The top 3 financial lies Americans tell their partners

February 17, 2023 6:09 PM

More than half of Americans consider 'financial infidelity' equivalent to other forms of cheating, research shows.

There's more than one way to cheat. Many American couples have struggled with what experts call "financial infidelity" — the act of lying or keeping secrets about money from one's significant other — and it's more common than you might think.

A recent study by Forbes Advisor and Prolific found that 38% of U.S. adults have lied to a romantic partner about their finances at some point in their lives. At the same time, most Americans don't take it lightly — 54% said dishonesty about money is just as bad as other forms of infidelity. Other research has confirmed this attitude; a poll by CreditCards.com found that 42% of adults said financial cheating is equivalent to the "physical" kind.

But lying about money isn't just bad for relationships. It can also be a major threat to a couple's finances — and a tricky challenge for their financial advisor.

"It's an incredibly difficult situation to be in as an advisor, because you're confronting one partner in front of the other," said Jeffrey Edwards, the president of Atlas Financial Planning in Irvine, California. "Much like in marriage or couples counseling, you have to let the 'offender' understand it's not what they're doing that's wrong — hiding it is."

Here are some of the top areas where Americans are financially "cheating" on their partners, and some of the ways their wealth managers are trying to help:

Purchases

The most common topic of all was purchases. According to Forbes Advisor, almost half of those who confessed to financial infidelity — 49% — said they'd lied or kept secrets about something they'd bought.

This typically applies to clothes, electronics or other consumer goods, but there are also more extreme examples. One financial advisor in Virginia, who asked to remain anonymous to protect his clients' privacy, said he recently met with a couple who owned several rental properties together. It turned out the wife only knew about one of them.

The husband had secretly refinanced that first home and then used the equity to buy others, hoping to eventually make the whole scheme profitable. The wife, meanwhile, was perplexed and upset that all their assets were rapidly diminishing. Once the advisor discovered all this, he refused to work with the couple and instead referred them to a financial therapist.

"If you asked that guy, 'Do you lie to your spouse?' I don't think he would say 'yes,'" the advisor said. "To me, that's part of financial infidelity, too — no longer giving your spouse the same authority or the finances as you have."

Debt

The No. 2 topic of financial fibbing was debt, with 37% of respondents saying they'd hidden or lied about how much money they owed.

In many cases, Forbes found, Americans conceal their debts out of embarrassment or fear of how their partner may react. In general, the most common reason for financial infidelity was shame (36% of respondents), and the second-most was "trying to avoid an argument" (32%).

Indebted partners may have good reason to worry. According to a study by the debt settlement company National Debt Relief, 54% of Americans believe a spouse's debt is a major reason to consider divorce, and 60% have considered putting off marriage to avoid taking on their partner's debt.

"It can be hard for individuals to face their own realities when it comes to their current financial situation, let alone sharing that information with a partner," Amy Pridemore, the executive director of the Virginia Credit Union Financial Success Center, told Forbes. "So rather than facing this truth and its potential consequences, individuals may fabricate lies regarding money."

Spending patterns

The third most common subject was what the survey called a "pattern of spending," meaning not just one purchase but a general habit of overspending. A full quarter of respondents said their deceptions covered up such tendencies.

Karen Van Voorhis, the director of financial planning at Daniel J. Galli & Associates in Norwell, Massachusetts, said she recently came across this problem. While advising a couple, she learned that the wife had committed "several rounds of financial infidelity in recent years."

She was "basically spending on credit cards and not telling the husband until she got caught — $20,000 to $30,000 each time, twice," Van Voorhis said. "This caused the husband to have to pull on joint investment funds to pay off the debt. It was one of the major reasons that they pursued a formal financial plan with us, because he was terrified about drawing down their investments too quickly if it happened again."

While continuing to work on the couple's financial plan, Van Voorhis also recognized that they needed outside help with their relationship.

"In their case I vetted several financial therapists, looking for ones that specifically dealt with financial infidelity, and sent them a short list with an admonishment that they absolutely needed to go see one of them," she said.

This approach dovetails with a tip from the anonymous advisor in Virginia: When you encounter dishonesty, address it directly.

"I think I learned to be a lot more clear and bold with clients," this advisor said. "You are paying me to be a fiduciary — and not with your whole life, just with your finances — but your finances are crumbling because of these other pieces. I need to be able to say that."