Financial infidelity ruins relationships. Don’t let it put an end to yours.
$154. That's the maximum amount both millennials and baby boomers agree you can spend without having to tell your partner, according to a MONEY poll.
Unsurprisingly, millennials and boomers also cited frivolous spending as the top cause of money-related fights in a relationship. Considering that two-thirds of adults in relationships combine their finances with their partners, it's clear how careless spending can cause serious damage and trust issues. And this Valentine’s Day, instead of spending money on chocolates, flowers and gifts, consider spending time on strengthening your financial relationship with your partner.
Excessive spending is just one example of financial infidelity, which is the act of concealing aspects of one's finances from a partner. Other examples include hidden bank accounts, misrepresented net worth and secret debt.
Financial infidelity doesn't have to involve a large amount of money: the amount in question can range from hundreds of dollars to millions. But even if the amount involved in the deception is small, keeping financial issues secret is simply bad for a relationship.
And financial infidelity is more common than you might think. The National Endowment for Financial Education says 42% of US adults have committed financial infidelity; two years earlier, that number was 33%. And financial infidelity, just like sexual infidelity, becomes hard to escape: 75% of adults surveyed said it affects their relationships.
Thankfully, financial infidelity is avoidable. All it takes is transparency and communication—the bedrocks of any healthy relationship. If you and your partner are preparing to combine finances (or have done so already), following these steps can help you both get on the same page.
Be upfront about your income, assets and debts
The devil is in the details here. You and your partner should share exactly how much you take home each pay cycle, as well as your monthly expenses. If you have assets, such as property or investments, disclose those, too. Generation X couples, in particular, tend to have the least clarity when it comes to their partner’s finances, according to a 2015 Fidelity study.
It's also important to be forthright about any debt, because it plays a significant role in financial health and can wreak havoc on relationships. Disclosing your debt can be uncomfortable, especially if it’s high, and you may be scared that your partner will judge you harshly. But being embarrassed in the short term is worth it if it means having true financial transparency for the long term.
Assess your spending habits
Some people are frugal; others are more reckless with their spending. Understanding how and where you and your partner spend money will make it easier for you to determine your respective financial values. Furthermore, this objective analysis will force you and your partner to confront any bad spending tendencies you have. And if either partner has a real problem, you can take the time to resolve the situation before combining finances.
Agree on how to combine your finances
Now that you're armed with a clear picture of your finances and spending patterns, you and your partner can create a realistic financial plan that will help you meet your needs and reach your goals.
Decide on how you'll pay the bills. Even if you don't split them, partners should provide each other with access to all accounts in order to maintain financial transparency. It's also a good idea to set a threshold for discretionary spending. While many millennials and boomers agree on $134, only you and your partner will know what number is the difference between comfort and frustration.
Finally, if you have any shared goals, such as a house, or expenses, such as rent, discuss whether or not you and your partner should maintain a shared savings or checking account.
A plan is worthless if you don't stick to it, and there's no way of knowing how well you're doing unless you monitor your progress. By conducting regular checkups, it will be easier to spot any financial infidelity warning signs, including an unwillingness to discuss money, secrecy around account management and new, unexplained bills. Checkups also give you and your partner the opportunity to reevaluate your plan and adjust accordingly to any changes in your situation.
Don't let financial infidelity become a third wheel in your relationship. Insist on transparency and communication on all financial matters. Your relationship—and wallet—will be better for it.