What is financial infidelity? And how can you prevent it?
Brad wanted to refinance his mortgage in order to build a new home for his family. Since his wife Gillian was on the title, it meant their banker, Tim, needed to pull up the credit report for both of them. First, he needed to get them to sign the approval to access their credit report.
Gillian made a call to Tim to tell him she did not want her husband to know how much outstanding debt she had. She claimed it was from loaning money to ‘a friend.’
This is an example of financial infidelity. Not because Gillian loaned money to ‘a friend.’ Financial infidelity happens when someone makes financial decisions that affect their partner without first disclosing their actions.
That does not mean you need to call your partner for every purchase you make. In this story clearly, Gillian’s actions impact the financial well-being of their family. Especially since her outstanding debt will affect the amount of money that is accessible to them through the refinance. The more debt that is outstanding, the lesser the capacity for more credit.
And if both parties are on the title of the house, then financial institutions need to consider both party’s current financial situations.
Conflicts over the subject of money are one reason many couples choose to separate. You can prevent this by broaching the subject of money before making any kind of commitment.
But what happens if you’re married?
Don’t wait till things get bad. Start by inviting transparency. The best way to do that is by becoming transparent yourself. And another way to get your partner to open up is to ask them to talk about their financial goals. Discuss your dreams and goals as a couple and as individuals. Discuss how you can support each other’s goals — emotionally and financially.
Money is an emotional subject — it can mean security and safety for some and fun and adventure for others. Discuss what money means to both of you. Respect your differences.
Decide how you want to deal with conflicting goals. One of you may want to complete your Ph.D. while the children are still young. And the other may want to start a business.
Your new partner may need to know how her finances are going to be affected by your alimony or child support payments. Have you updated your Will since your divorce? And changed the beneficiaries on your life insurance policies? Have you updated the beneficiaries on your policies? Or is your ex-wife still named as beneficiary on your insurance? Do you still have a mortgage with an ex?
Does your partner know that you are still supporting an adult child from a previous marriage?
All this is not important if you decide to keep things completely separate. But if you decide to buy a home together, then your partner’s obligations will affect your finances. This is worth discussing before you decide to commit to each other.
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