?
(02:00) And while it's easy to say, well, clearly, they have a money problem, in my opinion, the problem isn't money. The problem, like all forms of cheating, is fundamentally a lack of trust. And in that relationship, the ability to talk about money isn't present. And so, either there is a desire or demand to control money in the way you want to without compromising with your significant other. Or sometimes there's just significant embarrassment over how you make money decisions, and so you keep it a secret.
(02:40) Now, often when we talk about financial infidelity, people assume that it means someone is spending money and buying stuff in an out-of-hand way. And it's true, spending can be a form of financial secrecy, but so can savings. Let me explain a little bit about the difference. You see, some people in their relationships find themselves choosing to spend money without the consent, or discussion, or involvement of their significant other. And this will often show up in a number of different ways.
(03:18) Sometimes, there's just more stuff being purchased or unloaded from the trunk or arriving on the front door stuff than the budget would reasonably allow. Sometimes, there are statements from credit card companies that we didn't know about. Other times, there's just a lot more cash in the wallet or in the purse than seems reasonable given the level of income or the way we handle our bills. And so all of these can be signed that one of the people in the relationship is choosing to get cash back or spend or purchase without really engaging their significant other. But sometimes financial secrecy shows up through savings, and this is often a byproduct of a sense of intellectual curiosity or restlessness.
(04:11) And so, one party will have a desire and a commitment to saving or investing more money than their spouse or partner may want to. Sometimes, what we see is not statements from credit card companies but statements from different investment programs or clubs, perhaps statements from hedge funds or cryptocurrency or private equity funds that we really haven't talked about or understand together. Sometimes, financial infidelity through savings can show up through forgotten or missed bonuses. What I mean by that is there has historically been a pattern of bonuses or true-ups or extra funds that we used for agreed-upon expenses, and now we seem to never talk about those, or they seem to never arrive. Is it because they don't?
(05:10) Or is it because those monies are getting funneled into some sort of secret investment or savings account? In either case, the root cause is secrecy born out of a lack of trust and desire to work together, and it can be really damaging. So, what to do if this is present in your relationship? You probably already know, because I think the remedy is similar to the remedy for any sort of deception or infidelity, and that is honesty. The first step is not just to look at what happened, but why did it happen?
(05:56) And so before you engage in a big, deep conversation, often with tears or anger, it's important to look in your own heart and see why do you feel compelled to act against the involvement or participation of the person who you publicly say is the most important on Earth. That's a really, really important step to take to understand the root causes of the relational dysfunction. With that said, it is important to have a conversation about what happened and why it's been going on, and certainly some level of apology for your complicity in making these decisions. Now, sometimes, the apology and the light of day can help to bring a fresh air to your relationship. But usually, there's some level of breached trust that needs to be repaired, and this can be attempted through forming agreements together.
(07:05) For example, some couples will agree that from now on, neither of us will spend money above a certain level. Or in the case of the savings secrecy, there will be no accounts that are opened in this household that are not in joint name to ensure that we're both involved in what's happening and an attempt to rebuild the trust. Sometimes you'll need a neutral third party, and a friend or a colleague or a financial advisor can participate in neutralizing or diffusing the energy and the hurt that's existed while you work to form new methods of making decisions and certainly counseling or therapy can often be really helpful to not only work through the issues that you have as a couple but also through your own relationship with money and its importance in your life. So, while a difficult topic, it's one to honestly acknowledge and be able to face. Financial infidelity can be extremely destructive in relationships, but hopefully, now that you're thinking about it, you can help avoid this topic in your relationship and move on to brighter times, working together towards your common goals ahead. Thanks, I'll see you back here for the next video soon.
Shane Tenny is the managing partner of Spaugh Dameron Tenny. Along with hosting the Prosperous Doc® podcast, Shane has a true passion for behavioral finance, helping clients and audiences understand how to develop successful strategies based on their unique temperaments. An accomplished and highly engaging speaker, Shane is regularly interviewed for television and podcasts, is actively involved in the Financial Planning Association®, and contributes to industry advisory boards.