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It’s often said that with age comes wisdom. Then there’s the bit about youthful indiscretions being attributable to age.
That’s all find and dandy, but a time comes in everyone’s lives when it’s time to, to quote my mom, grow up. Growth isn’t linear across all humans, but the sooner the maturation process commences, the better and that’s particularly true when it comes to finances. After all, the more mature someone is financially, the less likely that person is to make financial mistakes and incur regret and the more likely they are to be open to professional advice.
As advisors know, financial maturity takes many forms, one of which is undoubtedly how mature we are when it comes to money in personal relationships. Indeed, financial infidelity is a very real thing if for no other reason than that men and women are wired differently. For example, men are more given to impulse purchases than are women.
As an anecdotal example of financial infidelity, I offer up the following: I collect and sell baseball cards. Recently, I saw a seller on a social media site telling a story about a buyer asking him to ship the purchased cards on a very specific day of the week so they’d arrive on another very specific day so the buyer could get to the mail while his wife was at work. Yes, that’s financial infidelity and some generations are more prone to it than others.
Young Clients Need Help
In the essence of cutting Gen Z some slack, it’s fair to say most of them aren’t yet married so there are arguably limits on their financial infidelity. Still, they are and their millennial counterparts are offenders.
New research from Bankrate.com confirms 4 out of 10 adults who are married, in a civil union or living with a significant other or committing some form of financial infidelity, but that percentage skews higher among millennials and Gen Z.
“Two-thirds of Gen Zers who are married or living with a romantic partner have kept or are keeping a financial secret from that person. More than half of millennials are doing so. It’s only about one in three Gen Xers and Boomers. So this is definitely being driven by young adults,” said Bankrate’s Ted Rossman in an interview with Dimitri Sotis of WTOP News.
Here’s why financial advisors should take note of financial infidelity. Regardless of age group, a third of those polled by Bankrate believe financial cheating is equally as mad as the more conventional former of stepping out on a relationship.
“I think it goes to show how personal and emotional money can be for people,” Rossman told WTOP. “We know that money fights are one of the leading causes of divorce and other angst in a relationship. I think one possible solution here other than just plain old communicating more, but one other solution might be ‘yours, mine and ours.’”
Understanding Financial Infidelity
As is often noted in this space, advisors aren’t couples counselors, but there’s no getting around the fact that money issues are the leading cause of divorce.
With that in mind, it’s worth it for advisors to realize need for control often breeds financial “cheating” and that offense usually boils down to spending more than the significant other would like or accumulating debt in secret.
“Main reasons cited for keeping financial secrets are a need for financial privacy or a desire to control their own finances (37 percent), followed by a lack of desire to share or it having never come up (33 percent) and embarrassment about money management habits (28 percent),” concludes Bankrate.
Related: Why Gen Z Needs Advisors