Teresa Giudice's antics as one of the Real Housewives of New Jersey captured the attention of Bravo television viewers. But she's becoming well known for the financial crisis she now faces after her husband hid millions of dollars in debt. Giudice told hosts of The View that she thought she was spending within her means. After her husband's failed investments caught up with them, he came clean and the couple filed for bankruptcy.
Hiding spending from a spouse isn't always that dramatic, and it's more common than you probably think. According to surveys conducted by CESI Debt Solutions, Capital One, and the University of Pennsylvania, about a third of us lie to our partners about our spending. These relatively informal polls don't distinguish between a forgotten lunch at Taco Bell or a spending binge worthy of its own Hoarders episode. However, researchers found six common themes to hidden expenses:
#1: Gifts and Discretionary Spending
Most personal finance advisers agree that spouses should allow each other at least a little budget of their own to play with every month. But hidden gifts and splurges often signal a lack of control in other areas of our relationships. An extravagant gift for your spouse or for your children might seem like a great was to show you care about them, but psychologists warn that shopping for affection doesn't lead to permanent happiness. Cars, boats, and houses can easily become symbols for negative turning points in family finances.
#2: Credit Card Debt
In one informal survey, about one in five respondents admitted to maintaining a secret credit card. Hidden credit card debt can put a huge strain on a relationship, if only from the stress of keeping a spouse from finding out. Not only must you keep bank statements and passwords secret from your spouse, you've got to make extra money to pay down finance charges and fees. Secret accounts often find the light of day when spouses make innocent credit requests, like seeking pre-approval for a mortgage or requesting a joint account from the secret card's issuing bank.
#3: Loans to Family and Friends
Personal loans can ruin marriages, friendships, and family ties, especially when they go unpaid. If it's not bad enough to hide personal loans from your spouse, imagine the trouble you'll be in when Uncle Sam starts looking at your books. Over the past few years, the Internal Revenue Service has stepped up enforcement of the rules that govern loans between friends and family. Even an interest-free loan could leave you on the hook for what the government calls "imputed interest," or the amount of money you would have made if you had lent the cash at market rates.
#4: Hidden Savings
Authors Scott and Bethany Palmer write about five common "financial personalities," including one they call "The Security Seeker." It's easy for them to look beyond natural savings goals, like college or retirement, and obsess about the day they might need to flee from a failed marriage. In many cases, their actions turn into self-fulfilling prophesies. Other times, savers may feel compelled to hide cash from spend-happy spouses who don't think far ahead when it comes to money. Both examples highlight a lack of trust that can emerge in relationships between people who didn't fully investigate their financial compatibility before marriage.
#5: Failed Investments
Even with the best of intentions, a spouse can sabotage long range savings plans by making the wrong investment decision. The Palmers point out the differences between Security Seekers and "Risk-Takers," entrepreneurs or investors willing to put everything on the line in exchange for a shot at a windfall. Just as hidden credit card debts require constant covering up, a failed real estate deal or a busted stock pick can force spouses to work overtime or to take even bigger risks, just to come out even.
#6: Food and Drink
It's easy to "eat your feelings" when something's not right about your relationship. For some couples, a morning ritual at the drive-thru window can turn into hundreds of dollars a month in unexpected expenses. Surveys indicate that couples hide alcohol purchases from each other more often than anything else in this category. Whether it's buying a round for friends after work or covering up an addiction, it's easy to hide a series of small credit card charges until the other spouse starts wondering where all the money went.
According to psychologist Dr. Kalman Heller, most couples hide spending habits from each other because each spouse feels fear or shame about some aspect of themselves. Heller and other relationship experts advise setting a time each month to look at financial statements and regular bills, so that spouses can rationally discuss money instead of just fighting about it. Some "play money" in the budget for each spouse to use as they wish can also defuse arguments. Getting clear about money can make room for the parts of your relationship that really need attention.