There are good secrets and bad secrets, especially in marriages. A good secret might be that you found a certain vintage jigsaw puzzle your partner has long been seeking, and it’s wrapped up under the tree. A bad secret… well, how about if you’ve got a secret credit card? Or you’re making secret purchases? Or you’ve racked up some debt that your other half doesn’t know about?
Lots of surveys have revealed that a significant chunk of married folks have financial secrets like these. They’re bad because they can put a couple’s finances on shaky ground — but even worse, they can put the entire marriage on shaky ground, too.
The survey says…
The folks at StudentLoanHero.com recently surveyed 1,000 people carrying more than $6,000 in credit card debt. More than 40% of them had over $15,000 in credit card debt. But one of the most surprising findings from the survey was this: 32% of respondents said that they’ve hidden their credit card debt from their significant others. Why? Well, they felt ashamed of it, and/or they wanted to avoid arguments or fights.
Here are some related findings from other surveys:
- Almost half of Americans said that their significant other or spouse didn’t know how much they spend on holiday shopping according to a Swagbucks survey.
- 63% of Americans go into debt due to holiday shopping, with 25% of them racking up debt of $500 or more according to the same Swagbucks survey.
- Arguments about money have been shown to be the top predictor of divorce, per a 2013 Kansas State University study, and a survey taken in the same year of 191 Certified Divorce Financial Analysts cited money issues and arguments as the third most common cause of divorce.
- 58% of survey respondents said they conceal cash from their spouse, 30% hide bills, and 15% hide bank accounts, per a 2010 survey by the National Endowment for Financial Education. Also troubling: 34% said they lied about their earnings, their debt, and/or their finances.
- In Canada, fully a third of respondents to a 2018 survey said that finances are the biggest stressor in their relationship, with 20% saying that their significant other was unaware of how much debt they had.
Diving into deception
If you can’t see what the fuss is all about, consider that when a couple has joint financial accounts, joint ownership of a home, and are authorized users on each others’ credit cards, their lives are deeply intertwined financially. If one party racks up a lot of debt as an authorized user on the other party’s credit card, that other party is responsible for it. If one party misses a mortgage payment, credit scores can take a hit — and missing mortgage payments can even lead to the loss of the home.
As just one example, the table below shows the importance of a strong credit score when you want to buy a home (credit scores make a difference in other aspects of your life, too). It reflects someone borrowing $200,000 via a 30-year fixed-rate mortgage, and reveals that the difference between a good credit score and a bad one can be $100 to $200 per month and tens of thousands of dollars in interest paid.
| FICO Score | APR | Monthly Payment | Total Interest Paid |
|---|---|---|---|
| 760-850 | 4.516% | $1,015 | $165,498 |
| 700-759 | 4.738% | $1,042 | $175,065 |
| 680-699 | 4.915% | $1,063 | $182,780 |
| 660-679 | 5.129% | $1,089 | $192,208 |
| 640-659 | 5.559% | $1,143 | $211,477 |
| 620-639 | 6.105% | $1,213 | $236,549 |
Even if mortgage payments and credit card bills are being paid off on time, if you and your partner are still not quite on the same page regarding your finances there can be significant discord. For example, if you like to spend all the money you both have coming in on vacations and toys, new cars and entertainment, you’re not leaving anything for retirement savings or for college savings for your kids. If your partner has a retirement savings plan and you’re torpedoing it, you’re going to be living in a house of strife.
What to do
The first thing to do, and to do often, is to communicate. Be open about how you’re each managing your joint money and financial obligations. Together come up with a long-term financial plan for how you will achieve long-term goals such as retirement. You can have short-term goals and plans, too, such as when you agree on how much to spend on holiday shopping and how you’ll save that sum before the holiday season approaches. Check in on your progress toward goals regularly, and be accountable to each other.
If you’re already struggling with a lot of debt, know that you can pay it off — especially if you work together on that. A part-time job for one or both of you can help, as can many other strategies for getting out of debt.
It can also be helpful to consult a financial advisor. A good one will cost you some money, but he or she can more than offset that by making sure your money is parked in the most productive places and that you have a plan that will get you to your goals.
Here’s a little incentive, too: Couples that work hard at a sound plan can pull off all kinds of financial feats — even retiring early in some cases!
About 16% of marriages end because of financial infidelity per a survey by the National Endowment for Financial Education. Don’t let that happen to yours.