December 23, 2019

The Secrets of Financial Infidelity

Couples don't always see eye to eye when it comes fo spending money, and some resort to hidden cash purchases and hidden accounts.

The busiest shopping season of the year is also the perfect time for couples to engage in financial infidelity, making purchases in secret that they expect their romantic partner is likely to disapprove of. The financially unfaithful are likely to hide the purchases they make and costs associated with them.

People who are prone to hiding purchases from their partner may choose to pay cash and tend to shop at stores that are open to cash transactions; they may keep a personal, rather than joint, credit card or bank account, and request packaging that conceals their purchases.

Financial infidelity is a real problem for both consumers and companies. A new research paper looks at financial infidelity, rather than sexual or emotional infidelity, among romantic partners. The lack of research on financial infidelity is surprising because it is so common.

“Financial matters are one of the major sources of conflict among couples,” Hristina Nikolova, corresponding author on the study, told TheDoctor in an email. Previous studies have shown keeping money secrets in relationships can be a deal breaker, she said.

Those who scored higher on the FI scale were more likely to hide their purchases and even bank accounts from their partners.

Couples who disagree about financial goals are more likely to commit financial infidelity than those who have similar goals, according to Nikolova, the Coughlin Sesquicentennial Assistant Professor of Marketing at Boston College. People who are unsatisfied with their relationship and who are not as emotionally invested in the relationship are more likely to commit financial infidelity than those who are more committed to their partner.

Sometimes financial infidelity occurs for reasons of safety and not for immediate gratification or because one partner disagrees with the other. Hiding money and purchases can be a way to escape violence.

The researchers conducted 12 studies to develop and refine their Financial Infidelity (FI) scale, a measure of the likelihood that people will commit financial infidelity. These studies also analyzed the impact of financial infidelity on consumer behavior, reviewing bank account data collected in partnership with a money management app. The researchers found app users who scored higher on the FI scale were more likely to hide their purchases and even bank accounts from their partners.

Nikolova and her team — which included researchers from the Mendoza School of Business at the University of Notre Dame, the School of Management, University College London and the Kelley School of Business, Indiana University — plan to look at specific factors within relationships that make consumers more or less prone to financial infidelity. These factors can include the distribution of financial responsibility within the relationship, the relative decision making power of each partner, the management of separate versus joint resources and the frequency with which partners discuss finances.

“The likelihood of financial infidelity occurring varies across relationships,” Nikolova said. The same consumer can be financially unfaithful in one relationship, but financially faithful in another, she added.

This study included only U.S. participants, so future studies could examine financial infidelity in other countries, Nikolova said, as well as how different cultural ideas about masculinity, femininity and the balance of power between partners are associated with financial infidelity.

The study is published in the Journal of Consumer Research.

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