A little honesty could be the best Valentine’s Day gift this year.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
The big result
Almost one third (31%) of respondents said they believe that a partner taking steps to hide credit cards is worse than physical cheating. Yet 15 million Americans admit that they’re guilty of this kind of financial infidelity; they either hide credit cards or bank accounts from their partner.
The fascinating details
Those 15 million aren’t the only ones guilty of financial infidelity either. Another 9 million said they’ve hidden credit cards and bank accounts in the past, but have owned up to it since.
Here’s a breakdown of who is most likely to hide credit cards:
- 23% of people in relationships hide credit cards and bank accounts. However, those who don’t live together are more likely to hide aspects of their finances.
- 85% of people say they try to be honest with their partners about money. But 77% said they don’t feel their partner is as truthful.
- If you make less than $40,000 per year, you’re the most likely to think financial infidelity is worse than cheating.
- 11% of people say they never discuss finances with their partner. Women were more likely not to talk money than men.
What you can do
“It’s understandable why so many Americans view financial infidelity as worse than physical cheating,” says April Lewis-Parks, Financial Education and Communications Director for Consolidated Credit. “Financial infidelity messes with your money. It’s impossible to balance a budget and make real plans to achieve your goals if your partner is hiding debt, income or any part of their financial life. How you can work together if one person is holding things back?”
What’s the harm in hiding? It makes it impossible to move forward effectively!
- If you hide credit cards from your partner, it affects your household debt-to-income ratio. When you apply for financing, you could get rejected because you have too much debt. That wouldn’t be a welcome surprise as you go to buy your first home together, for instance.
- Hiding credit cards also means you aren’t contributing as much. If you’re using your income to cover bills your partner doesn’t know about, it means you’re not contributing as much to bills you hold together.
- If you hide bank accounts, you’re keeping money that could be used to achieve life goals together. Money in hidden accounts tends to be spent more frivolously. These purchases may make you feel good, but they use up income that could be spent on achieving things you want to do together.
Lewis-Parks encourages those one in ten people who don’t talk money to do so soon.
“You need to have an honest conversation about your finances,” she explains, “and that doesn’t just include revealing hidden accounts. You each need to put your cards on the table. How much debt do you have? Where does each person stand with credit – is it good or bad?”
Lewis-Parks also recommends talking about more “mundane” aspects of your finances:
- How do each of you prefer to pay bills – online, by mail or auto pay, etc.
- When do you prefer to pay bills – when you receive the bill, on the due date, etc.
- How do you save money and how much do you like to save each month?
- Do you pay just the minimum requirements on your credit cards or do you prefer to pay off your balances in full every month?
- Do you keep a formal budget or use a budgeting tool?
“Then, you need to talk about your financial goals,” Lewis-Parks continues. “This can be an exciting conversation, as you look towards the future and plan how to get there.”
Consolidated Credit offers a booklet that helps couples who are getting married with a roadmap for their money talk. It’s not just beneficial for people who are engaged. If you’re moving in together or if you’re already married and never had the money talk, you can use it.
This guide is designed for newlyweds. It addresses financial concerns for people who are married for the first time, as well as for those people blending families from prior marriages. It teaches couples how to combine their finances, set mutual goals, and decide how to manage their money to achieve their goals.
Lewis-Parks also encourages anyone currently hiding credit cards to find a way to eliminate that debt.
“Revealing hidden debt may be easier if you can show you’ve found a solution to get rid of it,” she explains. “If you can’t pay off the balance using traditional payments, you need to find debt relief.”