The cost of financial infidelity

When impulse spending gets the better of her, Sheila Baldago normally does two things. First, she hides the shopping bags somewhere safe — in her friend's car or in the stack of clothes in her closet. Second, she keeps mum about it.

It's not that she's scared her husband will fly off the handle if he finds out about her shopping spree.

"I just feel guilty whenever I buy something for myself and he doesn't do the same," Baldago, who works as an account executive in Dubai, explains.

"But when I get caught, I explain that shopping reduces my stress and it's one way of rewarding myself for working so hard."

She insists a little self-indulgence is fine, so long as she doesn't splurge on expensive stuff and put the family's budget in danger.

"I get away with it because somehow, I know he will find out for sure and I can tell him everything then," she said.

"I don't mind keeping money secrets if it's just spent on little things because I do that. But I wouldn't like it if it's a huge amount. I think the spouse should know if you're spending Dh500 and above."

Whatever you call it — secret spending or financial infidelity — it seems a lot of people in the UAE are guilty of it. A survey by Visa released in September 2011 revealed a penchant for secret shopping among UAE residents.

According to the research, which was conducted among 980 shoppers of Souq.com, nearly 40 per cent admitted to having secretly bought items online without telling their partner.

More than one in ten (14 per cent) confessed to spending secretly between Dh1,000 and Dh5,000, while a small portion (3 per cent) owned up to making larger clandestine purchases worth up to Dh20,000.

Richard Taylor of Acuma Wealth Management isn't surprised to hear about couples keeping money secrets. In fact, experience tells him that women are more likely to lie about the cost of clothes, make up and furniture, while men are more likely to lie about how much money they have burnt on gambling, socialising or drinking and expensive gadgets.

"However, I wouldn't go so far as to say that many lie [outright] about what they are spending, although obviously this will go on. I think it would be fairer to say that most couples tell the occasional white lie and can be pretty economical with the truth — and about different things."

But when it comes to money and relationships, is secret spending bad or good? In the words of Steve Gregory, managing partner at Holborn Assets, people have a right to have money of their own, to spend as they wish.

But it is when clandestine spending gets out of hand that problems arise.

"I think people may lie about their spending, at least occasionally, just to avoid conflict, and I also think this may actually be healthy as long as it is occasional," he said.

"After all, when receiving a birthday present, we don't really have a right to demand to know how much it cost our partner, does it?

"It's when people hide debt issues from one another that trouble brews. The offended party will be quite rightly angry to discover they need to bail out the partner when the bank starts calling constantly."

CESI Debt Solutions, a nonprofit organisation, cited one case of a happily married 65-year-old, whose secret purchases started to pile up. Like many people, Victoria Johnson (name changed) was also buying things for herself, her children and friends without the knowledge of her husband. The purchases added up and her debt clocked $17,000.

"I never meant to run up that big a bill," she said.

"I kept saying I would pay it off, but I just never did, and soon it got out of hand. By then I was embarrassed, ashamed and I didn't tell my husband because I knew it would cause problems," a CESI press statement quoted her as saying.

Luxury car addiction

Dr Rogayeh McCarthy of the Counselling and Development Clinic in Dubai has encountered quite a lot of UAE residents guilty of secret spending. One husband addicted to luxury cars is hiding one Ferrari in South Africa, just to avoid conflict with his wife.

"He has two Ferraris here and one Ferrari in another country. He does not want his wife to know about it because she will definitely get angry, knowing that they don't own a house yet. But he just loves Ferraris. His priorities are different."

McCarthy warns that keeping secrets can sometimes be indicative of a more serious problem in the marriage. Some people keep secrets because they don't feel secure in the relationship or they simply want to avoid conflict with their controlling spouse.

"For example, there's a wife who purchased houses without her husband's knowledge or she's buying land in India behind her partner's back. There is no sense of togetherness and transparency. The wife in this scenario is insecure about the future. People who do things like this feel they have to build up their own future without their spouse in the picture so that in case something bad happens, they are in a fin-ancially stable position.

"Keeping money secrets is a sign that there is already a problem. It is not just destroying trust in the marriage, but the family's budget as well.

"You have a husband who is obsessed with [a] bicycle and he keeps secretly buying stuff related to his hobby. Eventually, his spending piles up and it gets out of control. Ultimately, the family's budget suffers."

Taylor says secret spending isn't a major problem "in general," but it can pose serious issues when it gets out of control.

"In a healthy, solvent relationship, I really don't think it causes major problems if the wife spends a bit more on the things that matter to her that the husband doesn't understand, and vice versa."

"In fact, bar the occasional argument when the other party finds out the true cost of certain items/activities, I think it can actually contribute to a happier relationship with both parties getting what they want without any major downside," he said.

"However, as with all things in life, there is a line and once that line is crossed, it can become a major problem that has the capacity to ruin relationships and even lives."

"I have seen situations where it has got completely out of control and a spouse has been in hundreds of thousands of dollars of debt, all spent on discretionary lifestyle items — of which their spouse had nearly no idea," he said.

"It's one of the worst situations I've ever encountered as a financial adviser and when this sort of deceit has gone on for so long, it is literally devastating for all parties involved."