Of all the ways to cheat on your spouse or partner, fibbing about finances may seem like the least of all evils.
After all, is it anyone's business that you carry mountains of old credit card debt? Do you really need to disclose how much money you lose on sports bets? Wouldn't it cause more harm to reveal that after a bad day you seek solace in $300 shoes?
"I call financial infidelity the No. 1 relationship wrecker," said Bonnie Eaker Weil, a New York psychotherapist and author of the book "Financial Infidelity" (Hudson Street Press; $24.95). "Because it's subtle, and many people don't think they're doing anything wrong, it can escalate and lead to other things."
A third of American couples with combined finances say they have committed financial infidelity, with both sexes lying to their partners in equal numbers, according to a Harris Interactive poll released in January. Sixty-seven percent of those couples had arguments as a result, and 42 percent said it caused less trust in the relationship. But the fallout can be much more severe. In 16 percent of cases, the lying led to divorce, and in 11 percent it caused a separation.
While people shouldn't have to clear every purchase with their spouse or partner, they must be transparent about all income, spending and saving, a habit couples should establish at the beginning of the relationship, divulging in the first few dates what each person makes and who is expected to pick up the restaurant checks, Eaker Weil said. That may seem like a no-brainer, but many couples have difficulty discussing finances.
"People lie about money because they don't feel safe talking about money," said Eaker Weil, whose book guides couples in using "Smart Heart" dialogue to empathetically and constructively talk about finances.
The roots of secret spending can go deep: Money can be a form of control when you're feeling insecure in the relationship, or a form of revenge when you feel you've been betrayed, Eaker Weil said. People also hide spending when they fear that the other person won't approve, to fill a void in their lives or to get a thrill.
Financial infidelity can be a gateway drug to a romantic affair, especially when a person gets a high from their secret spending, because they may be tempted to push the limits of what they can get away with, Eaker Weil said.
Other times, it's a byproduct of living in a selfish culture in which everyone feels entitled to whatever they want, said John Wagner, a psychotherapist based in Winter Park, Fla. That works if you're single but not if you're in a committed relationship, when "ours" needs to be more important than "mine" and "yours."
"In our marriage, if we're going to spend more than $100, we check in with the other person," Wagner said. "Not out of control but out of respect."
Discovering a spouse's financial deceit can bring on feelings similar to those wrought by adultery: pain, distrust and not knowing what's coming next, Wagner said. If you're lying about money, your partner likely wonders what else you might lie about, he said.
The financial problems rarely can be fixed without first addressing the core relationship issues, Wagner said. An important part of the healing is to agree to a "contract" describing how the couple will handle finances, including a spending threshold, above which each partner will check in with the other before making a purchase.
Gone unchecked, money lies can destroy credit and marriages.
A man walked into credit counselor Jackie Goff's office after he received a letter from his mortgage company alerting him that his mortgage was two-years delinquent. The man thought his wife had been paying the mortgage, but it turned out she had been intercepting the mail and hiding the delinquency letters. She also had been opening credit cards in his name without telling him. The couple owed, all told, $100,000.
"He was just blindsided because he trusted her," said Goff, senior assistant director at Consumer Credit Counseling Service of North Central West Virginia. The man had to file for bankruptcy, and the couple divorced.
When it gets awkward
Credit counselors say it is not uncommon to see couples driven deep into debt because one person was financially cheating on the other.
"It's always a very awkward counseling session," said Claire Gray, credit counselor at Apprisen Financial Advocates in Columbus, Ohio.
Gray remembers one married couple, in their mid-50s, who came to her after being sued by a creditor. The husband had racked up some $50,000 on credit cards he opened behind his wife's back, which the wife discovered only when she tried to refinance their home and was denied a loan.
To make matters worse, the couple made the mistake of going through a debt settlement company, hoping that by putting off payment, the creditors would settle for a lesser payment, but the company's fees swelled their debt to $80,000 without producing a settlement. With both husband and wife already working full time and unable to cover the minimum payments, their only option was to file for bankruptcy, Gray said.
Gray said these crises could be avoided if everyone took ownership of the family finances. Even if just one person is doing the check writing and check balancing, both partners should look at the monthly bank statements and free annual credit reports (annualcreditreport.com).
A couple should have a budget they both agree on, and they should go over what they're making and spending every payday or at least once a month, Gray said. Even if you have personal debt that you plan to pay off yourself, it's wise to disclose it to your spouse, Goff said. With the job market precarious, you never know if you might suddenly find yourself without income. Also, if you have to file for bankruptcy and you co-own a home with your spouse, you're both going down.
"People need to be truthful," Goff said. "Eventually it will catch up with you."
Thirty-one percent of Americans with combined finances have lied to their spouse about money, according to a Harris Interactive survey of 2,019 adults, commissioned by ForbesWoman and the National Endowment for Financial Education. Among the offenders:
58% hid cash
54% hid a minor purchase
30% hid a bill
16% hid a major purchase
15% hid a bank account
11% lied about debt
11% lied about earnings