Discovering financial infidelity can be devastating.
In this post, I’ll walk you through some immediate steps to take, along with longer term actions you can consider for your own safety and wellbeing.
Immediate Steps to Take
When you first discover financial infidelity, it’s easy to react emotionally. Before you blow up, take a moment to gather your thoughts and think about your next steps. This will help you handle the situation more effectively.
Stay Calm
I know, it’s easier said than done, right? Discovering that your partner has been hiding money matters can make your blood boil. But before you let the anger take over, take a deep breath and give yourself a moment. Reacting in the heat of the moment could make things worse.
Gather Evidence
Before confronting your partner, make sure you have your facts straight. Look for more evidence—like missing statements, unexplained withdrawals, or suspicious behavior. Knowing exactly what you’re dealing with will help you keep your cool when you bring it up.
Reflect on the Signs
Think back to any recent changes. Has your partner been acting shady lately? Are they getting defensive when you ask simple questions about your finances? Have there been more arguments about money? These could be clues that something isn’t right.
- Behavioral Changes: More secrecy, defensiveness, or reluctance to discuss money.
- Financial Red Flags: Strange withdrawals, hidden bank accounts, or missing financial statements.
- Emotional Indicators: More frequent money-related arguments or a shift in how they respond to questions about finances.
Consider Your Safety
If you think there’s a chance of violence or abuse, your safety has to come first. Get out of the house if you need to, and secure your personal finances. Don’t hesitate to seek legal advice tailored to your situation.
Confronting Your Partner
Having that conversation with your partner about financial infidelity is tough, but it’s necessary. Here’s how to approach it:
Approach with Understanding, Not Accusation
Instead of starting with accusations, try to come from a place of wanting to understand what happened. This can help keep your partner from getting defensive and might lead to a more productive conversation.
Present Your Evidence
When you do bring it up, have your evidence ready. Be clear about what you’ve found. This shows you’re serious and can keep your partner from brushing off your concerns.
Find Out the Motive and Extent
Ask how long this has been going on and why it started. Understanding their motives can help you figure out if this is something you can work through together or if it’s time to go your separate ways.
Recognize This as a Pivotal Moment
These conversations can be make-or-break. They can bring underlying issues to the surface and provide a chance to address them, which could strengthen your relationship in the long run.
Deciding Next Steps for Yourself
After confronting your partner, you need to decide what to do next. Usually, this boils down to two choices: moving forward with divorce or trying to reconcile.
Option 1: Divorce
If the trust is beyond repair and the damage is too great, divorce might be the best option. Protecting yourself financially and legally will be crucial.
Ensure Your Safety
Your safety is the number one priority. If there’s any risk of abuse or violence, focus on getting yourself to a safe place. Reach out to local shelters, hotlines, and legal services for support and protection.
Secure Your Finances
Start by setting up individual bank accounts and ensuring your income goes into them. Keep a close eye on any joint accounts for unusual activity. You need to protect yourself from any further financial fallout.
Protect Personal Information
Change your passwords on all financial accounts and online banking. Make sure your sensitive financial documents are secure and out of reach.
Consult a Divorce Attorney
A good divorce attorney can help you understand your rights and make sure your interests are protected. If there’s a risk of harm, they can assist in getting protection orders.
Consider Hiring a Forensic Accountant
If there are hidden assets or complicated financial issues, a forensic accountant can be your best friend. They can dig into the details and uncover any financial shenanigans, which is crucial for a fair settlement.
Option 2: Reconciliation
If you think there’s a chance to save the relationship and you both want to make it work, reconciliation could be the path forward.
Commit to Trust and Transparency
Honesty is the foundation of rebuilding trust. Both partners need to commit to being open about finances and ensuring there’s full disclosure going forward.
Seek Professional Help
Sometimes you can’t do it alone. Therapy—both individual and couples counseling—can help you understand the root of the issues and work towards rebuilding a healthier relationship.
Reassess Financial Roles
Look at how you both handle finances and make changes if necessary. Involving both partners in financial decisions can help prevent future problems.
Three Real Examples Of Divorce After Financial Infidelity
Financial infidelity comes in many forms, and not all lead to divorce. But I want to show you these two examples because they highlight the stakes if financial infidelity is left unchecked.
“I lost everything except for my children”
In Halima’s first marriage, her husband’s secretive money habits led to a financial disaster. She ended up being evicted and losing everything—except for her children:
Halima: [00:23:05] I lost everything except for my children.
Ramit Sethi: [00:23:09] Do you mind telling me a little bit of what happened?
Halima: [00:23:11] No, I don’t mind. With my first marriage, I divorced my ex-husband because of financial infidelity.
Ramit Sethi: [00:23:22] What happened?
Halima: [00:23:24] We were going under, and I didn’t know. He was a high school teacher, and I had a great job, and I got pregnant with my firstborn and decided that I wanted to be a housewife and have babies, raise children. And that the man of the house was going to work. And my ex-husband was in banking. He was in finance. And to me, I feel like if you’re dealing with money, you know everything about money.
Ramit Sethi: [00:24:07] Ah.
Halima: [00:24:08] Yeah, yeah. The house that we purchased when I was working, we were going into foreclosure. He was responsible for all the bills, and I trusted him with that as any good wife. In the beginning, I was married to my ex for about 10 years, 12 years total, being together with him. So I trusted him, and I loved him.
The house was being sold because I thought that—I was pregnant with my second now. They’re only 16 months apart, and we needed to upgrade. We were living in a really small 1,200 square foot home, so we wanted to upgrade and buy something bigger and better. So for about six months while we were—we sold the house, but it was actually foreclosed. The bank took it.
Ramit Sethi: [00:25:10] You didn’t know this?
Halima: [00:25:11] I didn’t know this. I didn’t know this.
Ramit Sethi: [00:25:13] Wow.
Halima: [00:25:13] We ended up renting a house. And while we were renting this house and sold our home, with that money, we were going to buy something bigger. So for about six months, I became really, really good friends with the real estate agent that we were working with because my Saturdays and Sundays would be going to look at homes with him. Even weekdays, we’d look at homes. So it was this grand plan for him to drag things on because he knew that once I found out, I was going to leave him.
And it ended the day after Halloween, on November 1st, 2019. We got a knock on the door. It was the owner of the house with the sheriff, another cop, evicting us. My son, at the time, was about 18 months old. My daughter was a little bit older. They were both in diapers, and I still have the hamper that’s downstairs that I was able to fill in with whatever I could. And that’s how I left the house.
And my whole foundation, my whole world came crashing down. Long story short, he left the country because there was really nowhere else for him to go. Nobody trusted him anymore. He was borrowing money left and right. Nobody believed him anymore. And he left me with the two babies.
You can see how much Halima is still haunted by her ex-husband’s financial betrayal. It didn’t just end her first marriage; it casts a long shadow over her current marriage with David, making trust a tricky thing.
“When I wanted a divorce, she threatened to kill me”
David’s story isn’t any less painful. His first marriage fell apart due to his ex-wife’s reckless spending and violent behavior. She was materialistic and refused to support his efforts to get their finances under control. Things got so bad that when David finally decided to leave, she threatened his life, forcing him to call the police. That was the breaking point, leading David to end the marriage for good.
Ramit Sethi: [00:12:03] Jeez. What was the second time you hit rock bottom?
David: [00:12:07] After my first divorce. Well, my only divorce because that’s not happening again.
Ramit Sethi: [00:12:15] Do you mind sharing what happened?
David: [00:12:18] So my ex-wife, she liked to spend a lot. She was very materialistic. She grew up with her mom not working, so she didn’t want to work. She had a job. And then while we were on our honeymoon, she got laid off. It was literally right in the middle of the honeymoon. She got a message from her supervisor saying that the company was bought off, and she’s not going to be with the company anymore when she comes back.
Ramit Sethi: [00:12:52] Oh my God.
David: [00:12:53] And after that, she didn’t have a job. She was physically violent towards me because I wouldn’t listen to her. She would tell me not to do overtime, but I’m like, how are we going to pay bills? Yeah, that dragged on for three years. And the point where I was just like, I can’t do this anymore, I have to get divorced, is when she literally threatened to kill me. I had to get the police involved and everything.
Ramit Sethi: [00:13:27] Okay. Wow. Well, I’m sorry you had to go through that. That is tough, devastating. Nobody should have to go through that. And now I think I understand a little bit more about why you said you feel rich. Because you don’t have the things that you had in the past from 22 on.
David: [00:13:51] Right.
Ramit Sethi: [00:13:51] Thank you for walking me through it. I really appreciate it.
“I just learned he took out a secret $100,000 loan—two years ago”
Jan and Emily are in their thirties and recently bought a house. During the sales process, Emily discovered a $100k loan that Jan had taken out without her knowledge. To make matters worse, Jan admits he didn’t really have a plan on how to use this money to benefit their lives. Emily is the higher earner and lets Jan manage their money, adding to the feeling of betrayal that she keeps buried under a calm exterior.
Jan: Together we got the loan, and then at some point, I received an extension to increase that loan. Initially, I just applied for a small amount, just thinking this would be a good backup or an emergency fund scenario. And then when I got approved, I got approved for the entire loan amount, which was way more than I was honestly looking for.
And then I sat with a couple of days and then I was just thinking that this would help me redirect my career. I was just hoping that that would be able to get me back on track. I was thinking, “Okay, cool. I can use this to start some kind of a small business or use it to generate some income for the lifestyle that both Emily and I want.” And then I took it and then I didn’t tell Emily about it, and then it just became this snowball that I became ashamed of.
Emily: I found out we were already under contract and our lender was requesting some information about this small business loan. Again, when we took it out, it was at the beginning of COVID. Jan had lost his job, which we knew we’d be set up for the whole year. We were aware that we were set. And so when he lost his job, it was all on me. And I had just started a new job, which is all commission based. So we knew at that point, okay, right now I have enough money to pay off that loan if we need. So I knew that if we’re taking it, I have the ability to pay it back, but it would give us a little cushion still considering or thinking that COVID would be done faster.
And so when our lender called and said, “Hey, I need these documents,” it was like, days had gone by and Jan keeps most of our– he’s very organized. He has everything in files. Everything is there. So I was like, “Babe, just send her the stuff. It’s all good. Just send her the stuff.”
And after a few days of that, I noticed that his mood was getting really weird. He kept saying, “They keep asking us for stuff. They keep asking us for stuff.” And I was like, “We haven’t done anything wrong. Open book, send them all.” And eventually, he just said, “I need to tell you something. I made a mistake.” And we were already a week and a half or two weeks into the home-buying process already.
I was walking home and he said the number and I just immediately like– sorry. I just immediately was like, “Am I going to be one of those wives whose husband gambles away all of their money?” Everything that I thought I had that I had been saving for the last year, working and working and working towards the thing, I didn’t have enough money to pay back that loan.
Ramit: I’m really enjoying this conversation. Yes, Jan made a mistake, a really dumb one, but he’s owned up to it. And Emily has acknowledged what happened and she’s accepted it. She said she’s not concerned he’ll do it again. I know a lot of you want me to sit here and beat Jan up, but that’s not what this podcast is about.
Everybody makes mistakes with their money, and you will often see me surprisingly compassionate when somebody does not know how to start investing. I mean, 90% of the time the people on this show don’t even read my book. I’m not going to blame them. I’m here to help them.
Now, I do get mad when people don’t take responsibility for their actions. But Jan has. He’s acknowledged it. He’s making amends. And I applaud him for that. And I applaud his partner, Emily, for accepting that and being so candid. Now, I want to go deeper. Again, I’m not interested in beating him up, but I want to make sure he understands why he took that loan out because if he does, he can get to the root cause of his lie around money.
Preventative Steps For The Future
Whether you choose divorce or reconciliation, setting up safeguards can help prevent financial infidelity from happening again. Communication and shared responsibility are key.
Regular Financial Check-Ins
Make it a habit to have regular discussions about your finances. Whether weekly or monthly, these check-ins can help keep everything out in the open.
Joint Decision-Making
Agree that major financial decisions will be made together. This ensures transparency and builds trust.
Improve Financial Literacy Together
Understanding money matters can empower you both. Take courses, read books, or attend workshops together. The more you know, the better you can manage your finances as a team.
Create a Shared Financial Plan
Sit down and make a budget together. Set long-term financial goals you both want to work toward. Having a plan can strengthen your partnership.
Maintain Individual Financial Autonomy
Even with full transparency, it’s important for each partner to have some level of financial independence. This can help maintain trust and prevent future issues.
Money and Love Can Go Hand in Hand
Financial infidelity is usually a symptom of deeper issues, whether it’s an unhealthy dynamic, a power imbalance, or past trauma. Learning to talk openly about money is crucial. By taking these steps, you can protect your finances and build a stronger, healthier relationship.
Here are two scripts you can use to start talking about money better
Talking About Overspending
Instead of reacting with: “Oh my God, did you really buy that? Where is the money going to come from??”
Try this:
You: “I realize I’ve gotten into the pattern of lecturing you about why we need to save. I don’t think it’s working. Do you?”
Them: “No.”
You: “Can we zoom out and decide what we want our money to do for us, together?”
Dividing Financial Labor
Instead of complaining: “You never want to sit down and plan our vacation! This is why we end up wasting so much on plane tickets and having to stay in awful hotels.”
Try saying this:
“I made a list of the things I’ve been in charge of with our finances in the last two weeks—and the things you’ve been in charge of. This list isn’t fair to me. I want to talk about redoing our responsibilities. Can you talk Tuesday or Thursday evening?”
If you’re looking for even more insight into dealing with financial infidelity, be sure to check out my latest book, Money for Couples, where I share the lessons I’ve learned over hundreds of conversations with real-life couples just like you.
