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Secrets between spouses
Keeping the peace in some marriages involves keeping some spending secrets.
March 11, 2005: 3:00 PM EST
By Scott Medintz, MONEY Magazine. Additional reporting by Joan Caplin, Judy Feldman and Ellen McGirt.

NEW YORK (MONEY Magazine) - Judging from the survey, marriage is to money secrets what a hothouse is to tomatoes. And many couples have no problem with that: 44 percent say it's okay to keep financial secrets from your spouse, at least under certain circumstances.

Spending elicits the most marital subterfuge. Some 40 percent of married respondents, for example, admit that they've told their spouse that they spent less on something than they actually did.

No gender surprises here: Women were more likely to have told their husbands they paid less than they really did for clothing, shoes and gifts; men to have understated spending on car stuff, entertainment and sports tickets. Interestingly, though, wives who owned up to fudging on what they spent were most likely to do so on items for their children. Husbands, by contrast, were most likely to have lied about what they spent on themselves.

Downplaying a purchase price is a marital misdemeanor, but hiding the purchase altogether kicks the deception up a few notches. Even so, 16 percent of the married respondents admitted they'd bought something they did not want their spouse to find out about.

Husbands and wives both were guilty of this practice, but guys turned out to be the big-ticket secret spenders: Twice as many men as women said they'd spent more than $1,000 without their spouse's knowledge. Women were most likely to say that less than $100 was the most they'd ever spent without telling their husbands.

What's the point of all this sneaking around? To keep the peace. Some 43 percent of respondents said the reason they deceived a spouse was to avoid conflict.

"A lot of married people don't share spending details because they don't want a spouse telling them what they should and shouldn't do," says Violet Woodhouse, a financial planner and family law specialist in Newport Beach, Calif. "We don't want to be judged, and we don't want to be held accountable."

Among respondents who hid purchases, in fact, 45 percent did so to avoid a spouse's anger, disapproval or lecturing.

Suzanne, a business consultant who lives in Connecticut, says this is why she hides many purchases from her husband. (Due to the sensitive nature of the subject, MONEY agreed not to fully identify the people who responded to our requests for personal stories about financial deception.)

"Anytime I buy something, I get a lecture from my husband," she says. So now whenever she shops for herself -- and the bills can run as much as a few hundred dollars a month -- she keeps the loot in the trunk of her car and waits until her husband is out to bring it in. He often catches on, asking, "Is that new? When did you get it? What, another pair of sandals?"

She says, "I just don't want to hear it." A word to the wise, spouses: However much you disapprove of your partner's spending, trying to control it too forcefully could backfire.

Victoria Collins, an Irvine, Calif. financial planner and the author of "Couples and Money," cites the example of one client, whose husband routinely demanded detailed accounts of her spending, even asking to review her grocery receipts. Yearning to assert her independence, the wife started running up large purchases on plastic, even though she knew her husband would find out.

"The glee she got from defying him outweighed the pain of his anger when the statements arrived," explains Collins, who also has a doctorate in psychology.

The client moved on to skimming from her household expense kitty, building a secret stash she could spend without her husband's knowledge. The marriage, not surprisingly, ended in divorce.

Talk of secret stashes in marriage often elicits a quiet chuckle of recognition, particularly among women. In fact, though, very few of the married people in our survey owned up to having such a cache. But three in 10 did say that they or their partner had a separate account both knew about. So what's the secret? About 30 percent of the time, only the owner knew how much the account held.

Still, these separate accounts are often a smart arrangement, says Olivia Mellan, a Washington, D.C. psychotherapist who specializes in financial issues.

"There's a big difference between privacy and secrecy," says Mellan, author of "Money Harmony: Resolving Money Conflicts in Your Life and Relationships." "Privacy allows you a degree of autonomy in your relationship, and that's healthy."

By agreeing in advance that each spouse should have some separate discretionary money to use however he or she wants, you eliminate the resentment that helps fuel secretive spending. (See "How to stop the lies".)

Respondents claimed that they keep very little from their spouses apart from spending. Few admitted, for example, to misleading their partner about how well the household was doing financially.

Among those who did, the most common ways were to give the impression that they earn more money than they actually do, to overstate their investment gains or to understate their losses.

Take Steve, a small business owner from New England who, unbeknownst to his wife, invested his three sons' college savings in a single penny stock -- and lost all $50,000 of it.

"My wife would never have gone for something so risky, but I kept thinking the stock would come back," he says. "I'm trying to make it up little by little. I still haven't told her. She'd lose it." Steve is playing a very dangerous game.

"It's no big deal to keep minor purchases secret," says Scott Stanley, a psychologist at the University of Denver's Center for Marital and Family Studies and co-author of "You Paid How Much for That?" "But when the amounts are out of control, you're endangering your family's future."

Steep losses are tremendously difficult to recoup quickly, simply as a matter of arithmetic: For every 50 percent drop in a stock's value, for instance, you need to double your remaining stake just to get even. That leads many secret investment losers to try to dig out quickly by taking ever more desperate risks.

Besides, secret losses have a way of suddenly ceasing to be secret -- usually painfully. One way or another, Steve is likely to find himself confronting an outraged wife.

Collins points out that his best hope of putting his family's finances back on track -- not to mention his marriage -- is to come clean before his wife finds out on her own. First, though, he should put together a prudent plan to make up at least some of the losses, involving real sacrifice on his part.

"He can promise, say, to delay replacing his car or to give up Saturday golf and put the fees toward rebuilding the college fund," says Collins. That's far less risky than doubling down on other dubious investments in hopes of covering his mistake.

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