Nearly 1 in 5 Americans is keeping a big financial secret.
Some 19 percent of Americans, or about 29 million adults, are hiding a checking, savings or credit card account from their spouse or live-in partner, according to a new survey from CreditCards.com — a practice that could easily lead to financial trouble and emotional distrust in a relationship, experts say.
“A lot of people follow the whole ‘yours, mine and ours’ method, and that can definitely work,” says Ted Rossman, industry analyst at CreditCards.com, a Bankrate sister site. “I think it works if there’s that agreement upfront, if you know that you’re doing it and you know how much you’re setting aside.
“Where it can be really harmful is if people don’t know,” Rossman says.
The study sample consists of 1,000 nationally representative interviews among adults aged 18 and older, including 636 who are currently married or living with a partner. The survey was conducted between Dec. 14-16, 2018.
Keeping secrets from your partner isn’t conducive to a healthy relationship, but keeping financial secrets can be especially detrimental. Whether your relationship is plagued by financial infidelity or not, a solid foundation built on trust and understanding is key to long-lasting success.
The effects of financial infidelity
Throughout the course of any relationship, couples will confront no shortage of financial questions. How much will you save for retirement? What’s your monthly budget? Should you buy a home or rent? Will you have a joint account or separate?
As you begin answering these questions and setting long-term goals together, the magnitude and impact of a secret account may grow.
“It’s hard enough to meet these big financial goals if you are on the same page,” Rossman says. “It’s near impossible if you’re not.”
When only 40 percent of Americans have the savings to cover an emergency $1,000 expense, 78 percent of workers live paycheck to paycheck and the average American’s personal debt exceeds $38,000, covering up a financial account or indiscretion can be devastating to a household’s finances.
“If this is the state of affairs, if this is how close to the edge people are, it’s really, really important to be on the same page because there’s just not that much money to spare,” Rossman says. “If someone is hiding thousands of dollars, that’s really meaningful.”
The consequences of hiding an account are felt equally from both an emotional and financial standpoint, and neither has an easy fix, says Maggie Baker, Ph.D., author of “Crazy About Money” and psychology and financial therapy specialist based in the Philadelphia area.
Hiding money shows your partner you don’t trust them enough to be honest about your financial situation. According to the CreditCards.com survey, 55 percent of people believe hiding a secret bank or credit card account is at least equal in severity to physically cheating.
Financially, by funneling money into secret accounts, you could jeopardize everything from short-term budgets and spending to long-term savings and investment goals.
How to come clean
Coming forward about a hidden account isn’t easy, but it’s a conversation you should begin sooner rather than later.
If your partner doesn’t learn about the account from you directly, they’re bound to discover a bill or bank statement they don’t recognize, or your behavior may tip them off.
“Communication can break down very easily because of the person’s feeling of guilt or shame of what they’re doing,” Baker says.
It’s better to deal with your indiscretions as soon as possible, the same way you would any other type of infidelity, says wealth psychology expert Kathleen Burns Kingsbury, author of “Breaking Money Silence.”
“It is not about defending your actions,” Kingsbury says. “It is about expressing your love and regret, and then spending most of the time listening to your partner’s reaction, thoughts and feelings about the financial betrayal.”
And there’s no cutting corners throughout the process.
“Remember that this conversation is not a one-time event but a series of dialogues about your motivations for keeping the secret, your reason for coming clean and most importantly how this impacted your partner,” Kingsbury says. “Listen more than you talk, and expect there to be some difficult feelings.”
Moving forward: Relationships can grow stronger
“Couples who go through a financial infidelity and work through the underlying issues of betrayal and trust in the relationship can end up stronger,” Kingsbury says.
Both Baker and Kingsbury recommend seeking professional help from a counselor who can assist with the financial impact of a hidden account as well as the emotional fallout. A financial therapist has the training to not only help change the dangerous behavior but also help each partner process their feelings and work to repair trust in the long term.
While dealing with the emotional betrayal, go back to the basics of your financial plan. Revisiting the money conversation will look different for everyone depending on the nature of your relationship.
“How tightly are you tied financially? Do you have joint accounts? What’s the status of your living arrangement? All these things sort of get to how deeply intertwined your financial lives are,” Rossman says.
Everyone can benefit from more financial honesty
Any serious couple, whether they’re dealing with financial infidelity or not, should prioritize an openness toward finances in their relationship at every stage.
Baker says shared financial responsibilities are imperative.
“The minute you surrender your participation in the process, you’re setting up an unequal situation in terms of the financial knowledge of your family,” she says. “What I would encourage is equal partnership from the very beginning. … You have to be equally engaged in the facts of your money.”
Looking realistically about where you and your partner stand currently can also help you figure out where you want to go in the future.
“Make time to explore each other’s money history, talk about your financial goals and dreams, and then if possible, work with an emotionally intelligent adviser who can help you create a financial plan to achieve your goals,” Kingsbury says. “A good adviser will also help facilitate these conversations. Breaking money silence is the key to being a couple that is healthy around finances.”
Conflicts about money are inevitable. But sharing responsibility and keeping the conversation open over time can ensure both partners feel comfortable bringing their money matters to the table.
“No. 1 is trust and openness,” Rossman says. “There are values that are cherished in any sort of relationship, and with money in particular, it’s just good to get it out there.”