You made the mistake of joining bank accounts when you joined hands in marriage. Now what?
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Along with the time-honored traditions of Valentine’s Day — flowers, chocolates, and candle-lit dinners —, there’s also those pesky surveys about “financial infidelity.”
Last month, creditcards.com declared the results of its poll of 845 adults…
Roughly 1 in 5 Americans who are in a relationship admit they have spent $500 or more without their partner’s knowledge. A smaller number — 6 percent — have taken the subterfuge a step further, leading financial double lives by maintaining hidden checking or savings accounts or using secret credit cards.
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The Truth about Financial Infidelity
Some people argue “financial infidelity” is about keeping a little bit of independence in married finances — and what they don’t know won’t hurt them. But David Pisarra says it’s usually a sign of something else.
“Financial infidelity is the canary in the coal mine,” says Pisarra, a divorce lawyer with the firm Pisarra & Grist in Los Angeles and host of the podcast Men’s Family Law. “You might as well be putting five dollars a month in a local divorce lawyer’s account.”
Debt.com editor Michael Koretzky argues that married couples should never combine their finances at all. But Pisarra says that could be a sign that one-half of a blessed union is already planning to make a run for it.
“Couples that keep all of their finances separate, down to the penny … It’s almost guaranteed that at one point, one of them is going to stray,” he said. “They’re halfway out of the relationship already.”
“We usually couch it in terms of safety money, or emergency money, but these are all normal ways in which people prepare for divorces,” Pisarra says. “In these situations, you need to have an exit strategy whether you’re a man or a woman. And part of that exit strategy is having available cash.”
Whether you agree with Pisarra or not, he’s definitely an expert in how people hide money from their spouses. So here is, dare we say, the definitive guide on how to save and stash that cash, without your spouse or significant other’s knowledge.
1. Start by hiding any new income from your spouse.
If you use direct deposit to receive your paycheck, this step will be simple.
Next time you’re in line to get a raise, figure out how much it will add to your paycheck and have it automatically deposited in a separate bank account, or at another bank entirely. Your company’s human resources department can easily split your direct deposit into however many accounts you want.
If you don’t have direct deposit set up, you’ll need to take your account number and the bank’s routing number to HR. Both appear on the bottom of your paper checks, or you can ask your bank.
2. Overpay your taxes.
- When both people work and have similar incomes, separate filing may avoid a higher tax bracket
- If adjusted gross income must be under a threshold to qualify for certain deductions like out-of-pocket medical expenses, separate filing keeps AGI down
- When your spouse has tax debt or child support payments you don’t want to be held liable for
- When you and your spouse are already considering divorce or own separate property
If you can convince your spouse to file separately, you can request HR increase your tax withholding. You’ll have to fill out a new W-4, which you also submitted when you got hired. That will take more money out of your paychecks and help you get a bigger refund check later — which you can have sent to a separate bank account.
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If you’re getting a paper check, make sure to also report a separate address on Form 8822 so your spouse doesn’t find the check in the mail. You’re not supposed to use a P.O. box unless “your post office does not deliver mail to your street address.”
“Because you have to wait so long to get your money, this is a long-term strategy, which is generally what women tend to do,” Pisarra said. “They tend to plan their divorces for between 2-3 years.”
3. Get cash back — lots of it
This one’s easier than doing your taxes: Get cash back every time you go to the grocery store by using your debit card.
“This one’s very popular,” Pisarra said. “The spouse that does the shopping adds on an extra $40 every time they go shopping, and that money disappears and they store it in their best friend’s house.”
This one takes time, too, but you could amass a decent stockpile of cash by taking out even $10 or $20 every time you go to the grocery store or pharmacy.
The real beauty is that the cash goes under the radar because the total charge shows in online banking as groceries. As long as your spouse doesn’t collect your receipts, you’re golden.
4. Open your own online bank account
To hide money, you’ve got to have a place to keep it. One of your best options is an online bank account.
We spoke to Ally Bank, a top-ranked online-only bank, and a customer service rep told us that nothing gets mailed to your home address. So you don’t have to worry about your statements ending up in your spouse’s hands. But they do need your physical address to comply with federal law, so don’t freak out when you see that.
To actually set up your account, you’ll have to fill out an application online or, if you prefer, one you can print and mail. It doesn’t cost any money to open, and there are no monthly service fees. From there, you’ll be able to deposit money into the bank account through the following ways…
- Do an online funds transfer from your current bank (This would be difficult to hide if you presently have a joint bank account)
- Mail a check to the bank
- Scan your check and send it
- Wire transfer
Some online banks also offer smartphone apps that will deposit your check remotely if you take a photo of the front and back of the check.
If you want to deposit the cash you’ve been skimming off the grocery bill, you’ll have to find an online bank that has a contract with ATM networks, like Alliant Credit Union. Ally doesn’t do cash.
5. Get your own credit card
The problem with getting a credit card is that it can be traced two ways: through bills sent to your home, and through the bank account you use to pay your bills.
The second problem can be solved using an online bank account. The first problem can be solved by setting up a P.O. box, which you can apply for online from the U.S. Postal Service. You’ll have to rent the box, but we found small boxes available for less than $100 per year.
Be careful when you apply for the credit card. Under federal law, a physical address is required to open one. But according to a customer service specialist at Capital One, you can change your address on file to a P.O. box, after you have applied for the card and received it in the mail.
“A separate credit card is something that everyone should have,” Pisarra said. “They should have credit in their own name, so when there’s an eventual breakup, they can go and re-establish their life quickly.”
6. Stash your own prepaid or gift cards
Now that you have a credit card in your name and an online bank account, you can use the credit card to buy $500 prepaid debit/gift cards. These are often sold in pharmacies, and many are reloadable.
These make a lot of sense if you want to spend or save money in secret. You can load up several cards at once and stash them away until you need them.
There are downsides — the money is usually not insured, and there can be fees for not using the cards and for reloading them. We’ve reviewed some of the lowest-fee options.
7. Rent a safe deposit box.
The final option is also the final destination for all your cash, prepaid debit cards, and credit cards. A safe deposit box is available to rent at nearly every major bank; and no one has to know what’s inside. That’s right; not even the bankers are allowed to know the contents of the box.
An FDIC newsletter — which would point out if it actually was illegal — just says you’re “better off stashing your cash in a bank deposit account, like a savings account or certificate of deposit, than in a home safe or a safe deposit box.”
That’s because the cash isn’t insured the same way cash in a bank account is; the money isn’t earning any interest. But that’s the risk you take when hiding money. Just remember that you’ll have to rent one — a small one costs between $15 and $25 a year; and you’ll have to hide the key from your spouse, too.
Final words of advice
If you’re in a relationship now and you’re squirreling away money for a divorce, remember that your spouse will still be entitled to half of your money, property, and assets if you are discovered.
“Once the court gets involved, the court just looks at it and cuts it in half and says; half is for Party A, half is for Party B,” Pisarra says. “It doesn’t really matter who has it or where it’s at.”
“And even if you’re in a new relationship, “it’s wise to have an exit strategy,” he says.
“Everybody should have emergency funds because you never know what’s going to happen,” Pisarra says. “You can meet the most perfect person on the planet, and all of a sudden you’re dealing with a crazy person and you need to get out now.”
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Published by Debt.com, LLC