What tall tales have you told your other half recently to keep your secret spending on the down low? You know, that outfit you wore Saturday that you said your mum bought you ages ago, or those sneakers you hid in the car for weeks which you insisted you got last winter but just forgot about?
According to research, one in five Australians is spending money in secret, with clothing topping the list, followed by gambling, junk food and cigarettes.1
We look at who’s spending in secret, which couples have more transparency due to joint accounts, and how habitual secret spending can impact relationships as well as household finances.
Who’s shopping in secret?
On average individuals are forking out around $2,713 a year on purchases they’re hiding from their partner, with 44% using cash to do this, 26% using credit cards and 17% using debit cards.2
When it comes to the average secret spender, Generation Y is spending nearly twice what Generation X is and more than six times its baby boomer counterparts.3
Research shows that the average Australian is also $1,196 in debt because of sneaky spending habits.4
What about shared accounts?
While many prefer to keep their finances separate, whether they indulge in secret spending or not, there are a number of couples opting to merge their money.
Around one in five couples has a shared savings account and around one in four a shared credit card, with those most likely to do this being baby boomers, followed by Generation X and Y respectively.5
While there can be benefits to a joint account—as you’re paying fees on one account rather than two and repayments on things like your home loan or rent might be easier to manage—there are still risks.
For instance, if your partner racks up a large debt on your joint credit card, you’re both responsible for paying it back. And, if they default, it will affect your credit rating as well as theirs.
Is financial infidelity really a problem?
A recent survey by Relationships Australia highlighted that financial stress was one of the key negative influences on a couple’s relationship, with disagreements about money a major cause of divorce.6
About 85% of respondents indicated that financial problems were likely to push couples apart7, which is why openness, honesty, and planning together can play a big part.
After all, average household debt in Australia today is around $245,0008, so if considerable money is going unaccounted for, it may be time to come clean and devise a plan that works for both of you.
How can couples work better together?
Whether you have shared financial commitments, joint accounts, investments that are in both of your names, or sneaky spending habits, honesty is the best policy.
Here are some tips to ensure you’re both on a level playing field:
- Discuss your views on money management early on
- Be honest and transparent about your spending patterns
- Be open about your financial situation—income, expenses, assets and debts
- If you do have debts, work on a strategy to reduce debt together
- Talk about mutual financial goals—travel, marriage, property, children
- Create a household budget and have a savings plan.
Meanwhile, it’s important to be realistic and give yourselves some room for movement. And remember, it’s ok to have shared financial goals and still some personal freedom.
For more information
If you’re over living on instant noodles, check out these tips and tools to ensure you’ve got money tomorrow and in the long term.