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Being in a relationship is all about honesty, trust and sharing everything – or so we’d like to think.
Yet research from credit rating agency, Noddle, reveals that 1.9m married couples actively try to keep their finances secret from their partner, while more than half of Brits in a relationship don’t know how many debts their partner has.
Separate research from Prudential paints a similar picture, with more than one in seven hiding debts – an average of £8,000 – from their partner.
Further findings from the insurer show that one in 10 keeps a secret stash of savings and investments from their other half, with an average value of £30,300, and that some 12 % don’t tell their partner how much they earn.
All of this shows that as a nation, we still shy away from talking about money, even with our spouse or partner.
Reasons for keeping schtum
Keeping quiet on certain money issues may seem the best answer, as it avoids the need for awkward conversations.
After all, admitting you have run up hefty debts on loans, cards and overdrafts, can be a difficult subject to broach. There may also be fears that once your partner knows that you owe big sums of money, this will result in tension and arguments – and possibly even separation.
At the same time, some people may decide to keep their earnings secret to maintain their independence, or to maintain their financial security in case of a break-up.
Others may want to keep their financial affairs hidden because they don’t trust their partner to make sound financial decisions.
Money secrets can be destructive
While discussing finances can be daunting , not being open with your partner can have all sorts of repercussions.
Hiding significant sums in savings or debts can cause huge trust issues if the other person finds out. Money secrets in a relationship can also make planning for the future very difficult.
For example, taking unexpected debts into retirement could make a significant dent in the joint income you were expecting to be able to live on. Keeping income or stashes of cash secret could also mean couples are not making the most of the pension saving tax relief or allowances available to them.
Put simply, keeping information about your finances to yourself can impact on your financial decisions and create financial or relationship problems.
Get your finances out in the open
Talking openly is particularly important ahead of major milestones, such as moving in together, getting married, and having a child.
It’s essential to understand each other’s financial position – and that includes any debt – that you bring into the relationship. You also need to understand your partner’s attitudes to money, and how it should be managed.
The best approach is to tackle the subject of money as soon as possible, and certainly before you move in with someone and start taking out joint financial obligations.
Talk openly about what it means to combine your finances, and make sure all of the skeletons are firmly out of the closet before your finances become linked.
Becoming jointly liable
While having a joint bank account or mortgage is a sign of your devotion and commitments to one another, be aware that if one of you runs up debts – or fails to make a payment – you are both liable.
This is because financial ties will appear on your credit report as an “association” to your other half.
If your credit reports are linked, and your partner has financial problems, this could have significant implications for your credit rating.
Not only could it affect your ability to apply for loans, credit cards and mortgages – and at the best rates – it could even impact on something as simple as a mobile phone contract.
Being upfront about finances doesn’t mean you have to pool all your money.
In fact, many experts suggest it often makes sense to keep some assets and accounts separate.
One popular approach involves couples having a joint bank account for joint monthly bills and expenses, but then separate accounts for personal spending, as this gives you some independence.
Whatever works best for you and your other half, the key is to have full financial disclosure.
Make plans together
When it comes to thinking about money as a couple, make sure you go through your finances together and work out how you are going to manage your money. This includes household budgeting and paying off debt.
You need to make plans together, and decide what you want to spend your money on.
This means setting out clear goals, and agreeing on how much you’re aiming to save each month for big-ticket items.
You’ll also need to address difficult issues, such as whether the higher earner contributes more cash to the savings fund.
While this may entail a tricky conversation, it could prevent unnecessary stress and misunderstanding.
In addition, by knowing where you and your partner stand, you will be on a much firmer footing to forge ahead with your joint plans, whether it’s to buy a house or retire – or simply to seek out the best financial deals along the way.
Having the conversation
When it comes to talking about money, it is worth picking a quiet moment to have the conversation when neither of you are distracted by something else.
Once you’ve started the conversation, make sure you stick to the topic – and don’t try and sugar-coat any difficult issues.
By talking about money, you can get a full understanding of your joint financial circumstances when planning for the years ahead. This will put your union on firmer financial foundations, and make your future happiness more secure.
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Money Means is a news and information series written by independent financial and consumer journalists and experts. FSCS launched Money Means in 2016 to help give people clear and useful information about personal finance, to increase their understanding and confidence when dealing with money.