Financial Infidelity: The Little Green Lies We Tell

From Brad

Do you keep money secrets from your partner? Do you spend money without your partner’s knowledge? Do you hide your purchases from your partner? Do you tell your partner you spent less on something than you actually did? Do you have secret stashes of money that your partner knows nothing about? Have you made investment decisions behind your partner’s back?  If you answered “yes” to any of these questions, you may be putting your relationship at risk by committing acts of financial infidelity.

In a survey of 1,001 people commissioned by Money Magazine, forty percent of the respondents admitted that they have told their partner that they paid less for a purchase than they actually did. Sixteen percent confessed to buying something that they did not want their spouse to know about.

While both men and woman admitted to financial dishonesty, women were more likely to tell their husbands that they paid less than they actually did for clothing and gifts, while men minimized their spending on cars, entertainment, and sporting events. Almost twice as many men admitted that they had spent over $1,000 without their wife’s knowledge, while women were more likely to say that the most they had spent without telling their husbands was $100.

Forty-five percent of those who admitted being deceitful around spending stated that they were not honest about their spending in order to avoid their partner’s anger, disapproval or lecturing. In the same survey, 44 percent reported that they believe it is okay to keep financial secrets from their spouses.

It is not surprising that people keep secrets about money. Many couples avoid talking about money because it is such an emotionally loaded issue. If and when financial infidelity is discovered by one of the partners, it rocks the very foundation of their relationship. “If he/she is being deceitful about this, what else are they lying to me about?”

Financial infidelity is such a common issue in our work with couples that my father and business partner, Ted Klontz, Ph.D., and I developed a four step process for addressing financial infidelity in relationships, which uses the acronym SAFE:

  S: Speak Your Truth. Talking about money and our financial behaviors is a taboo topic in our culture. We find that people are often more willing to talk about their sex lives than their financial lives. Many of us carry significant shame around money, often because we think we have too much or too little. The first step to establishing financial safety in your relationship is to sit down with your partner and talk about money; what it means, your early money experiences, your preferred spending/saving style, and your financial goals.

  A: Agree to a Plan. Many acts of financial infidelity occur with couples who lack explicit agreed-upon strategies of spending and saving. A comprehensive spending plan is an essential component of a healthy financial relationship. It is helpful for couples to agree on the amount of money that each can spend without needing to consult with their partner. When a potential purchase goes above the agreed upon amount, the couple agrees to consult with each other prior to making the purchase.

  F: Follow the Agreement. It sounds simple, but this is the hard part. An agreement is only as good as a couple’s commitment to honoring it. It is helpful in the beginning to set up the agreement to be valid for the next 30-60 days. After the agreed upon period of time, the couple meets and answers these three questions: Is the plan working for me? Is it working for you? Is it working for our relationship? If either person in the couple answers “no” to any of these questions, the couple should renegotiate their plan.

  E: Establish an Emergency Response Plan. If couples find that they can’t talk about money without fighting, can’t come to an agreement, or can’t keep their agreements about money, they may be in trouble. As such, it is important to have an Emergency Response Plan, which goes into effect when these types of difficulties arise.  This plan identifies, ahead of time, what the couple will do when they arrive at an impasse. For example, when a couple cannot arrive at or adhere to a plan, the Emergency Response Plan might include an agreement to seek help from a psychologist, pastor, social worker, or marriage and family therapist.

With money being the number one cause of marital conflict and the number one cause of divorce in the early years of marriage, couples cannot afford to be financially unfaithful. Use the SAFE process to establish an agreement around money with your partner to maintain financial fidelity in your relationship.   

Brad featured in Honolulu MidWeek

June 6, 2007

SAFE Financial Infidelity Advice

  by Katie Young

In this article, “The Young View” columnist Katie Young interviews Brad regarding steps couples can take to prevent financial infidelity.

New Automobile Commercial "Winks" at Financial Infidelity

From Ted 

Have you seen this commercial? A lady is seen coming out of various stores and stowing her purchases in the floor wells of her new mini-van where, if wanted, the seats can be stored to produce a flat interior surface inside the van. In this case however, she takes the seats out of their stowed position, which makes room for her to hide her various packages. The commercial ends with her pulling into the driveway, and shows her husband approaching the car as she brings it to a stop. He looks inside the car and says: “I thought you were going shopping”. She just smiles.

What we are watching is a light-hearted media sanctioned example of what we call “Financial Infidelity”- that is, telling lies about, omitting, giving false or incomplete information about or otherwise hiding money behaviors from one’s partner or spouse. Studies show that 40% of couples admit doing it. Fifty percent of people admit they think it is okay to do! But our experience in working with couples tells a much different story.

Lying about money behaviors and being caught by one’s partner raises the same questions in the offended partner’s minds as does being caught lying about a secret relationship. It creates, consciously and unconsciously, feelings ranging from unsettling mistrust to those of outright anger and rage at one's trust being violated. At the very least, it raises the question: “If he/she is lying to me about this behavior, what else don’t I know?” Financial Infidelity takes many forms. As we travel and talk about Financial Infidelity, it seems that everyone can relate to a story of being on one side or the other of Financial Infidelity. We recently collaborated with Jeff Zaslow of the Wall Street Journal on an article addressing the subject:

http://www.careerjournal.com/columnists/movingon/20060331-movingon.html

Our book on the topic is in the development stages. We have been interviewed on radio and television (The Today Show), as well as been asked to contribute to magazine articles addressing the topic (most recently an interview with “Details” magazine). People seem to be hungry to learn more about this concept.

There is an old adage that says, “We are as sick as the secrets we keep”. In other words, our relationships are as healthy as the amount of truth we tell. This is true about our money behaviors too. With television commercials like the one described above, reflecting a culturally sanctioned “wink” at such behavior, it is no wonder that money is one of the biggest stressors in our lives, and one of the biggest threats to the integrity of our relationships.

Engaging in Financial Infidelity in intimate relationships can lead to disastrous results. We have seen it first hand.

Statistics on Financial Infidelity

From Brad

Financial Infidelity may be much more common than you think!

A study commissioned by Money Magazine revealed some startling statistics. In a survey of 1,001 people, over half reported that money was a sensitive topic in their households. Forty percent admitted that they have told their partner that they paid less for a purchase than they actually did. Sixteen percent admitted that they had bought something that they did not want their spouse to know about.

While both men and woman admitted to dishonesty, woman were more likely to tell their husbands that they paid less than they actually did for clothing and gifts, while men minimized their spending on cars, entertainment and sporting events. Almost twice as many men admitted that they had spent over $1,000 without their wife’s knowledge, while women were more likely to say that the most they had spent without telling their husbands was $100.

Forty-five percent of those who admitted being deceitful around spending stated that they were not honest about their spending in order to avoid their partner’s anger, disapproval or lecturing. In the same survey, 44 percent reported that they believe it is okay to keep financial secrets from their spouses.

Source: Medintz, S. (2004). Secrets, lies and money. Money, 34(4), 121-128.

Financial Infidelity: When It's OK To Shop Behind Your Spouse's Back By Jeff Zaslow ~ The Wall Street Journal, March 31, 2006

This Wall Street Journal article started a media frenzy that ended with Ted making appearance on the Today Show!

http://www.careerjournal.com/columnists/movingon/20060331-movingon.html

Marital disharmony in America could be eased overnight by a little machine that would sit next to cash registers at every retailer. It would authorize not only your credit-card limit, but also your "spousal authorization amount." That would be the maximum dollar figure you are permitted to spend without informing your spouse. Each couple would determine its own limits in advance, a giant bureaucratic agency would be informed, and countless money battles and divorces could be avoided. That's all wishful thinking, of course. Even if such a gadget were to be built, millions of couples would abhor it, because they're addicted to surreptitious spending. Surveys show that up to half of all couples admit that they commit "financial infidelity" -- lying to spouses about expenditures they've made. At the same time, financial and marital advisers say that a touch of secret purchasing can be healthy and liberating for a marriage. Will an unauthorized purchase strum up marital discord? Above: The $5,999 Martin 000-ECHF Bellezza Nera guitar. So how should couples develop a formula for their discretionary spending? In the corporate world, inventory managers use the term "open to buy," which refers to the amount available to spend. These days, a cottage industry of consultants is helping couples negotiate their own "open to buy" amounts. Ted Klontz is president of Onsite Workshops, an organization near Nashville that helps people with financial issues. Last Friday, he visited a couple in their Tennessee home to help them sort out their spending patterns. The husband is a high-earning music-industry veteran. His wife goes on frequent secret-spending sprees, dropping many thousands of dollars at a pop, usually on clothing. Reviewing their financial records, the couple had a realization: The wife's buying usually followed incidences when the husband was unkind to her. She was retaliating subconsciously, says Mr. Klontz. "Instead of saying, 'Ouch, that hurt,' she'd walk away feeling unloved, then buy things to feel better. This is extraordinarily common." Complicating matters, the wife is beautiful and the husband likes her to look beautiful, says Mr. Klontz. "When she dresses nicely, he falls in love with her all over again. He reinforces the buying behavior." Mr. Klontz is helping this couple understand their dynamics. When couples get married, they often resent losing their autonomy. A common refrain: "Why must I ask permission before I spend money? I'm not a child." Mary Hunt, founder of the DebtProofLiving.com advice Web site, tells spouses to give each other an "adult allowance" -- money that can be spent however they want, without having to justify it. The amount is determined after reviewing all household expenses. For Ms. Hunt and her husband, the amount agreed upon is $200 a month. Ms. Hunt advocates sharing credit reports before marriage, which can reveal a runaway spender. "It's more important than a blood test. It's a character reference." After marriage, couples should have "money dates," where they go through everything they've spent "except the allowance money," she says. They should do it in public places so they're less likely to argue. All this can be a challenge because our culture indulges extra-marital spending. Wine locker rooms now cater to collectors who don't want their spouses to know how many expensive bottles they've purchased. Credit-card statements feature camouflaged business names to mask fees paid to porn or gambling Web sites. Store gift cards can be loaded up with stray cash, and even if your spouse snoops through your wallet, the card doesn't indicate a value. A lot of people find insidious ways to hide secret spending. Some use a check to buy groceries, write it for a larger amount, and get cash back from the supermarket. "They'll use the difference to pay for a pedicure," says Ms. Hunt. "I call it 'money laundering.' " When the canceled check arrives, their spouses assume the full check went for groceries. Ms. Hunt says she pulled such antics earlier in her marriage. She got a private post-office box so her husband wouldn't see bills. She burned collection notices. She'd rip off tags, and put new outfits in her closet for a while, so she could swear that "they're not new" if her husband asked. By 1982, she was $100,000 in debt. It took 13 years for her to get solvent. Her advice: If you're deceitful, ask yourself, How would I feel if my spouse did this to me? Mr. Klontz says that, years ago, he and his wife agreed that they could each spend $150 a month without informing each other. One day, in a music store, he saw an $800 guitar. He wanted it. He bought it. He took it home and played it for his wife. She thought he sounded great, but then asked: "How much was it?" When he told her, she reminded him of their agreement. "You're right," he said. "I don't deserve this. I'll take it back." "No, that's OK," she replied. "You work hard. You do deserve it." He kept the guitar, but has since realized that he was being passive-aggressive. Rather than focus on his violation of their agreement, he played the victim, and manipulated her. Richard Kahler, a financial planner in Rapid City, S.D., runs workshops with Mr. Klontz. Mr. Kahler learned just this week that his wife, Marcia Welch-Kahler, has secretly been spending $30 a month without telling him. Since 2004, she's been supporting a disadvantaged girl in India. "I've wondered why I never told Rick about it," Ms. Welch-Kahler says. "I guess it just felt private. It's something I did that was mine." Mr. Kahler is philosophical about this. "Sometimes," he says, "a spouse really needs to have 'me only' money."

Ted Interviewed by Details Magazine

From Ted

Last spring, we were again contacted by the Wall Street Journal to contribute to an article that financial columnist Jeff Zaslow was writing about couples who keep the truth from their partners about their money behaviors. The resulting story created quite a stir. Within hours of its appearance in the paper, we were swamped with calls from the national media for follow-up radio interviews and television appearances, as well as requests from newspapers and magazines to offer comment on the topic. We have had the opportunity to continue to be involved in introducing the concept to more and more people.

The latest manifestation of this effort can be found in the September 2006 Details magazine. I talked with author Kayleen Schaefer for nearly two hours late last May, giving her background on the concept and offering her couples she might contact who might be willing to talk to her about their personal experiences with what we call “Financial Infidelity". Although she does not refer to us directly in the resulting article other than to use the words “relationship experts”, Ms. Schaefer did an excellent job of concisely and entertainingly introducing the concept of Financial Infidelity to a new audience of 25-40 year-old men. The couple’s stories she shares, are nothing short of amazing, and yet are pretty typical of the stories we hear from couples we work with who are struggling with the aftermath of discovering that they have been lied to or found out.

We are currently working on a book called “Little Green Lies” that is designed to help couples protect their relationship and families from the destruction that can result from this common and troubling phenomenon.

Dishonesty and your loved ones.

This has been one of the most difficult topics for people to accept in a long time. Every day, year in and year out, husbands, wives, partners, and significant others are lying, scheming, and threatening the very core of their relationships -- trust. They engage in secret borrowing, spending, loaning, giving, investing, or gambling. The resulting damage to a relationship can be severe, permanent, and irreparable.

But it doesn't have to be.

Financial Infidelity consists of withholding or distorting important financial information from one's spouse or partner. And it's becoming increasingly frequent. With the ready availability of credit cards, home equity loans, and other borrowing opportunities, many individuals in relationships spend, conceal it, and quickly get in over their heads. Whether it's the view that "It's easier to get forgiveness than permission" or "this is none of their business" or "Well, it's just one small account," this type of deceit sows the seeds of distrust and anger.

It is with mixed emotions that we acknowledge that Financial Infidelity seems to be coming to the forefront. One one hand, we are pleased to be able to call attention to it and help, and on the other, even we are surprised by how much of it exists.

Share your story here, anonymously, and allow us to help explain some of the steps you can take. And the beauty of blogs like ours is that you can gain support from other bloggers through their Comments. Or, contact us directly (ted@klontzcoaching.com or brad@klontzcoaching.com) if you want to talk with us.