What is financial infidelity?

Financial infidelity is a serious relationship issue; it is an indicator of lost trust. With financial infidelity, communication also suffers which can affect other areas of your relationship. In Canada, the top reason for divorce is financial issues, or financial infidelity. In fact, 68% of terminated marriages ended in Canada over finances or property related problems. The second most common reason for divorce was romantic infidelity.

Interestingly, our southern neighbors in the United States don’t have the same statistics. The number one reason for divorce in the US is lack of commitment (75%) followed by romantic infidelity (60%). Only 37% of marriages ended as a result of monetary problems and financial infidelity in the US. Clearly, Canadian couples struggle more with financial infidelity in their relationships!

Ultimately, financial infidelity revolves around lies and deceit regarding shared and personal finances. It occurs when one partner withholds financial information or overspends outside agreed guidelines. However, it can also pertain to deception of personal financial details, such as one partner saying they have more wealth than they really do or hiding accumulated debts. Keep reading to learn the signs of financial infidelity and how to approach it.

What is financial infidelity? 

Financial infidelity occurs when partners who share finances start lying about money. However, it can also be the deceit of personal finances that are not necessarily shared in the partnership. This can become apparent in many ways, such as hiding debts one partner is not aware of or overexaggerating net worth. It can also show up when one partner makes a large, perhaps impulsive, purchase without discussing it with the other partner. Shared finances require open communication and full disclosure. Straying from this in any way can be referred to as financial infidelity.

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Signs of Financial Infidelity

When you share finances in a marriage or partnership, it can be difficult to imagine hiding information. Although, money can be a touchy subject for some and not everyone is great at managing it. With this can come shame and make it difficult to talk about in the relationship.

Individuals may apply for new credit cards and not tell their partner about it. They may even have secret spending habits or private bank accounts. Sharing finances requires open communication and guidelines for how money can be used. Unfollowed guidelines or evasive communication can indicate financial infidelity. If money is missing from shared accounts, questions should be raised. There is a chance cash is being withdrawn for debts or to make large purchases. If a partner becomes defensive or refuses to answer questions about shared money, this is a bad sign. 

Here are some common signs of financial infidelity to watch out for:

• Opening a new credit card or line of credit in either partner’s name in secret
• Lying about credit scores
• Spending large sums of money without discussion
• Accumulating and hiding debts
• Lying or concealing spending habits
• One partner manages all the finances solely and separately from the other partner
• Requesting signatures on financial or legal documents without allowing time to read and process them
• Stonewalling during financial related conversations
• Lying about earnings and keeping a portion to oneself
• Having secret bank accounts, credit cards or other accounts
• Hiding shopping, gambling or other addictions
• Withdrawing from retirement or investment accounts without consulting your partner
• Lifestyle changes, such as a new wardrobe or sudden, lavish vacations
• Removal of a partner from a joint account
• Secretive, defensive and impulsive behavior

Effects of Financial Infidelity

Money can be tricky to talk about with anyone, especially if there are financial strains. Financial infidelity affects both parties greatly. Important information is hidden about something that affects everyone in the partnership. This can even extend to children or other members of your family who may rely on you financially. Trust in the relationship becomes broken and will take significant work to repair. Reoccurring financial infidelity could leave someone feeling betrayed, angry, foolish, and much more.

Here are some other effects that arise from financial infidelity:

• Setbacks with major financial goals, such as being able to afford a down payment, pay for a child’s education or retire by a certain time
• Falling into a spiral of debt
• Losing assets suddenly to repossession
• Relationship problems, such as more frequent arguing, separation and even divorce
• Decreases in credit scores
• Struggle to pay bills and other financial obligations
• Lifestyle downgrades, such as having to move into a smaller home or cut back on certain luxuries

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Examples of Financial Infidelity

Here are several common examples of financial infidelity:

• Money has been withdrawn in large amounts or high frequency from joint accounts
• Conversations about money withdrawals or use do not go anywhere
• Money from joint accounts is going towards personal debt, without discussion
• One partner has begun contributing reduced amounts to joint accounts
• Lying about when and how money was spent
• All debts or bank accounts were not disclosed when finances were joined
• Making large purchases without discussion or consent from your partner
• Hiding financial information that may go against the partner’s expectations or agreed budgets
• Unmanaged shopping, substance, or gambling addictions that require excessive withdrawal from shared financial accounts

Is financial infidelity a crime? Is financial infidelity abuse?

Generally speaking, financial infidelity is not a crime in Canada. However, some acts that fall under financial infidelity may be considered a crime. For instance, if your spouse opens a credit card in your name and acquires debt on the card without your knowledge, this is technically a crime. It would be considered fraud. Although, financial infidelity on it’s own is not a crime. If you suspect there’s illegal activity related to finances happening in your relationship, it’s best to consult a legal professional.

As for abuse, financial infidelity can be a sign of greater financial abuse, or the beginning of such abuse. Financial abuse heavily surrounds a partner who excessively controls finances. In their control of the finances, they aim to control and manipulate their partner on a deeper, more emotional level.

Ultimately, abuse is a complex thing and it often must be assessed on a case by case basis. But it is important to note that financial infidelity can absolutely be a form of abuse. If you suspect there’s financial abuse in your relationship, consider reading Financial Abuse in Marriage: 9 Signs, Tactics & How to Deal and seek professional guidance from a trained therapist.

Financial Infidelity in Marriage

Many marriages end due to financial problems, including financial infidelity. As mentioned above, a whopping 68% of divorces in Canada happened over financial problems. This makes it the most common reason for divorce, even surpassing romantic infidelity and other forms of abuse.

With the ongoing economic problems in Canada, such as high inflation, mass layoffs and exorbitant property prices, there is an even greater financial strain on marriages right now. Many couples may be feeling the pressure financially which might extend to other parts of the relationship. Only you can decide if your marriage has reached its end. Consider counselling or seeking other professional support in reaching this decision.

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Is financial infidelity grounds for divorce?

Financial infidelity is not legal grounds for a divorce at the time of writing. In Canada, there are three allowable legal reasons for divorce:

• Being separated for one year
• Adultery
• Cruelty

Financial infidelity is coined as the “new adultery” given that it impacts more marriages than unfaithfulness in the modern age. However, this has not yet made its way to the legal system.

In practice, most divorces occur and end on the grounds of separation for one year. This ground for divorce is the least complicated to prove. In turn, it is the cheapest method of divorce. The other two methods involve lengthy and costly proceedings. 

There may be an opportunity to argue cruelty due to financial infidelity. However, this may not be the most efficient and effective way to secure a divorce.

Can you sue your spouse for financial infidelity?

In short, yes, you can sue your spouse for financial infidelity through divorce proceedings. During your divorce, you can argue debts cannot be divided as matrimonial property. The argument here would be that these debts were incurred without your knowledge or approval. Further, you gained nothing from these debts as they only benefited the other party. You may also be able to build a case for a settlement related to excessive, non-mutual expenditures made by your partner during the course of the marriage.

Anything that cannot be settled amicably during proceedings and must be decided by a court will be costly. It may not always be in your best interest to sue the other party or make costly arguments in court. In some cases, it might be better to let bygones be bygones so you can move forward from a relationship troubled by financial infidelity. Consult a legal professional to determine the most cost effective and reasonable approach.

How to save your marriage after financial infidelity?

Once trust has been broken, it is always difficult to rebuild, regardless of how it was broken. But it is not impossible, especially if both sides acknowledge the issue and are willing to work through it. It is wise to seek professional help when saving your marriage. A counsellor or therapist will guide you through challenging conversations towards a healthier relationship. 

In general, you will have to work on:

• Acknowledging damaged trust. You cannot mend a relationship if both parties do not acknowledge the key issue. 

• Disclose all information. Financial infidelity involves lying about finances. The truth must come out, and there needs to be honesty about all information.

• Define and clarify your joint values around finances. Have conversations about individual relationships, and values and learned belief systems about money. Find your joint goals. Work to understand if these goals are possible. You must consider your disclosed individual histories with money.

• Work on your relationship in all capacities, not just finances. Financial infidelity may be the final straw as to why you are working on things. In all likelihood, other areas of your relationship can be improved. Work on them all slowly, to come out stronger and more aware of each other.

• Have open conversations; hear and listen openly. Actively listen to each other and share your concerns and desires. If you cannot speak openly and hear each other, this needs to be worked on. 

• Aim to be fully transparent with your partner. Financial infidelity results from hidden finances. You need to establish a system of joint monitoring and discussion on expenditures. Will you sit down together once a week and review budgets and statements? – Find a system that works for you and keeps you both accountable to transparency in your finances.

How do you deal with financial infidelity?

Aim to quickly resolve financial infidelity once it is identified. Become honest about your shared financial status and health. Seek support from financial professionals in establishing budgets and other joint approaches to money. Further, seek support from relational professionals in resolving relationship and trust matters. Finally, try to avoid arguing or making each other feel small. It’s best to take the high road when resolving financial infidelity, especially if you want to try to save the relationship.

How to recover from financial infidelity

Recovering from financial infidelity is not simple. It will require work from both partners. Most importantly you need to know when to seek the help of professionals. They will assist you in becoming more honest and open with each other. Money is difficult to navigate. It becomes easier with the help of others. Many professionals have strategies on how to speak about money. They also have insights into other underlying issues that may be at play. Financial infidelity is an indicator of multiple problems in relationships. All issues need to be addressed. While recovery from financial infidelity is not impossible, it requires work. 

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Should you forgive financial infidelity? 

Forgiving financial infidelity is a personal decision and may depend on the severity of the situation. Multiple factors will come into play. How long was the financial infidelity occurring? How much debt has accumulated? Was the debt used on an extramarital affair? Was the debt used to support an undisclosed addiction? Have there been other problems?

At the end of the day, only you can decide if financial infidelity is something you can forgive. The other party needs to be willing to repair the damage and take accountability. You then need to figure out methods to ensure financial infidelity does not reoccur. This will require establishing better communication and understanding. Reach out for support from psychological and wealth professionals when needed.

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