What is financial infidelity? Definition, examples and how to recover from financial cheating

Have you ever kept a financial secret from your spouse or partner? Do you consider it to be a big deal? It can be a serious breach of trust and can significantly impact your relationship when it rises to the level of financial infidelity.

Any successful relationship relies on trust, which is built on open and honest communication—and that includes the subject of money. It's crucial to be truthful when discussing financial matters with the person in your life who can be affected by your choices.

We'll discuss how to open stronger lines of communication about money so you can be more comfortable discussing the subject and avoid the hurt that can come from hiding or lying about financial choices and circumstances.

Financial infidelity, also known as financial cheating, occurs when open communication about money breaks down, leading to secretive or deceptive financial behavior. It might be caused by fear, shame or past financial trauma. Here are some examples of what it may look like.

• Your husband borrows from his 401(k) to invest in real estate, which you didn't know about until he broke the news to you that he lost the investment. The account is technically his, but the loss affects your future together.
• Your partner of 20 years was laid off, but instead of telling you, they pretended they were still going to work every day until you caught them in their lie. You're now wondering if this means they haven't been paying the rent.
• Your wife got a bonus at work, but you only found out about it when her friend inadvertently mentioned it in front of you. Turns out, she didn't want to tell you she gave it all to her brother, who is out of work.

Some incidents aren't financial infidelity—they're just poor money management or a lack of communication. Consider these cases.

• Your long-term girlfriend is a teacher with $90,000 in federal student loan debt. At one point, you and her discuss the possibility of refinancing her loans. While she feels it'd benefit your shared future, you think loan forgiveness may be a better choice. However, because these are solely her loans, she moves forward with refinancing despite your preference.
• You asked your husband to use only the debit card, not the high-interest credit card you're both working to pay off. You're reviewing the accounts and see he used the credit card for groceries. He didn't realize he'd done it; he wasn't paying close attention to which card he was swiping. He apologizes and puts the card in a drawer to avoid accidentally using it again. In this case, it seems like a genuine mistake.
• Your wife manages the household finances. Although you have access to every account, you don't ask questions and never log in. When you learn your shared net worth is higher than you thought, you're delighted—but also suspicious because your wife had said she didn't think replacing the truck was affordable. In this case, you could have been more proactive, and you both could have communicated better.

Many people aren't aware of financial infidelity until it happens to them. Here are some tip-offs:

• Rejected applications. Everything seems fine until you apply for a mortgage together and get rejected because of your spouse's hidden debts.
• Missing statements or limited access to accounts. Your partner might be beating you to the mailbox or changing passwords to keep you from discovering excessive spending.
• Declined payments. You get a notice from your lender that your scheduled payment bounced, or your card is declined unexpectedly.
• Dismissive responses. Your significant other is vague, changes the topic or gets defensive when you ask financial questions.
• Vague whereabouts. A spouse with a gambling problem might disappear for hours with no explanation, or you might catch them lying about going out with a friend.
• Missing cash. Your partner might withdraw cash from your joint checking account without telling you what it's for, or the cash you keep at home might mysteriously disappear.

Financial cheating can devastate a relationship and decimate a couple's finances. The fallout may include:

• Shattered trust. If you can't trust your partner with money, you'll wonder what else they've deceived you about and how you'll know if they're being truthful going forward.
• Grief. Losing your faith in your partner's honesty can mean experiencing the wide range of anger, denial, depression, numbness, regret and fear.
• Uncertainty. What will this deception mean for your relationship? For your financial plan?
• Credit damage. Large debts, late payments and judgments can lead to subprime credit and all the challenges that come with it, such as trouble refinancing debt and higher insurance premiums.
• Derailed goals. Hidden spending, investment losses and tax fraud can impede saving for retirement, supporting aging parents or meeting other commitments.

Whether you're a newlywed or you've been married for years, it's important to be comfortable talking about money. Lay a foundation of financial honesty by discussing the following topics. Revisit them throughout your relationship at regular check-ins.

You may have talked about dreams like owning a home, changing careers or retiring early. Take the conversation to the next level by discussing the financial steps required to achieve them, include prioritization so you can agree on urgency.

If you're not married yet but plan to be, disclosing your net worth can be scary. Will it change your relationship if one of you is wealthy (or in debt) and the other is not? These are valid concerns, but they're ones couples can work through. There are also ways to legally manage major discrepancies, such as signing a prenuptial or postnuptial agreement. If you are married, it's helpful to look at where you stand, asset-wise, as a couple so you can plot a course for a better financial future. In addition, be sure to discuss joint versus separate accounts as you manage your money.

Knowing each other's income will help you create a shared budget, a debt pay-down plan and a retirement savings strategy. If there's a big discrepancy, discuss how this affects what you expect from each other in terms of career paths or contributions to household labor. Also, agree that you'll both speak up right away if you experience a pay raise or pay cut.

Sit down at a computer together and pull your credit reports from all three credit bureaus (Equifax, Experian and TransUnion). Review them to see what the other person owes, to whom and how reliably they've made payments. If you have debt, discuss how you can adjust your budget to pay it down.

Keep tabs on take-home pay and look at pay stubs to view deductions for taxes, retirement and benefits. Know the amounts and due dates of household bills. Add up monthly spending to assess whether it's sustainable, and adjust as necessary.

If one of you has your savings in Bitcoin and the other has stock and bond mutual funds, you have some risk tolerance differences to reconcile. If you haven't built an investment portfolio, discuss what's held you back and how you can move ahead.

Do you have any past financial traumas or financial regrets? If so, how do they affect your attitudes and behaviors about money?

Financial infidelity doesn't have to end your relationship. You might engage in couples counseling to work on the problem together or pursue individual counseling with different therapists.

Your faith community can be a source of support as well. See if your church or other religious organization offers counseling, small group meetings or retreats that help couples improve communication and trust.

When addiction or other mental health issues are the underlying problem, pursue compassionate, professional treatment.

In extreme cases of financial cheating, it may be necessary to pursue options for protecting assets, including separating your finances.

Moving forward together after financial infidelity involves building back broken trust and maintaining honest communication about money, even in times of financial stress. You should make joint decisions about your finances, compromising where appropriate for the good of the relationship.

Remember, you and your partner don't have to do this alone. A Thrivent financial advisor can help you create a plan for a brighter shared financial future.