I have previously discussed this topic but as a result of the number of clients I see who are victims of this financial infidelity I thought I would raise it again.
In layman terms “financial infidelity” is a term coined to describe the activities of a partner who is hiding the real financial picture from you.
It comes in many guises but in its simplest form it could be anything from secret shopping to having secret credit cards. However, at the other end of the scale it could be gambling debts or a business venture that has gone bad – and it could be eating away the equity you have in your home – and all without your knowledge.
There are many reasons people seek to hide the truth from their partner. They range from being ashamed of their actions, a sense of entitlement to being scared about what their partner will say or do when the truth inevitably comes out.
Unfortunately many people don’t know that there partner has been financially unfaithful until it is too late and there is a large debt to be paid off or they no longer have an asset worth what they thought it was.
However, you can have some degree of protection by ensuring you and your partner have a basic understanding of where each other is at financially. Even if one person handles the finances in the relationship, the other should at least understand the basics of how much is being spent and how much is being saved. It is important to also seek the advice of your accountant or solicitor when committing to large business dealings to ensure you fully understand your obligations, especially if you will not be actively involved in the business. I see way too many couples who did not realize the implications of acting as a guarantor for their spouse only to find that they ended up with a massive debt after they separated and the business subsequently collapsed.
The bottom line is that lack of honesty can and does ruin marriages, especially when it comes to finances. So be up front with each other, obtain independent advice if necessary, and ensure your financial future is as protected as it can be.