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Money secrets can damage relationships and lead to divorce

NYT News Service|
Can financial infidelity lead to divorce?
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Can financial infidelity lead to divorce?

Do you know why your spouse never tells you about the money she spends or saves in her bank account? Beware, as this habit of financial infidelity can be dangerous and may lead to divorce faster than you ever thought.

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Are you honest about your money habits?
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Are you honest about your money habits?

According to researchers, romantic partners aren’t always honest about money in their relationships, but when does hiding purchases, debt and savings constitute ‘financial infidelity’? Research by professors at four universities, including Indiana University, have defined financial infidelity as “engaging in any financial behaviour that is expected to be disapproved of by one’s romantic partner and intentionally failing to disclose this behaviour to them”. It involves both the financial “act” and the subsequent concealment.

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Is it same as secret consumption?
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Is it same as secret consumption?

Financial infidelity differs from secret consumption and merely hiding spending as it involves a broader set of financial behaviours, including seemingly “positive” actions, such as saving extra income in a personal bank account. “An understanding of financial infidelity can benefit financial services companies and advisors, clinical therapists and relationship counselors, all of whom play a role in promoting consumer wellbeing,” Olson said.

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A barrier to effective planning!
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A barrier to effective planning!

If couples seek professional financial advice, they must be willing to openly discuss their spending and savings habits, debts and financial goals. “It is clear that financial infidelity is a barrier to effective planning, as well as to a healthy relationship,” said researchers.

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The finding!
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The finding!

The researchers have developed a “financial infidelity scale (FI-Scale)” using a dozen lab and field tests. Among the key findings are whether the financial act is expected to elicit any level of disapproval was more important than the degree of disapproval. “Consumers more prone to financial infidelity exhibited a stronger preference for secretive purchase options, such as using a personal credit card versus a jointly held card, and cash over credit,” said the findings. The prevalence of financial infidelity among consumers and variations along the FI-Scale affects purchasing decisions. It is important that companies be aware of certain consumer segments that may be prone to financial infidelity and thus affect their bottom lines, the researchers noted.

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