Cheating hearts: Is your spouse unfaithful? (Financially, that is.)

The problem started two years ago when Ian’s consulting business ran into difficulties. He started to worry about the household budget. Now he constantly double-checks his credit card bills, turns down the heatin the house, frets about household expenses. His wife, Alice, a 49-year-old part-time school teacher, thinks Ian is overreacting. She likes nice clothes, gardening gear and artwork. To avoid setting off her husband, she regularly hides major purchases from him. Her most recent deception included a $300 lithograph that she “just had to have” for her art collection. To make sure Ian doesn’t notice such expenditures, Alice avoids using her credit card. Instead, she visits the ATM close to their Toronto home and withdraws $80 to $120 from the couple’s joint account until she has enough cash to pay for her purchases. “Ian goes through the credit card bills with a fine-toothed comb,” says Alice with a giggle. “But he never checks the savings account or ATM withdrawal slips.” Alice and Ian (whose names we’ve changed to protect their identity) are just one of a growing number of couples suffering from financial infidelity. The infidelity may be as seemingly innocent as a wife lying to her husband about the price of a pair of shoes, or it could be as disastrous as a husband concealing a $500,000 loss in the stock market, but its hallmark is a refusal to be honest with your spouse about money. Therapists and financial planners say they’re seeing more financial infidelity than ever before, perhaps because more and more marriages consist of two-income couples. Spouses who earn separate paycheques find it hard to surrender control over money they’ve earned. Especially if they’re a bit older when they marry, they equate giving up control over money with giving up control over their lives. “People are afraid that if they tell each other what they’re buying, they will be forced to compromise so much,” says Linda Cartier, a financial divorce specialist in Sudbury, Ont., “that they see it as a loss of financial freedom.” People won’t tell their spouses about their money lies—but they will tell pollsters. Harris Interactive Inc., a U.S. market research firm, found that nearly all of us (96%) agree that it is both partners’ responsibility to be completely honest about financial issues. Nearly 24% believe so strongly in this principle that they say openness about money is more important than being sexually faithful. Yet, almost one in three (29%) admit they have lied to their partner about finances. The survey results don’t surprise Cartier, the divorce specialist. They reflect what she’s seen with her clients. “A lot of spouses actually feel that they’re making things better by keeping their purchases and their money habits a secret,” she says. “They don’t want to argue or have a confrontation.” Alice would agree with that sentiment. As she talks about her small deceits, it’s clear that she rather enjoys fooling her husband. For instance, when she buys a print, she sneaks it inside the house and hides it in the back of a closet until “the opportune moment” when Ian is “in a really good mood” and then brings it out to show him. Alice never reveals the whole truth, though. Instead of admitting she spent hundreds of dollars on a purchase, she tells Ian she bought it at a local flea market or yard sale for only $10. “My visual environment is important to me,” says Alice, who hides as muchas $1,000 in purchases from her husband every month, including shoes, kids’ clothes and gardening equipment. “I like nice things. Ian doesn’t understand that. I just want to avoid a big fight.” Fibbing can be cute if it’s a matter of not confessing to your wife exactly how much you lost in the neighborhood poker game, or not mentioning to your husband that you just dropped $300 on a pair of pumps. Often, though, our evasions can be more serious than we think. “The real problem is that you’re violating an agreement,” says Brenda MacDonald, an independent financial counselor in Vancouver. “If I say I’ll do that, and then I don’t do that, it becomes a trust issue.” Once your spouse loses trust in your financial fidelity, he or she may begin to question whether the marriage is worth it. John, a 46-year-old Toronto writer, says he broke up with Eileen three years ago after losing patience with her out-of-control spending. “She bought and hid everything,” says John. “The sheer quantity of it was amazing—everything from clothes to electronics and household items.” Eileen thought nothing of maxing out her credit cards or going into debt to the Canada Revenue Agency. “I covered for her for a while,” says John, “but I’m Scottish and tight like my dad. It got so bad that I even started seeing credit card limits as a blessing because I figured once she reached the limit she would have to stop. But I was wrong. She just started hiding brand new credit cards from me.” John tried to discuss money with Eileen but the talks went nowhere. “Every time I broached the subject, it became personal,” says John. “She’d say things like, ‘You don’t love me’—that kind of thing. I think a lot of her spending was emotional—dating back to her childhood and the bad money habits she learned from watching her parents.” To make matters worse, Eileen’s spending was mixed with serious bouts of depression. John was sympathetic, but when Eileen refused to attend financial counseling, he decided that he had had enough. “It became a matter of how much was I willing to put up with for the sake of the relationship,” he says. “After five years we went our separate ways.” hile John was taken aback by Eileen’s overwhelming emotional need to spend, therapists say that for both men and women, money is more than a number. “Money holds a lot of emotional symbolism,” says Barry McCarthy, a certified clinical psychologist with the Washington Psychological Center. “Men and women differ in the nature of their infidelity. There’s much more of a tendency among men to hide income, while women tend to be more concerned about hiding excess spending.” Ruth Hayden, a financial educator and author in St. Paul, Minn., believes men are driven by a need to show off their ability to their world. “Men need to believe they’re successful. They have more ego. Men who feel they are falling behind often think that if they can hit a big one—whether in the stock market or at the gambling table—they can catch up.” One of Hayden’s recent cases involved a retired attorney who decided to trade his own stock portfolio. He ended up losing $500,000. “He went into a massive depression and was hospitalized,” says Hayden. “After that, he and his wife came to see me. He was intelligent, a good husband, great father, but he thought he was invincible. His wife stuck by him, but now he’s in his late 60s and back at his job as an attorney. He’s trying to fix some of the financial damage while he still can.” Amanda Mills, a financial therapist in Toronto, says men become overconfident about their financial ability, especially if they’ve had a string of recent successes. “If anything goes wrong, men often think they can fix it before their partner finds out,” says Mills. “But lying about money, whether it’s bonuses, or gambling or stock market losses, can be progressive. It often just gets worse before it gets better.” Consider Mario, an office worker from Guelph, Ont. Once a month for seven years, Mario told his wife, Katherine, that he was going to Sudbury on business. He was actually going to gamble. She only found out about it after she tried to book a holiday on his credit card and discovered it was maxed out. “His wife thought he was having an affair,” says Jennifer Will, a problem gambling counselor with Homewood Community Addiction Services in Guelph. “She said to me, ‘You know, he would come home late, go to pay for something and not have any money. Other times he would just sneak out at night for the strangest of reasons.’ When she found out he had gambled away their RRSP money, she almost wished he had been having an affair because that would have been a lot easier to deal with than trying to rebuild their life savings.” The good news is that you can get your relationship onto a solid financial footing by following some simple rules. Here’s how:

Get naked (financially)

Manisha Thakor, the Houston- based co-author of On My Own Two Feet: A Modern Girl’s Guide to Personal Finance, says couples must consciously learn to reveal all when it comes to money. “People say that for a relationship to work you have to be physically and emotionally compatible,” says Thakor. “But for a truly healthy relationship you have to be financially compatible as well.” If you’re just about to get married or move in together, Thakor say it’s an excellent idea to exchange three things: a list of what you own (cars, homes, stocks and bonds), a list of what you owe and—just to make sure no fibbing is going on—your most recent credit reports. Especially if you’re getting married, you may be surprised at what your beloved has, um, forgotten to mention. “A credit check is just as important as a blood check,” says Hayden, the financial educator. “The two of you must sit down and make full disclosure about money. And included in the debt portion of what you’re revealing should be a credit score. Because if he says he’s really frugal with money and then you find out he’s carrying $14,000 worth of debt, you’re going to say to yourself, ‘Hmm, we might have a different definition of frugal here.’ ”

Know your financial goals

You and your spouse should aim to do a joint financial checkup at least once a year, and preferably every six months. Tally up what you own and what you owe. Review your bank statements and investments together. Be honest about any setbacks—if you’re in charge of investing and a stock has just plummeted, it’s better to tell the truth now rather than wait and hope for a rebound. Conversely, if you’re the partner who doesn’t do the investing, be supportive about your spouse’s honest mistakes, rather than condemning him or her for every downturn. You should realize that financial goals often change in a marriage, says Marlene Neufeld, a financial therapist in Ottawa. Perhaps you and your husband both enjoyed frequent nights out when you were dating, but now that you’re saving for a house, you feel you should cut back—but he doesn’t. Or perhaps you would like your wife to go back to work, but she feels that staying home with the kids is more important. These and a thousand other disagreements need to be discussed, as openly and as rationally as possible. But forget the notion that the other person somehow needs to be fixed. While naturally thrifty people often assume that they’re in the right and their free-spending partners are in the wrong, you accomplish nothing by attacking your partner in hopes that you’ll somehow succeed in changing their fundamental personality. Far better is to tell your partner how you feel and demonstrate on paper why you feel that way. If you feel that he or she is overspending, draw up two budgets for comparison purposes. The first should show how the money is being spent now; the second should show what you could accomplish if that money were put to a better purpose. The other budget “should include fun stuff like a vacation,” says MacDonald, the financial counselor. “Just saying the extra money will go towards more savings isn’t enticing.”

Develop a system for spending and saving

A single clear rule on how much each party can spend goes a long way to ensuring a happy marriage. Mills, the financial therapist, recommends that you put a dollar limit on individual purchases—say $300 or $500 or even $1,000. Agree that any purchase above that limit automatically becomes a joint decision and must be talked over with your spouse. Guidelines like this can’t prevent all problems, but they can prevent surprises—like your spouse showing up with a new car or a new bedroom suite that he or she never discussed with you. Many other approaches are possible, of course. Hayden, the financial educator, advises two-income couples to set up four accounts. One is for savings and one is for household expenses. The other two are for you and your spouse. Both of you agree on how much of your joint income will be saved, how much will pay for household expenses, and how much will go into your personal accounts. The important point is that you have no say over how your partner spends his or her personal cut. Divvying things up this way ensures that each partner retains his or her independence, but it also establishes a framework for working together.

Draw up a contract

A pre-nup—or marriage contract as it’s called in Canada—isn’t the most romantic way to ensure financial fidelity, but it is effective. If one or both of you has come to the marriage with significant assets, a marriage contract can be a lifesaver. A contract clearly states who has rights to which property; it can also outline the financial responsibilities of each partner within the marriage. If you divorce, the contract can save you a small fortune in legal fees. “The courts will strain to uphold the property provisions of any marriage agreement,” says Philip Epstein, a family law expert and partner at the law firm of Epstein, Cole in Toronto, “but you must have full and complete financial disclosure. Failure to do that can be lethal.” Even couples who have been married for decades can benefit from a marriage contract. A “mid-nup” agreement can state how much each spouse is allowed to spend, the amount each spouse will contribute to a joint account, and how conflicts will be settled. “A contract makes the financial side of a marriage very clear and explicit,” says Hayden, the financial educator, who recommends mid-nups to couples who still love one another but suffer from persistent conflicts over money. “A contract can say things like, ‘Your debt is yours and I’m not paying for it. As long as you don’t hurt our credit score, I don’t care.’” Linda Ippolito, a family law lawyer in Toronto, says one of the most important features of a good mid-nup contract is a mediation clause that sets out how conflicts will be refereed. Most mediation clauses require that warring spouses first talk to each other. If that talk fails to resolve the issue, the clause names a mediator acceptable to both spouses. Husband and wife agree on how to share the cost of the mediator and agree to abide by the mediator’s ruling. “People don’t take such a contract lightly,” says Ippolito. The mere fact of having a mediation process in place prevents many problems from spiraling out of control and offers a good place to begin rebuilding any marriage threatened by financial infidelity.