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Financial Infidelity: What To Do When Someone Financially Cheats?

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Why is it that as most new relationships develop, couples tend to see each other naked before seeing each other's bank accounts? Is it because their financial status is more private and personal than their actual... privates?

Last year, Self.com and Today.com conducted a survey of almost 24,000 men and women and found that almost 50% of married adults admitted to keeping money secrets from their spouses. Additionally, the survey revealed that while 37% of men and 56% of women admitted to lying to their partner about money, 63% of men and 70% of women agreed that being honest about money was as important as being monogamous. And yet, another U.S. poll found that 31% of couples had committed financial infidelity.

Let's be honest with ourselves: Financial infidelity is cheating. It doesn't involve sneaking off into seedy motel rooms or sending hot and steamy text messages to a paramour, but it does involve a series of secrets and lies that can devastate a relationship. Financial infidelity is any money-related conduct that involves one spouse being less-than-truthful or forthcoming with the other spouse. It often starts off small and inconsequential -- for example, buying an expensive pair of designer shoes and claiming that they were irregulars or marked down 75 percent, or skimming from the household budget by using coupons and then keeping the "savings" in a separate slush account. Over time, the financial fibs grow larger, and the lying spouse may justify his or her actions by rationalizing that it's necessary for future financial security.

What are some of the reasons for financial infidelity? Are any of them justified? According to Scott and Bethany Palmer (a.k.a., "The Money Couple"), "people often cover up any money behaviors they think their partner may disapprove of, or they hide their dishonest behavior in response to their fears of how the other uses money." One typical scenario involves the spending-spouse and saving-spouse, who try to reconcile each other's financial incompatibilities like a balancing act. The saving-spouse may squirrel away money without the spending-spouse's knowledge, and justifies his or her actions by thinking that it's in the couple's best interests to save money for a rainy day. Is this deceitful? Yes. Is this dishonest? Yes. It is financial infidelity? Oh, yes!

According to Adrian Nazari, Founder and CEO of CreditSesame.com, the top three warning signs of potential financial infidelity include a partner who wants to control the finances with no input, suspicious withdrawals from investment accounts, and one person changing the subject when money discussions come up. Some other warning signs that your spouse may be less-than-forthright about finances include he or she insisting upon having separate credit card accounts and having secretive passwords for online banking.

How can you protect yourself and your relationship with your spouse from the infidelities that can destroy a marriage? Financial planner Douglas J. Eaton offers tips to improve financial communication between spouses, including:

1. Be completely honest about any money owed. Solve problems early enough so they do not worsen.
2. Set a regular time (weekly, monthly, quarterly) to discuss the family finances.
3. Both partners should be involved in paying household bills, as this creates checks and balances.
4. Limit or eliminate individual accounts (bank, credit, etc.) and make them joint. Agree that all online account access may be shared by both partners.

The National Endowment for Financial Education, which claims that 58% of spouses hide money from their partners, and the National Foundation for Credit Counseling, which states that 1 in 4 spouses wouldn't tell their partners about financial difficulties, add that making a pact to make financial decisions as a team and agreeing on a monthly sum of money that each partner can spend "no questions asked" (as long as it fits in the budget) will also aid in building a healthy financial relationship with your spouse.

Whether you are entering into a new relationship, or are in the process of ending an old one, a pre or post-nuptial agreement may also be a handy tool to help maintain complete financial transparency. Prior or well-into a union, you can both agree to having only joint banking accounts, spending up to only a certain amount of dollars on something without your partner's agreement, and accumulating only a certain amount of debt. Even divorcing couples can agree to some form of routine financial disclosures to avoid further litigation over perceived economic differences post-divorce. Such agreements can be as detailed as you both feel will be necessary and beneficial to the security of your future, both financially and emotionally.

Recovering from financial infidelity can be difficult, if not impossible, and many find it simply too challenging to overcome. However, both married and divorcing couples can benefit from seeking the advice of a trained professional, who can help them resolve their differences before litigation becomes the sole focus of the offended party.

Here are some tips for mediating financial infidelity in your relationship:

1. Identify your financial personality;
2. Seek out a safe forum for each party to discuss the reasons or rationale for their behaviors, including the driving force behind their conduct;
3. Insist on and devise a plan to encourage and ensure full financial transparency in order to rebuild trust between the parties; and
4. Create a going-forward all-encompassing agreement to avoid future disputes over money.

Leveraging the collective knowledge and experience of financial planners, divorce coaches, mediators, attorneys and any other member of the professional team will have a positive impact on the role money plays in your relationship.