The Untold Story of Financial Infidelity

It seems as if you can't pick up a paper today or turn on the TV or radio without hearing about the infidelity compromising the reputation of some man in power -- Spitzer, Patterson, Kilpatrick. Everyone thinks these are big scandals, but in terms of the total effect on women, financial infidelity can be the real destroyer.

Financial infidelity occurs when a partner hides financial assets or keeps financial secrets. It can be devastating to a relationship. Have you ever bought something and hidden the real cost of the item by charging only half on the credit card so your spouse won't know the real value? This is a small lie, but a lie nonetheless. Have you ever asked your husband, "Hey honey, do we have enough saved up for the kids' college educations?" and he answered, "Don't worry about it. I'm taking care of it."

Sometimes, these lies or platitudes can take on more extreme forms, such as hiding bank accounts or other assets and running up large credit card debt. Both types of lies can contribute to a lack of trust in a relationship and create further problems. It seems that people have a hard time discussing money matters with their spouses and an even harder time tolerating the dissonance brought about by money conflicts. Once trust is broken -- it's very hard to repair.

Spitzer and Kilpatrick went to great lengths to conceal not only their sexual trysts, but also their financial deceit. This is a generalization -- but it's usually the man who hides assets. Not only do men tend to be the major breadwinners, but many women don't get involved in the financial aspects of the relationship.

This is a huge risk for women who leave money matters up to their husbands. Women who see money matters as confusing, scary, or complain they are just too busy to deal, make themselves vulnerable to financial infidelity and future hardships. As Leslie Bennetts and Linda Hirshman argue in their recent books, Feminine Mistake and Get to Work, respectively, women tend to hand over all financial responsibilities to the men in their lives once they have children. If and when divorce or financial infidelity happens, they end up lacking in retirement funds and, at worst, in poverty.

We all know that sexual infidelity can wreck emotional devastation, but financial infidelity can also leave scars for years to come. When women are confronted with a life changing event such as death or divorce, there may be many surprises when they go to divide assets or settle an estate. There could be fewer assets to divide either because they are hidden or they are encumbered by debt that the wife did not know about it. Their children may not be able to the colleges they hoped to as a result of bad planning.

Women are financially vulnerable because of perfect storm of influences. First, they have a longer life span (approximately seven years longer than men) and lower earnings (25% less). Second, many of us take time off to be the primary caretaker, further lowering our earning power. Third, women tend to me less investment savvy and much more risk averse. All of this results in a critical shortfall in their economic security. Financial infidelity just adds insult to injury.

I know we are all extremely busy with the kids, homework, sports and every other little thing on our to do lists, but we still need to take care of ourselves financially because then we will truly be taking care of the family as well. What can we do?

First, do not hand over the purse strings. Understand the household expenses and where the money is going. Attend meetings with financial planners, accountants and attorneys. Together make a list of all bank and investment accounts as well as insurance policies and retirement accounts. Also, list the beneficiaries on the accounts since the beneficiary designation overrides a will and determines who will get the asset(s).

Second, don't lose your financial identity. For example, most women have a joint credit card with their spouse and are an authorized user only, which means they have no obligation to pay the debt BUT they also have no credit history. A better idea is to be a co-applicant or maintain your own credit card in addition to your spouses. Also, make sure you open up a bank account in your own name. Try to contribute, even just a little bit, to the account ever month.

Third, keep your skills fresh. According to the US Census, the number of stay-at-home moms has increased by 26% over the last 10 years. It is hard to imagine when you are so busy with the kids, but someday you may want or have to return to work. It's not only very difficult for women to on-ramp again, but her salary can take deep cuts as well.

Fourth, save for retirement. Don't leave it up solely to your husband to decide how much you will need for retirement. Make it a priority and know what is in place for retirement. If you are employed, save as much as you can through a company's retirement plan. If you are not employed, contribute to a spousal IRA.

You can't immunize yourself from the possibility of financial infidelity (or sexual infidelity for that matter), but you can put yourself in a position where it won't ruin your life. It's time that women took responsibility for their own financial wellbeing. It's not unromantic. It's realistic.