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Hristina Nikolova, a behavioral data scientist at Northeastern University, has been investigating the impact of financial ‘cheating’ among couples.
LONDON — Ripped up receipts. Rushing to intercept the postman. New credit cards arriving frequently in the mail.
These are just a few of the telltale signs that your partner is not being entirely honest about their spending.
According to a survey carried out in December by consumer financial services company Bankrate, 4 in 10 U.S. adults who are married or living with a partner admitted to keeping financial secrets from their other half.
Almost a quarter of participants said they held secret debt, while 18% confirmed they had a credit card their spouse was not aware about.
None of this is news to Hristina Nikolova, an associate professor at Northeastern University. The behavioral data scientist has spent her career researching decision-making by couples and has delved into the topic of financial infidelity.
A paper she helped produce in 2020 — which researched six categories where there can be financial infidelity: spending, saving, debt, gift-giving, gambling and income — looked at the knock-on effect that such behavior has on the marketing and sales industries.
“When you engage in that type of behavior, you’re more likely to look for ways to hide it — that has implications for how marketers offer their packaging and so on,” Nikolova says.
“So now you can imagine a brown box that doesn’t have any branding to suggest that there is a $500 Prada sweater or bag inside.
“We also found that another consequence [of financial infidelity] is there are consumers who prefer individual credit cards, even though these individual credit cards might come with a higher interest rate compared with a joint credit card that has a 0% rate. They are willing to incur a financial cost in order to be able to hide and not leave a track of their behavior on the joint credit card statement.”
The paper Nikolova published four years ago with three other researchers — “Love, Lies, and Money: Financial Infidelity in Romantic Relationships” — claims to be the “first to introduce, define, and measure financial infidelity reliably and succinctly and examine its antecedents and consequences.”
It used laboratory and field studies, along with analysis of couples’ bank account data, to produce a “financial infidelity scale” to measure how prone a consumer was to concealing their monetary activity.
The consumer insight expert’s latest research has looked to expand on what the “consequences” are when someone engages in so-called financial “cheating” when in a relationship.
“The first part of this work started with, ‘OK, what is this phenomenon?’” Nikolova says. “It’s very prevalent — there are a lot of industry surveys that show that people hide credit cards, people hide their spending, people hide the loans.
“But people also hide savings accounts, so it is not about hiding only spending; it is not about only hiding the negative behaviors. People also hide positive financial behavior.
“Our first paper was trying to understand this, including how we measure it and what are the marketing implications. And then in a new paper that we are working on right now, we are looking at this more from a relationship perspective — the dynamics between the two people, how they impact the relationship as a whole, and also the financial wellbeing of the couple.”
In her current paper, Nikolova and two colleagues — Jenny Olson from Indiana University and Joe Gladstone from the University of Colorado — found that couples containing one person who is prone to financial infidelity are less satisfied in their relationship and tend to have fewer total assets.
That is true when compared to couples where both say they are transparent about their spending and also against couples who both concede that they hide elements of their spending from each other.
“With couples who both are highly prone to financial infidelity, they felt like they were on the same page,” Nikolova says.
“They have this aligned understanding of their goals, so that leads to more relationship satisfaction. They think, ‘Yes, we’re both doing it so we’re aligned. That’s OK, so we feel happier.’
“But when one of them feels like they are deceived by the other person, then that leads to misaligned goals and that leads to lower satisfaction in the relationship.”
This financial deception can take many forms.
“You can think about experiences like going and spending money on a lavish dinner with your friends and not telling your partner about that,” Nikolova continues. “You can also pretend that a [new purchase] is a gift. You could hide the boxes and then pretend it was a gift from someone — people do that.”
The infidelity does not even have to be small scale. According to a report in The Times, some wealthy couples hide buying villas and holiday homes from their spouse.
Nikolova says there can be lots of reasons for couples fibbing to each other about what they are using their credit cards for, but as researchers they are “agnostic to what the motives are.”
“We have evidence that the misalignment in the financial goals is what is driving the lower relationship satisfaction, but we haven’t done any studies on why they start cheating financially in the first place,” she says.
The impact of financial infidelity, she argues, can be as bad, if not worse, than romantic betrayal.
“In our first paper, we made the argument that [financial infidelity] actually might be more hurtful to a relationship than romantic infidelity,” Nikolova continues.
“If there is romantic infidelity, there are the psychological consequences of being deceived. But then you can end the relationship and you are not left with any financial consequences.”
With financial infidelity, you might be left with a lot of debt, especially if you are married, she points out.
“If your partner has built up debt, legally you are also responsible for that,” Nikolova says. “And then on top of that, you also have the psychological consequences of being deceived and so on.
“So it could be argued that financial infidelity is actually more detrimental than the romantic or sexual infidelity that we have spent so much time researching in the past in psychology.”