Know the warning signs when sniffing out financial infidelity

Almost one in five Canadians admitted to keeping financial secrets from their partners, a recent survey says (Getty Images/HRAUN)

The COVID-19 pandemic has put romantic relationships to test with financial pressures intensified and divorce rates expected to soar. 

Lockdowns have not only revealed how personalities can collide in close, constant contact, but they may have also put the spotlight on previously unnoticed conflicting financial behaviours. 

According to a survey released in February—just before the pandemic hit—almost one in five Canadians admitted to keeping financial secrets from their partners, with 17 per cent of secret-keepers admitting the monetary value of their deceit exceeded $10,000. 

With money issues being a top reason for break-ups, financial infidelity can be a deal-breaker when it comes to whether couples stay together. 

Here are four tips for coping with financial infidelity before it tears a relationship apart. 

1) UNDERSTAND WHAT IT IS   

Financial infidelity takes on many forms—and not all are created equal. Generally, it’s a monetary act that violates a financial obligation or commitment established between you and your partner, explains CPA Michael Deepwell, principal of Lamp Financial Inc.

“It’s not being completely forthcoming or honest with your partner or spouse about your finances,” he says. “It could be related to spending or assets, having separate accounts, investments or, more commonly, debt.”

Examples include contributing funds to a savings account that a partner is unaware of and does not have access to, accumulating or owing debt via loans or credit cards (from the past or present) that a partner does not know about, and investing in the stock market, for example, or purchasing a big-ticket item without consultation or discussion. 

“You’re intentionally trying to mask or hide something that you’re doing and it could be for various reasons,” Deepwell says.   

This lack of transparency is a form of betrayal, adds professional matchmaker Carmelia Ray. It’s similar to adultery, she says, as it can create feelings of confusion and anger as well as erode trust, particularly in relationships where funds are viewed as “our money” and not “yours versus mine.”

“In the dating world, I call it micro cheating,” says Ray. “You’re not actually cheating, but you’re withholding or hiding and doing things that you know your partner would be upset about. That’s what many people do in finance.”

2) WATCH FOR WARNING SIGNS

Depleted bank accounts, racked-up credit cards, lavish gifts or packages piling up on the doorstep are obvious signs that spending, or fund allocation, may be out of whack. 

Less obvious signs could include a partner’s vague responses, discomfort or a change of topic when finances come up or when they are directly asked about their financial position, be it debt, savings, income or big purchases. 

“Any time somebody is withholding [information], they avoid, they start to withdraw, they’re nervous around you,” Ray says. “If they don’t want to have those discussions ... that’s a telling sign that something is different.” 

A partner may believe they can spend their earnings as they wish. They may not feel they need to consult on household finances they manage. Or they may assume their partner would support their decisions. But financial decisions made without consultation are another alarm bell, Deepwell says.

3) DECIPHER INTENT

There are many reasons why financial infidelity occurs, from embarrassment about debt to entitlement over earning power. There could also be addiction or mental-health issues influencing spending behaviours, or disregard or unawareness of the repercussion of financial actions. Whatever the reason, the first step in addressing it is attempting to understand its source or the root of why it’s occurring, Deepwell says.   

“Look at the intent and opportunity, bringing that into context,” he says.

Analyze the roadmap of your financial partnership, including who takes care of what bills, what bank accounts and credit cards are held together and independently, and who is responsible for household purchases such as groceries, maintenance and repairs, he says. From there, you can discern any discrepancies. 

“There are a number of issues that could arise ... and they usually arise gradually over a period of time,” Deepwell says. “It may be difficult to see in the moment, but when you look back, you start to see the signs.” 

Lastly, consider what your overall financial goals are and whether they are—or ever have been—aligned, he says.

“If you start looking at your financial goals and you realize that they’re at odds with each other, well, maybe that’s an indication that one partner [could be] doing something to achieve their objectives and not yours,” Deepwell says.

4) ADDRESS IT AND MOVE ON

Suspecting your partner is financially cheating isn’t enough to warrant a confrontation. Gather the evidence first, Deepwell says. If the warning signs do lead to sufficient evidence, there are a few ways you can address this deceit, experts say. 

In you’re in a new relationship, this can be an opportunity to establish whether you are able to get on the same page with your partner when it comes to money. Consider any warning signs as a launch pad to either align your fiscal goals or cut things off before you have invested too much emotionally or financially into the partnership, advises Deepwell.

“That’s part of the dating phase or primary phase of sitting down and talking through what this relationship [is] going to look like ... particularly on financial matters,” says Deepwell. “It starts with communication even before you start looking at investigating [financial] statements. Try to have an open and honest communication and that’s built on this level of trust and security.”

If you’re married or in an established relationship, the interaction looks different. 

First, you will want to review past financial plans or agreements made together to realign your goals and get back on track, Ray says. This could mean rejigging household budgets, spending allowances or income expectations. Approach the conversation without confrontation and, if defensiveness prevails, it may be time to seek third-party advice from a therapist, financial planner or accountant as a mediator, she adds.

“It’s important that you’re approaching your partner in a non-confrontational way ... that you’re coming from a place of concern and not accusation,” says Ray. “Look for those give-and-take moments and have the respect to really have a conversation around money.”

Deepwell agrees, adding that coupledom—with assets, debts, responsibilities and experiences in tow—comes down to being a partnership over a joint venture whereby each partner owns 100 per cent (or zero per cent) because they are essentially “on the hook” for each other.

“That’s very different from a joint venture relationship where you bring in 30 per cent, the other person brings in 70 per cent and that’s the fixed percentage you are accountable for,” he explains.

“Couples have unique situations and family backgrounds, with a lot of things that influence how they approach money ... but, ultimately, they need to look at where they stand, what their opinions are and where they came from and have an open discussion with their partners.”

FINANCIAL GUIDANCE FOR COUPLES

For more advice on how to navigate your finances as a couple, read CPA Canada’s new book, Love and Money—Conversations to Have Before You Get Married, which provides clear, practical steps for getting on track together when it comes to money. If you’re planning on starting a family, look to CPA Canada’s Babie$: The Real Story of How Much They Cost for tips on how to budget and plan for those unexpected costs. And for support during COVID-19, consult the financial literacy resources to help you manage your money.