Financial Infidelity: Red Flags to Look Out For

Financial infidelity is more common than you think. Learn red flags to look out for as well as how to become more proactive with your finances!

Why You Need to Talk About Money Openly

Marriage and money aren’t typically something that people love talking about, but if you want to have a strong relationship you have to find to communicate with each other that's transparent, productive, and respectful. 

I was looking at a survey, and one had recorded 39% of adults just avoid even talking about the numbers.

Think about it for a moment. We're not even talking about hiding anything

We may think we’re avoiding a fight by brushing off or keeping chats about money superficial, but that’s not usually how it works.   

Finances, money, budgets – they’re necessary topics, and the more comfortable we get about it, I think that actually leads to a better relationship, a better marriage.

That’s Tracy Coenen who you also heard at the top of the episode. She’s on the show today because she’s quite familiar with how things can unravel those financial issues can snowball into something much bigger. 

Tracy has seen that happen in her work. She’s a forensic accountant and fraud investigator with Sequence Inc where she investigates embezzlement, securities fraud, divorce, white collar criminal defense, insurance fraud, and civil litigation matters.

But let’s look at that side- financial infidelity. How would you define it? 

“Financial infidelity is hiding financial information, financial transactions, from your partner in a situation where you have a reasonable grasp of knowing what they want to know,” said University of Minnesota law professor Jill Hasday. “And, keeping the information is harming them.”

A study from the Journal of Financial Therapy, found 76% of married couples involved in financial infidelity say the experience negatively impacted their relationship, and 10% got divorced over it.

One reason why it can cause such damage to your marriage is that it breaks trust, which is such a critical piece in your relationship. It’s hard to rebuild that trust. It takes time. 

I hope you never have to deal with financial infidelity, but if it happens, how would you know? 

In this episode, we’ll discuss: 

  • Causes or underlying issues behind financial infidelity and red flags to look out for
  • Ways to start working as a team to either prevent or repair the damage
  • How to financially protect yourself 

We have a lot to cover, so let’s get started! 

Resources to to Stay on Top of Your Money

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Possible Causes of Financial Infidelity

Elle Martinez: We should address that there are a lot of reasons why people commit financial infidelity.

Definitely there are bad characters out there, but then there's also, shame. There's a lot of fear. I was looking back at the archives and some of the stories we've had with financial infidelity.

Yes there were cases where there was definitely an intent to sabotage the relationship and finances, but we had one where they were getting married and in one, couple she was a financial educator and a professional and he felt ashamed.

So he was military veteran. He was working. And so he lied about the status of his finances before they got married. Being a financial educator, she saw certain sides and that led to a confrontation. And then he admitted basically you were so much more ahead of me. I felt inadequate in a sense, but they were able to work it out.

Then I had a case where there was a couple and this happens in a lot of families. There's a go-to person with finances and it either could be based on like the income they make. It could be a cultural. Where one person does it, but it gets to the point where the other one doesn't even check in.

And so there was this imbalance here and in that case, he actually was saying yes to his family. He wanted to, you know, provide for them. He had a good job. So he thought, well, that's what I do. But long story short, it was $109,000 of credit card debt and he had to talk to his wife. He's like, this is all going to come crashing down in two weeks, you know?

Tracy Coenen: So financial infidelity, right? Doesn't have to beat the big stuff. I mean, when people think of financial in infidelity, they think about what I like to call sex drugs in rock and roll affairs, gambling, addictions. Those are all expensive things. And those are hidden for a reason, right? But it doesn't have to be that it can be the just hidden every day spending.

It can be that balance on that credit card. That's creeping up little by little by little. Maybe you always had an agreement that our credit cards will use them, but they're gonna be paid off every month. We're never gonna carry a balance unless there's an emergency. Right but then that balance starts to creep up a little by little and before, you know, You've got a $10,000 credit card balance that one person didn't know about.

And so there is a continuum of financial infidelity. So I don't like people to just think, well, oh, it's the sex drugs in rock and roll and that's not us. So we're okay.

Elle Martinez: Absolutely and I think you also bring up a good point. And I do wanna dig into this, which is this pandemic did a number on us, mentally emotional and for a lot of families, financially. Maybe we feel hopefully that things are turning around. We're getting better. We're thinking we need to pay attention to our finances more.

We need to be on the same page. So you mentioned looking at purchases and, and credit cards in particular. Could we dig into what to look out for? Say you wanna more engaged with the finances. Again, maybe you are suspecting something, but maybe you're saying we're not as far along as I thought we would be, what are some things to look out for or to check up with finances?

Financial Infidelity: What to Look Out For with Your Money

Tracy Coenen: Well, I think the first step that's important for many, many people is just getting bank statements and credit card statements and investment account statements and looking at them at all. Even if you're not looking for anything specific, just having them and looking at them is a great first step because so many people don't even look at them.

Right? You trust your spouse, you have a division of duties in the family and that's perfectly normal. Most families do that where one spouse is primarily responsible for the money, because it makes sense division of duties. But if you're not in that position, I always say every month, I want you to log in online or ask your spouse for that bank statement and look at it.

Just look it over and see because. You are going to know your family and you're gonna scan down that list of spending and you're gonna say, wait a second. What's that for? And you're gonna start asking some questions naturally. Okay. So first step is getting some statements and then second step.

If you're ready to kind of dig into them a little bit and look for, I say, look for unusual things. So look at how often someone's going to the ATM. Look for changes in patterns. We never went to the ATM before, but now I see my spouse going to the ATM twice a week, every week and taking out $500 each time.

And I can't fathom what he would be spending that on. Right. Or certain restaurants or retailers that are frequented that you didn't know about.

I give an example of, you have a spouse who was never into electronics before and now you see that they're having purchases at the apple store best buy that's unusual. So look for unusual.

Why Money Talks Need to Be a Part of Your Routine

Elle Martinez: I think that is fascinating because it does bring out the importance, even if you're not the go-to person, it's always good to have a second pair of eyes to double check everything. Like you said, it could be malicious or it could be something that I've noticed is a spending addiction or a spending problem.

It's so much better to nip it in the bud because your finances are commingling. The accounts are being shared. It's a protection. Even if relationship wise, you guys are okay financially, something's going on that could down the line, tear your marriage up because you're ruining the finances intentional or not.

So I think that's a great idea to have regular check-ins. We're a fan of money dates where, If you wanna go out, have a night in, but you just relax and review the numbers together, just to get a sense of like, how are we doing and what's going on? Are there things we need to work on or upcoming expenses? Making it normal to talk about finances.

Tracy Coenen: What if you didn't know your spouse was going to Starbucks every day and spending $8 every day at Starbucks, right? I mean, that adds up and that might be something important that you could see in the statements that you guys could just address. Maybe the answer is, Hey, like that's my vice that like really gets me going in the morning.

It makes me super happy. Okay. Well that puts a little bit of a strain on our budget. Is there something else we could cut? So you could continue to do that and have your daily happiness, right? Those are easier discussions to have on the front end, before you're in financial trouble.

Elle Martinez: Absolutely. And you know what, maybe you get an idea for an anniversary gift. Okay. Apparently they love cappuccinos. I need to start saving up now for that, but I think that's part of the problem is we see there's a lot of feelings of judgment and value with money. And I don't know any couple that prioritizes exactly the same things I know for me, books and travel.

If you look at my spending, those are the things I love to spend money on my husband's more the tech guy. So I think also having those conversations, like this is important to me, and this is why it's important to me. That way it's easier to fit it in, but I know it's not always that easy. Maybe you're you're uncovering bad financial behavior either like we mentioned, compulsive spending. They don't want to go to counseling for that. They don't wanna see a therapist for that, or it could be something that down the line may lead to divorce.

Are there things someone can do to protect their finances maybe while they sort this out, or even during the process of divorce?

How to Protect Yourself (and Finances)

Tracy Coenen: You know, I always say that you should have your own reserve of money that you can always fall back on. If you think that divorce is on the horizon, it becomes especially important that you have some money of your own. That's set aside in case your spouse cuts you off. Something of this sort. I mean, those are not the fun, happy things to talk about, but that's super important.

So having your own money but also having your own credit. And so making sure that you have a credit card in your name, that your spouse's name is not on. So your spouse can't cancel the card. Can't change the credit limit. Can't take your name off of it. And I know some of the sounds like cloak and Deger not fun to talk about, but super important when we get to the point of divorce, people do sabotage one another. And so those kinds of things are super important to set yourself up in case you think that there may be a divorce coming.

Elle Martinez: Yeah, and I would recommend if you feel you're at this point where you have to protect yourself, that's a sign that maybe also you need to get some counseling, whether that's couples counseling, or even for yourself, cuz this is a very, an emotional time you wanna go in there clear headed.

You wanna have a plan and you wanna make sure, especially if you have kids that they're protected. While things get sorted out that they don't suffer, whether that's, in a financial sense or emotionally and take care of that.

I know we just scratched the surface. Tracy. How could people reach out to you? If they wanted learn more?

Tracy Coenen: I recently released the divorce money guide at divorce money guide dot. It's my way of trying to make forensic accounting more accessible to average people. Forensic accountants are expensive, and if you're getting divorced, that process is already really expensive.

And there were so many people out there who were needing help understanding their numbers, potentially looking for whether money was missing. And so the divorce money guide is an online handbook to help them with that process for a fraction of the cost of what it would cost them to have a forensic accountant on their side.

Elle Martinez: I think we should just wrap this up whether things are going well or not you can't avoid finances in your marriage, in your relationship, you really need to have these conversations.

And like Tracy said, don't make it like the money talk. That's probably the worst way to go make it part of your routine, your schedule, whether that's weekly, monthly, however you do it. But something that's consistent and something that makes money less of a burden or a worry and more, just a tool to accomplish whatever goals you have together.

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Photo Credits: Milada Vigerova and Karolina Grabowska

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