Financial infidelity is the act of hiding financial information, engaging in secret financial transactions, or lying about money-related matters within a relationship.
In this post, we’ll cover everything you need to know and explore some real stories from real couples.
What Financial Infidelity Looks Like
Here are some common forms financial infidelity can take:
- Secret Bank Accounts: This involves opening and maintaining bank accounts without the partner’s knowledge, often used to store or spend money secretly.
- Hidden Debts: Partners may accumulate debts without disclosure, including credit card balances, personal loans, or even mortgages.
- Intentional Undisclosed Spending: This ranges from small, frequent purchases to large, one-time expenses made without informing the partner. It often involves using shared funds or individual income for discretionary spending on hobbies, luxuries, or vices.
- Lying About Income: Some individuals may understate or overstate their income to their partner, either to avoid sharing more money or to appear more financially stable. This can create imbalances in household financial contributions.
- Hiding Financial Documents: Concealing bank statements, credit card bills, or other financial records is another form of financial infidelity.
- Misusing Shared Accounts: Using joint accounts or credit cards for personal expenses without agreement, or withdrawing large sums from shared savings without discussion.
A real example of financial infidelity (from my podcast)
Both in their forties, Lisa and Jeff have a blended household. They have a $300k net worth, and were recently awarded a $1.275M settlement, an amount that would be transformative for almost any household.
However, rather than uniting the couple in shared excitement, this windfall reveals underlying tensions. Jeff’s admission that he views “her money as her money, and my money as my money” is the first sign that they’re not completely aligned with how they manage their finances.
Lisa: [00:03:00] I was doing well. He was doing well. We were high earners. We didn’t have too many financial problems. And in January of this year, roughly six months ago, I was awarded a seven-figure settlement. And it’s obviously life-changing for anyone to come into seven figures.
Ramit Sethi: [00:03:25] Can you tell me how much it was for?
Lisa: [00:03:27] Yes. So specifically, it was $1.275 million.
Ramit Sethi: [00:03:34] Okay, great. Let’s call it 1.3million. Is that post-tax?
Jeff: [00:03:38] Yeah.
Lisa: [00:03:38] Yes.
Jeff: [00:03:39] Our collective income before this happened was about 150k a year.
Ramit Sethi: [00:03:46] Before this came in, what was your net worth?
Lisa: [00:03:52] It was around 300K.
Ramit Sethi: [00:03:58] Okay. And that’s yours or the two of you?
Lisa: [00:04:01] Anything that we have now is what we’ve built together.
Jeff: [00:04:07] I’ve always counted her money as her money and my money as my money.
Ramit Sethi: [00:04:11] I think that’s a cute phrase, but I actually don’t think that’s doing you any favors.
Lisa: [00:04:17] And it’s the same with the settlement. And I find it really grates on me that he’s like, that’s your money. That’s your money. That’s your money. And I’m like, no, it isn’t. It’s ours.
This joke is quite revealing of Jeff’s overall mindset on money, and it really bothers Lisa. This highlights how a sudden influx of money, instead of solving problems, can sometimes amplify existing ones if not handled with open communication and mutual understanding.
Subsequently, Jeff admits to using avoidance as a strategy to deal with money discussions, leaving Lisa to handle the burden alone.
This pattern of behavior is not just about money; it speaks to a broader communication breakdown in their marriage. Lisa’s feelings of loneliness and the lack of support she experiences in managing their finances are significant because they reveal how unbalanced their partnership has become.
This imbalance is particularly poignant because, despite the financial windfall, Lisa feels isolated in her efforts to secure their financial future. The emotional weight she carries is substantial, and it underscores the importance of both partners being involved in financial decisions, not just one.
Lisa: [00:10:18] I will try to bring something up and he will aggressively tell me no. And he will shut me down and turn away. And I will be like, okay.
Jeff: [00:10:30] I don’t know if I agree with that.
Lisa: [00:10:31] It is totally true.
Jeff: [00:10:31] I usually make jokes. I usually tell you, hey, whatever you want goes.
Ramit Sethi: [00:10:35] This is a common thing with couples. So here’s how it works. I’m just going to break it down. One person, usually the person who likes to be in control and is checking all the apps every day, they see something. And they stew over it for hours, days, sometimes weeks. And then something sets them off. And it’s like this controlled fury. It could be, I love you, and I care about you, but if you answer this question wrong, I am going to murder you. I’m going to cut your neck and you’re going to bleed out here on the bathroom floor. It’s right between those two. You can’t really tell. They go, so what’s this purchase? Like that. It’s like a tiger just making one little sound. Jeff, anything sound familiar?
Jeff: [00:11:26] Yes, it’s funny you said that because she does that. And I immediately assume the knife is coming. And the knife never comes because she doesn’t do the knife.
Ramit Sethi: [00:11:33] That’s correct. That’s correct she doesn’t do the knife. And so you overreact, don’t you?
Jeff: [00:11:39] Yes.
Ramit Sethi: [00:11:40] You come out guns blazing and you use all your unconscious and conscious techniques– diversion, haha jokes, and also just over the top aggressiveness, and then you get what you want, don’t you? Which is what?
Jeff: [00:11:54] I get out of that conversation as fast as I can.
Ramit Sethi: [00:11:56] That’s correct. You escape. So you still remain the pursuee. Lisa, you’re the pursuer but you walk away steaming, frustrated. And that’s it. You take it on yourself. Not very productive. Pretty interesting. I liked that Jeff is being honest, maybe a little too honest. Jeff is admitting to everything, which is in itself a technique.
As we continue talking, we run into the seemingly trivial matter of Jeff buying running shoes on a line of credit – which might appear insignificant at first glance, but it unpacks much deeper issues.
This incident is emblematic of Jeff’s approach to finances—an approach characterized by avoidance, secrecy, and a lack of communication with Lisa.
The fact that Jeff hides even small purchases like shoes speaks volumes about his discomfort with financial discussions and his desire to sidestep responsibility. This behavior is problematic because it erodes trust in their marriage. It’s not about the $149 shoes; it’s about the patterns of behavior that such actions reveal. Jeff’s admission that he pushes financial problems to “later” shows a lack of foresight and an avoidance of the necessary, sometimes difficult, conversations that need to happen in any healthy relationship.
Jeff: [00:21:01] This is tough to admit, but let’s be honest. I hide purchases from her and that’s how she found out about these credit cards. And it’s for the sole purpose that I don’t really have to discuss the purchase with her. I don’t have to, in my mind, get permission. And also in my mind, I’m pushing the problem to later.
And ultimately, in my head, I think I’m going to pay it off before she even really knows about it. But that doesn’t really ever happen. So ultimately, I just have to have a little bit of a come up and I go, yeah, I did this. Sorry, I should have told you. But I do feel a little bit of guilt about it because there’s a mild sense of hiding, of lying, even though I’m not lying necessarily. I’ll tell her what I did later. But it’d be better to be honest and truthful about it.
Ramit Sethi: [00:21:52] When you say you’ll tell her later, is that because she finds out about the purchase and then asks you?
Jeff: [00:21:58] Yeah, I mean, the shoe showed up. The shoes show up and I put them on. And she goes, where did those come from? And I tell her, yeah, hey, I bought some shoes.
Lisa: [00:22:09] I don’t recognize that I didn’t charge and I’ll say what was that for? And that will frustrate him, being asked about the purchase.
Ramit Sethi: [00:22:18] And so as a result, how do you approach money in your relationship now?
Lisa: [00:22:23] So I don’t want to start any conflict. And as Jeff very well knows, I’m averse to conflict, so I will avoid it. If it’s potentially something I have a problem with, it would have to be a pretty big problem for me to bring it up. I would just let it go and deal with it financially on my own, in my own mind and in our financial plan to make plans to pay it off. He has this attitude about money where he’ll be like, ‘it’s just money, I’ll make more. And again, it’s not in a reckless sense. He’s actually pretty frugal. So this discovery paints him in a less frugal light, when he’s actually super frugal.
Lisa and Jeff have a lot to work through to break their old habits. In the rest of the conversation, I help Jeff address his childhood trauma around money and guide Lisa in overcoming her tendency to avoid confrontation, both of which are rooted in their upbringing. Listen to the episode to see how we tackle these issues.
Signs of Financial Infidelity
Financial infidelity often shows up as various signs that can be observed in behavior, financial activities, and emotional interactions. Here are some examples:
Behavioral Changes
Increased secrecy and defensive behavior are an initial common sign. A partner may become unusually protective of their phone or computer, quickly changing screens when you approach. They might also react defensively or angrily when questioned about financial matters, even if the inquiry seems innocent.
Financial Red Flags
Unexplained withdrawals from joint accounts or missing financial statements are clear warning signs. You might notice unfamiliar transactions on bank or credit card statements, or discover that certain statements are no longer arriving at your shared address. Sudden changes in spending patterns or lifestyle without a clear reason for the shift can also indicate hidden financial activities.
Emotional Indicators
An increase in money-related arguments is often a sign that something is amiss in a couple’s financial relationship. These conflicts may happen more often and with greater intensity than before. Additionally, you might notice a general reluctance to discuss money matters or long-term financial planning, which could suggest your partner is hiding something.
Other signs to be aware of:
- A partner insisting on handling all financial matters alone, excluding you from the process.
- Sudden changes in password protection for financial accounts or devices.
- Finding receipts for purchases you were unaware of.
- Receiving calls from unknown creditors or collection agencies.
- Unexplained increases in working hours or frequent “overtime” that doesn’t reflect in paycheck amounts.
Recognizing these signs early can help address potential financial infidelity before it significantly impacts the relationship. However, it’s important to approach the situation with open communication rather than accusations, as some of these signs could have innocent explanations.
Causes of Financial Infidelity
Here are a few possible reasons why people commit financial infidelity, but note that reasons often overlap because money is a complex topic for people:
Personal Reasons:
- Fear of judgment or disapproval might lead someone to conceal a job loss or failed investment.
- Guilt over excessive spending or poor financial decisions can result in attempts to hide the evidence.
- Shame about one’s financial situation, such as low income or high debt, may cause a person to lie or withhold information to maintain a certain image.
Unhealthy Relationship Dynamics:
- Power imbalances within a relationship can contribute to financial infidelity. If one partner feels financially controlled or manipulated, they might resort to secret accounts or hidden spending as a way to regain some autonomy.
- Poor communication about money matters can also lead to misunderstandings and secretive behavior.
- Couples who avoid discussing finances openly may find it easier to hide financial activities rather than face potentially difficult conversations.
External Factors:
- Economic stress can push individuals towards financial infidelity as a coping mechanism. Job loss, unexpected expenses, or general financial instability might lead someone to hide the true extent of their financial struggles from their partner.
- Societal pressures, such as the expectation to maintain a certain lifestyle or keep up with peers, can also drive people to engage in secret spending or accumulate hidden debt to meet these perceived standards.
Additional causes may include:
- Differing financial values or goals between partners.
- Addiction issues, such as gambling or shopping addictions.
- Cultural or familial influences on attitudes towards money and financial transparency.
- Past experiences with financial abuse or control in previous relationships.
While knowing the causes doesn’t justify the wrongdoing, it helps to recognize the underlying causes to address the financial infidelity effectively.
Consequences of Financial Infidelity
Hidden spending or undisclosed debts can seriously drain shared savings and emergency funds, leaving couples vulnerable when financial emergencies strike. Not only that, but these hidden debts can also damage credit scores, making it tough to get approved for loans when it’s time to buy a car or home.
But the fallout isn’t just financial – emotional distress is another major consequence. When one partner hides financial information, it can lead to heightened stress, anxiety, anger, and deep feelings of hurt and betrayal. The partner who feels wronged may start to feel like they’ve lost their financial independence and might feel the need to closely monitor every financial move. On the other side, the partner who hid the debt might struggle with intense guilt and shame. This emotional turmoil often spills over into other parts of life, affecting work, physical health, and relationships with friends and family.
Perhaps the most significant emotional impact is the loss of trust. Even if a couple decides to reconcile, trust can be hard to rebuild. The betrayed partner may find themselves questioning their partner’s honesty in all areas, not just finances. Financial infidelity can feel as damaging as emotional or physical infidelity and can seriously shake the foundation of a marriage. When children are involved, the damage can extend to the entire family. Kids who grow up in an environment tainted by financial infidelity can develop unhealthy attitudes towards money that follow them into adulthood.
This prolonged emotional distress, coupled with the financial instability caused by the guilty partner, can push many couples toward divorce. Divorce brings its own set of challenges, with legal considerations that vary by state, particularly regarding financial infidelity. Decisions around dividing assets and determining alimony can become much more complicated. But ending the marriage doesn’t necessarily solve everything – those who have experienced financial infidelity often carry emotional scars into future relationships, making it difficult to trust new partners.
Another real example:
David and Halima have been married for a year (this is their second marriage for both). They suffer from deep emotional (and financial) scars from their past relationships that affect their ability to cooperate and lead to ill conceived get-rich-quick schemes and mounting debt.
Halima’s first marriage ended because of financial infidelity. She got a knock on the door. It was the owner of the house with the sheriff, evicting her. She lost everything except for her children.
They initially came on my podcast because David wanted to know if he could retire early. But when I started to peel the layers of their finances, I was truly shocked. And not just once, multiple times.
In this conversation, you’re going to hear the ways that both of them treat money. We’re going to delve into their past to try to understand their behavior, and you are going to hear a lot of puzzling explanations today. My goal for you is to help you try to understand why people act the way they do with money.
Recovering from Financial Infidelity
If you’re looking to repair your relationship after discovering financial infidelity, here’s where you might want to start:
Understand you’re not alone
There’s a lot of fear and shame around money, which often contributes to financial infidelity. Society’s taboos about discussing finances openly can make it difficult for couples to address money issues honestly. This widespread discomfort with financial conversations can lead to secrecy and, ultimately, financial infidelity.
You might feel your situation is a uniquely terrible problem, but it’s important to realize that many others have faced similar challenges. Financial infidelity is more common than many people realize, occurring in various forms and degrees across different types of relationships.
I’ve talked to many couples about money on my podcast, and I’ll share two examples at the end of this post where financial infidelity came up. These real-life stories will illustrate how financial infidelity impacted their relationship, how they dealt with it, and the steps they took to rebuild trust and financial harmony.
Understanding that you’re not alone in facing financial infidelity can provide a sense of relief and hope. It can also encourage you to seek help, whether through counseling, or by learning from the experiences of others who have successfully overcome similar challenges.
Change your money dynamic
If your spouse committed financial infidelity, it’s likely that you feel like you’re more of the ‘money’ person in the relationship.
Unlike washing the dishes, money cannot be delegated to one person, because money cuts across everything: where you live, what you eat, what you do for fun, even who you are. Managing money is less like shopping for groceries and more like parenting. You rarely hear of just one of two partners “doing the parenting thing”—nor should there be one partner “handling the money.”
This is foundational: Both partners must be involved in the family finances. When you internalize the importance of both partners having financial skin in the game, you’ll start to understand why so many couples report the same fights:
- “The minute I walk in the door, he asks how much I spent at Target.”
- “She constantly looks at the credit card bill and says I spent too much going out with my friends.”
- “He tells me to cut our grocery bills, but he has no idea how much I’ve already cut to the bone.”
If one person is “the money person,” you’ll never build a true team that works together on creating a Rich Life. People will go decades arguing over petty expenses, never realizing that the real problem is that one person is in charge of money. It would be like thinking you hate cooking for 20 years, only to realize that you have a poorly lit kitchen with bad ventilation and rusty knives. Now that we know what’s actually wrong, we can fix it and move on. What a relief!
Naturally, one person might have more of a knack for money. We see this in all important aspects of life—in parenting, in planning travel, in maintaining family relationships. But both partners have to care about money, because it affects every part of your lives. Both have to talk about finances regularly, build a system together, and evolve it over time.
If you don’t create a vision together and make decisions as a team, it’s easy to fixate on meaningless minutiae like spending on coffee or snacks, or issues I call $3 questions. We should spend more time asking $30,000 questions instead, like:
- Setting up automatic investments (potential upside: $250,000)
- Minimizing investment fees ($50,000+)
- Creating a debt-payoff plan ($50,000)
A simple way to change your money dynamic is to change the way the both of you think about money. It starts by intentionally choosing a different language—even if the conversation is only inside your head. Here are a few ways to quickly reframe how to think about money as a couple:
Instead of: “We can’t afford it.”
Use this: “We can’t afford it yet, but we’re building a plan to save for it.”
Instead of: “That’s for rich people, not for people like us.”
Use this: “I didn’t grow up doing that, but if we want to, we can plan for it.” (Unless it’s something outrageously expensive like buying a private jet, in which case try this: “That’s a nice plane, but I’d rather take a family vacation together.”)
Instead of: “I would never pay for this.”
Use this: “In the past, I would never have paid for this, but I’m starting to understand why some people would.”
Instead of: “Must be nice to spend that much. We can barely afford . . .”
Use this: “We choose what’s important for our Rich Life, and other people choose what’s important for them.”
Understand your money psychology
Recovering effectively from financial infidelity requires both you and your partner to dive deeper into your money psychology. This will help the both of you understand the underlying causes of financial dishonesty and work towards preventing them from happening again.
Go deeper and try to understand the causes of financial infidelity in your relationship. These might stem from childhood experiences with money, learned behaviors from family or society, or personal insecurities. For example, someone who grew up in a household where money was always tight might develop a scarcity mindset, leading to secret hoarding of funds. Alternatively, a person raised in a family that equated spending with love might engage in hidden purchases to feel valued.
Identify your invisible scripts – the unwritten rules and beliefs that guide your financial behavior without you even realizing it. Here are some of the most common invisible scripts about love and money that I hear from couples:
- “Talking about money is unromantic.”
- “It’s normal to fight about money. Money is stressful.”
- “He just isn’t a money person.”
- “I make it; she spends it!”
- “I don’t need much, but it seems like they’re always spending on something. Like, do we really need another toy for the kids?”
- “Rich Life? We’re just trying to pay our bills.”
- “We’ll probably have our debt until the day we die.”
What invisible scripts around money do you have in your relationship? Does your partner follow the same invisible scripts? What would it take to rewrite those scripts?
In my new book, Money for Couples, I’ll walk you through a 10-step program to address the common money issues in relationships: how to stop fighting over money; how to get both partners to participate in the finances; how to handle the situation when one partner is a saver and the other a spender; and how to take control of too much debt.
Stop fighting about money for good
In millions of homes across the country, we’re having the same fights about money. One partner feels anxious, the other buries their head in the sand to avoid talking about it. One agonizes over the budget, the other spends on whatever they want. We avoid discussing finances, we tiptoe around difficult conversations, and in the process, we allow money to drive a wedge between us.
What if talking about money felt good? In my new book, Money for Couples:
- You’ll learn exactly what to say when talking about money, even if your partner resists talking about money.
- You’ll get the steps to create a joint vision of your Rich Life—one that fits you as an individual and as a couple.
- You’ll learn how your past affects the way you feel about money, and how to change your story to one that feels positive and future oriented
- And much, much more.
