Are You or Your Spouse Committing “Financial Infidelity”?

One of the things most couples argue about is money. But how can you start a life together, buy a house, and pay for your kids if the two of you are in the dark about each other’s finances? According to a study by Mass Mutual, a financial service company, 1 in 4 married Americans admit to keeping a financial secret from their spouses. The study found that the younger people were, the more they kept a secret. Apparently, talking about money is more embarrassing than talking about sex.

The top financial secrets married Americans are keeping from their spouses are 1.) having a separate credit card (38%), 2.) giving money to a loved one (32%), and 3.) hiding a major expense (24%). And more than half (55%) waited until they were married to have the money talk. Like talking about sex, the more you talk about it the better it gets. 

The Give Me the Money Convo

Amanda Wallace, head of insurance operations at Mass Mutual says that “Newlywed couples know first-hand what it takes to plan a wedding, and are poised to put the same level of energy into their finances before and after the big day. But they often don’t. The concepts are similar—researching, engaging professional expertise, weighing trade-offs, making thoughtful decisions, and being prepared for the unexpected on the journey.” But of course, most women don’t want to reveal how much they spent on that killer dress they “got on sale”, and most men aren’t going to admit how much the motorcycle was that they “had to have.”  

Financial advisor like Wallace says her big advice to newlyweds is to “control your financial health as a couple and individually. There can be a lot of debate about what’s mine, yours and ours in marriages, which suggests it’s a great place for new couples to start the discussion of shared and individual assets, debt, accounts and protections for the benefit of today and tomorrow, and the benefit of the household.”

“Talking about money with your spouse isn’t always easy," says CreditCards.com senior industry analyst Ted Rossman. “You can still maintain some privacy over your finances, and even keep separate accounts, but you need to get on the same page regarding your general direction.” His company did a financial study as well, which found that 44% of those in “live-in relationships” thought they were better “money managers” than their spouses, and 12% thought they were worse. 

Write down all your debts and spending habits, your savings and investment goals, stocks you want to buy, and the American Dream: your house purchase. If you establish more of a budget together, and keep from hiding stuff, along with wasting your money on depreciable items, it will keep you from making the wrong financial decisions. It’s also a great time to meet with a financial planner who will help you with making more money with the money you have. Instead of fighting over finances, you can kiss and make up because you are less stressed about money. Saving and investing money together is very “adulating”, and can be fun once you start seeing you are making some money from it. 

So What Do We Talk About?

First, start the discussion with revealing to each other your credit scores and debts. (And agree beforehand not make fun of each other.) You’re in this together. You both need to up your credit scores if you want to eventually buy a house together. “Major life decisions that you’ll want to make as a couple like buying a house or taking out loans will be impacted by your credit score, so if you need to take corrective action, you should know as soon as possible,” says Wallace. Here’s where the secrets come in. Who wants to admit they have a low credit score? If that’s the case, there are a bunch of things you can do; from opening up new credit accounts to lift your “available credit ratio”, to paying down cards you already have to raise your score. 

As far as keeping separate checking accounts go, each of you might want to keep your own checking account, as well as opening up a joint checking account for agreed-upon expenses. And you never want to get into a situation where you miss your shared credit card payments that can screw up your credit scores instantly, another reason to pay cards on time. 

Till Debt Do Us Part

What most couples don’t realize is that the individual debt they start incurring once married, is shared. Baron Bilart, a former bankruptcy attorney who advises people on Nolo.com, says that “Generally, debts incurred by you or your spouse prior to marriage or after separation or divorce, are not considered combined debts.” However, debt incurred during the marriage, if they are household expenses, are considered combined ‘community debts’ and both spouses are considered equally responsible.” 

Be prepared for the unexpected, and get some professional expertise from a financial planner so you don’t have to worry so much. And as always, be prepared for the worst and hope for the best.