Financial Infidelity is the new phrase for when one spouse secretly spends family money or creates debts without the knowledge of the other spouse. This can be anything from secret shopping, gambling addictions, secret credit cards or compulsive ebay purchasing. Such spending is normally funded from family savings, hidden credit or store cards or even from using the redraw facility on the home loan.
Essentially this, for many people, is a breach of trust which often results in separation. With separation comes property settlement and divorce. It is still common in relationships for one party to be the “financial controller” and in these relationships it is particularly easy for such behaviour to occur. Sometimes this is one of the causes of a separation. If the financial infidelity is not discovered until after separation it is commonly referred to as a STD or “Sexually Transmitted Debt”.
As a general rule any spending during the relationship will be born equally by the parties regardless of who did the spending and who did the earning. There are ways you can protect yourself before the event such as by having a carefully drafted “pre-nuptial” (before marriage) or “post-nuptial” (during marriage) financial agreement.
Parties who fall victim to financial infidelity need to take steps, pre and post separation to protect and preserve the remaining family assets. Sound legal advice early on or even prior to separation can give a person tools and techniques to protect assets and discover financial infidelity before there is nothing left to divide.
Some hints and tips to uncover and avoid financial infidelity:
- Become actively involved in family finances;
- Watch the mail – be aware of sneaky behaviour eg opening mail in private;
- Go through the filing cabinet – become aware of what the family finances consist of;
- Get on internet banking and regularly check statements and transaction histories;
- If you discover financial infidelity – keep copies of the evidence it may just come in handy in your property settlement;
- Change permissions on redraw facilities and credit cards to restrict spending limits;
- Protect savings by creating an account with limited access – eg passbook only;
- If it is necessary to preserve funds, transfer them to an account that can’t be controlled by the irresponsible party.
- Seek legal advice and counselling.