Financial fibs, how far would you go?

Figures released by Hargreaves Lansdown have revealed the extent couples, both married and unmarried go to when it comes to talking truthfully about financial matters.

The survey which received 2,000 responses revealed:

• Three quarters of couples say they share every detail of their finances with their partner (73%), while 15% agree to keep some aspects of their financial lives private.
• One in 20 (4%) people say they agreed to share everything, but they’ve lied to their partner.
• 7% say they tell their partner everything about their finances, but they think they’re being lied to. 10% of young people aged 18-34 think their partner is lying to them about money.
• Married people are more likely to agree to share everything, but overall, they’re more likely to lie to their partner about their finances than those who live together.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, commented:

“Marriage means we’re more likely to agree to tell our partner the pure, unvarnished truth about every aspect of our finances. It also means we’re more likely to lie about it – particularly when it comes to savings and debt.

“There’s nothing wrong with the odd white lie about a trivial and inexpensive purchase. There are also plenty of couples who have an emergency fund they keep to themselves, so if something goes wrong, they have something to fall back on.

“However, if couples get into the habit of lying to one another about important money matters, it can cause all kinds of problems over the longer term. It can mean missed bills and dangerous hidden debts, and it can test a relationship to breaking point.

“Couples don’t necessarily have to open up about every last penny they spend: plenty of couples agree to keep some things to themselves. But you need to share the important issues, and commit to telling the truth, or you could drag both of you into financial trouble.

“It’s not a huge surprise that unmarried couples who live separately are more likely to lie about savings, spending and earnings than those who live together, because their finances are likely to be more separate. However, it reveals how important it is to have a serious and honest conversation about money before you decide to move in together. Otherwise you could be set for some nasty surprises.”

Married V unmarried

78% of married couples agree to tell each other everything – more than other couples – and only one in ten agree to keep some things private. However, 4% of them are lying to their partner (compared to 3% of couples who live together).

Of the group who admit to fibbing about their finances, they’re more likely to admit to lying about debt than unmarried couples (32%, compared to 24% of those who live together). They’re also more likely to lie about savings (40% compared to 19% of those who live together).

Unmarried couples are far more likely to admit to lying about spending (among those who admit to lying, 31% of those who live together say they lie about spending and 42% of those who live separately – compared to 18% of married people). Those who live separately are far more likely to lie about their earnings (37% compared to 27% of those who are married and 19% of those who live together).

What we lie about

• Overall, we’re most likely to lie about how much we have in savings (48% who admit to lying say they do this).
• Women lie about spending, debt and income more than men do. Among those who admit lying, 35% of women say they lie about spending compared to 14% of men.

The risks of lying

• If you’re living together and you’re hiding poor spending decisions, you risk being unable to pay your share of the household costs.
• If you’re running up joint debts, your partner will be just as liable to pay them as you are, and if you don’t make repayments, it will affect your partner’s credit rating too.
• Being dishonest about what you earn won’t necessarily damage your joint finances, but if you’re splitting household costs according to earnings, it means you’re not paying your fair share, which will have its own consequences if it ever comes to light.
• There’s also the fundamental issue of keeping important secrets within a relationship.

Common exceptions

There are some circumstances where you might choose to build some savings without spelling it out to your partner.

• Some people who are concerned about the longevity of their relationship will build an ‘escape fund’ just in case.
• Others have been through financial difficulties in the past because of their partner’s approach to money, so feel more comfortable with savings to bail you both out if needs be.
• But if you’re building up a nice little nest egg for yourself at your partner’s expense, this can tip over into dangerous territory.

The compromise

• There are plenty of couples who choose to keep certain things private – 15% of couples do this.
• As long as you’re both happy with this, it can take an awful lot of drama out of financial decisions.
• It’s vital to set ground rules – like not getting into debt or being unable to pay your share of the bills.
• Long term planning should be part of the agreement – because if you ever plan to buy a home together, or grow old together, you need to make plans together and work towards the same things.
• You should also be careful if one of you has insisted on this approach, or you have opted for it out of fear of your partner’s reaction. If you start on an unequal footing there’s more potential for things to go awry.

What impact do these ‘fibs’ have on family law cases?