How much does your partner know about your finances?
For many people, the answer seems to be ‘not much’.
Research from Prudential has shown that 31% of people have savings that their other half is unaware of. More than that, 7% have over £50,000 stashed away.
Why is that a problem?
We’ve previously discussed how one in five people could be in a financially incompatible relationship, so it is hardly surprising that so many people have private saving accounts or hoards of cash which their partner does not know about. But could the secrecy be affecting whether your savings are working in your favour or not?
Kirsty Anderson, retirement income expert at Prudential said: “Saving money is always a good idea but doing it so you are protected in the event of a relationship breaking down means missing out on potential tax benefits.”
“At any stage of a relationship it is important to have open and honest conversations about finances, but it becomes especially relevant when approaching retirement as decisions made then will impact the rest of your life. Paying off debts in retirement can have a serious negative impact on how far your pension savings go, so have the conversation now and try to clear these debts while you are still working.”
“Couples approaching retirement should consider speaking to a financial adviser about their income and working out a plan for funding their lifestyle. It is vital to open up with each other about any secret savings or debt in advance though!”
Why the secrecy?
You’d be forgiven for assuming that this is money that has been put aside for some grand plan, however, 34% of people say that their secret savings are not earmarked for anything specific, they just wanted to keep the cash out of their partner’s hands.
In fact, the report states that a lack of trust is likely to be the root cause of keeping financial secrets from significant others.
How do we change our ways?
For those with deep trust issues when it comes to money, it is unlikely that financial advice will make much of a difference. At least, it should not be the first step in your journey. However, for couples who could simply benefit from being a bit more open and streamlining their finances, there are several options.
Of course, what works for one couple, won’t have the same effect on everyone else. So, adapt your approach to suit you and your partner. The most straightforward and obvious method of working through a lack of trust in each other financially is:
Start talking: The first step is to start talking to each other. Understanding the position you are in, both as individuals and as a couple will give you a good place to start working from.
Deal with the past: Whether it’s debts, savings or your actual salary, take the opportunity to clear any misconceptions and bring everything out into the open. Use the new level of communication to clear the air and give yourselves a fresh start.
This might be a good time to air any concerns you have over each another’s ability to handle finances and discuss how your actions as individuals affect your financial position as a couple.
Setting goals together: From the above discussion, you should start to see some common themes which can be turned into goals and objectives for you both. These might be things you need to work on independently, or to be tackled together.
Making a plan: Working together, these aims and actions should form a coherent plan, with the end goal seeing you both being more financially stable, trustworthy and financially compatible.
Working with a financial adviser: If it’s simply a case of working through your differences and aligning your financial priorities, then talking to a financial adviser could help you to become more financially stable, together.
On the other hand, if you have a large amount of cash in savings, you could benefit from financial advice to make sure that your capital is working for you and can be used to help you to meet your goals in the future. Whether that money is secret or not, it should be used in a way which benefits you, both now and in the future, however you decide to use it.
To get started, or to find out how financial advice could help you, and your partner to prepare for a more open and positive financial future, get in touch with Sarah or Bev on 0115 933 8433.
