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Author of best-selling books Kill Your Mortgage and Sort Your Retirement, and The Perfect Balance: How to Get Ahead Financially and Still Have a Life.
Hannah McQueen has helped thousands of Kiwis identify their financial goals and put in place a plan to make them happen. Through her regular column in JUNO, Hannah shares the challenges and questions she helps her clients resolve, and explains how to kill off debt and regain control of your finances.
Studies show that arguing about money is the top predictor of divorce. Almost 40 per cent of spouses admit lying to or deceiving their partner about money. It’s called ‘financial unfaithfulness’. And it replaces sexual infidelity as the leading cause of relationship strain and breakdown.
In my role as a financial coach, I’ve seen many examples of financial cheating: when you overstate income, downplay spending habits, or hide debts from your partner. You let your partner believe you’re in control of your finances, when clearly you aren’t.
Cheating can come as a shock
I recall one meeting that took an awkward turn when the husband admitted he had debts of more than NZ$150,000. This was a shock to his wife. These debts were business loans and new credit cards with unpaid balances.
When she was told, the wife cried. She was frustrated at her partner for not telling her sooner, angry that he was prepared to jeopardise their financial position, and embarrassed that she hadn’t realised how bad things had become. On reflection, she confessed to “having an inkling”. But she hadn’t wanted to dig deeper.
It’s important to say the debt was not due to her husband’s frivolity. The debts had made it easy to overspend when the couple didn’t have the money in the bank. He had hoped the situation would right itself. But it didn’t. They needed to sort the problem. If she was to trust him, she had to know they would not end up in the same place again. They needed a strategy and a framework, as well as accountability andtransparency.
I said we could correct their situation over the course of one year. This couple is now in control, and on track to be mortgage-free in seven years, including the extra loan and credit-card debt.
Taxing a relationship
The most common arrears one partner incurs without the other knowing is debt to the Inland Revenue Department. Essentially, you are spending the tax money on a lifestyle you can’t actually afford.
Often the cheater doesn’t even want to know how much tax they owe, preferring to pretend that the debt doesn’t exist. And if it doesn’t exist, then they don’t need to discuss it. They hide the fact that they are sinking, in the vain hope that things will sort themselves out. They assume that telling their partner will just make the situation worse.
Choosing to remain in the dark can be just as financially damaging. In fact, I believe one partner’s ‘hands-off’ disengagement from the finances often facilitates the overspending in the first place.
Money issues cannot be buried – they will rise to the surface. Depending how severe they are, financial problems will create anything from a ripple to a tsunami on the calm waters of your relationship.
Acknowledging, then acting
My advice to people in this situation is first admit the issue, then work on fixing it. This can be confronting and very emotional, which in turn results in hurt feelings instead of progress. Sometimes people need to be ‘called out’ on their behaviour, and supported to create a different reality.
Do not remain hands-off with your finances. Money problems are rampant, and are an increasing cause of failed relationships. Financial success is about making progress, and living a life you enjoy. But it’s also about making headway in the face of setbacks.
Go on, address the issues and get on track to a happy, healthier relationship and a happier, healthier you!
Hannah McQueen is founding director of enableMe – Financial Personal Trainers.