Relationships are based on trust and marriage can rightly be the symbol to mark your trust in the person you choose to be with. However, a recent study by the Cooperative Bank, titled modern Families and households, highlighted their finding which should be of concern.
It emerges that people in relationships across Britain could be keeping as much as £41bn a secret from their partners.
Some numbers from the report are as follows:
- Nearly two thirds (62%) of people revealed they have debt in the form of credit cards, overdrafts and mortgages. In 2010, Debt Advice Foundation in a similar survey found 47% of people struggling with debt kept loved-ones in the dark about financial problems.
- Men typically said they are £14,228 in debt on average.
- Women’s debt levels were found higher, at £22,418 on average.
There exists plenty of research that identifies debt amongst women more serious than men. In 2013, it was found that 64% of the estimated 8.8 million people with severe debt problems were women. It has also been found that inflationary pressures of household bills and mortgages are to blame particularly in those households reliant solely on women’s income.
Other studies have found that nearly one in five (18 per cent) attribute their secret debts to overspending due to previous relationship break-ups and other emotional upheavals.
The potential impact on you
It appears many people are unaware that responsibility for your partner’s debt passes on to you, even if your relationship breaks down. This may be the case even if you are unaware of the debts run up by your partner. This is also the case in the event your partner dies or when declared insolvent/bankrupt.
In such a case, you will be incurring the cost of debt you weren’t responsible for, and failing to manage them can affect your credit score. One may argue that someone unaware of debt shouldn’t have to face the brunt, but that is another debate. What appears to have been found is a lack of awareness of fully understanding of the responsibilities.
It has also been found that people (13%) did not disclose individual savings to their partner; more likely for those with children aged 19 or above. Here it becomes important to be aware that in case your marriage breaks down and a prenuptial agreement not in place, you must disclose all of your money and assets as part of the process to the courts. Failing to do so can have very serious consequences if they come to light.
According to Vince Hughes, Retirement Income Expert at Prudential, “couples who are keeping separate secret stashes of savings with the intention of funding their retirement could be missing out on vital pension tax relief. Alternatively, couples approaching retirement, unaware of their partners’ debts, could be in for a nasty shock if they haven’t been cleared when the time comes to give up work”.
Talk about it. It’s better that way.
Findings in other reports echo what was found by Cooperative bank, such as Prudential whose study itself was aimed at analysing attitudes to and conversations about money among co-habiting couples.
The reasons to not have these conversations or to keep debt /saving s a secret may seem valid, particularly for younger couples. Coming clean will likely lead to some awkward or uncomfortable discussions as well, which can feel like something best avoided.
However, if you are truly looking to spend the rest of your life with someone, it is in the best interest of both to have these conversations and get them out of the way. This is even more important for couples looking to secure their financial future.
In fact, take it a step further and speak with a professional financial adviser or retirement specialist for help with those crucial decisions that will need to be made (now rather than later) when turning these savings and investments into retirement income.
Think of it this way: have a difficult conversation, truthfully, today and get them out of the way once and for all. This also means you can eliminate the potential damage caused to your relationship if these secrets see the light of the day.
Securing your financial future is a good way to show your commitment to the relationship and avoiding potential hardships later on in life when you maybe less prepared to tackle them.
This post does not intend to drive fear or suspicion in your mind, but rather see the good in certain awkward conversations surrounding money. In fact not all secrets, as Prudential found out, are scary- one in four of those who don’t disclose everything to their partner about their income/savings are planning to use the cash to buy presents for their other half, while another 22% admitted to planning for a major purchase such as a dream holiday or a new car.
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