Why you need to take a balanced approach to secret savings: Sarah Coles

I have a secret savings account.

I can admit this in public, because my family stick very rigidly to the rule that they will never read anything I ever write or listen to anything I tell them. It’s good of them to keep my feet on the ground that way.

My secret savings give me the security of knowing that I can get out of a financial hole if I need to, without having to dip into shared savings or let anyone down. For someone who has had a less-than-straightforward financial past, they bring me immeasurable comfort. I’d recommend them to anyone, as long as you’re building these savings fairly, and for the right reasons.

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For one in six people reading this, our research shows that you don’t need me to suggest secret savings, because you already have them. However, for more than half (57%), it will be an alarming notion – because they’d be really worried if they discovered their partner had money stashed away that they didn’t know about.

My secret savings give me the security of knowing that I can get out of a financial hole if I need to, without having to dip into shared savings or let anyone down, says Sarah Coles. ( Photo by Dominic Lipinski/PA Wire)My secret savings give me the security of knowing that I can get out of a financial hole if I need to, without having to dip into shared savings or let anyone down, says Sarah Coles. ( Photo by Dominic Lipinski/PA Wire)
My secret savings give me the security of knowing that I can get out of a financial hole if I need to, without having to dip into shared savings or let anyone down, says Sarah Coles. ( Photo by Dominic Lipinski/PA Wire)

There’s no need to panic if your partner is saving on the sly, because they may well have a reason that’s good for you both. We asked people with secret savings why they’d built them, and the most common answer was that there wasn’t any specific reason, they just thought it might be a good idea. Part of this will be because they want to protect both of you from the unknown.

Two in five people said their secret savings were for emergencies. It’s a great idea to have emergency savings, although it’s usually best to plan them as a couple, so you know that between you there’s money to cover 3-6 months’ worth of essential expenses in an easy access account while you’re working, or 1-3 years’ worth in retirement. However, there are all sorts of reasons people keep at least some of their emergency savings quiet – especially if they want to save more than their partner does, or if they’re concerned their partner will want to spend them on non-emergencies.

However, there’s a fine line here. One in five people say they’re keeping their savings secret at least partly because they don’t trust their partner with money. This may work for you as a couple, but it isn’t a solution in itself. If one of you is constantly bailing the other out, you’ll end up going round in circles financially. It might be better for your partner to get support with their finances from a charity or other professional that can help with their particular problems, so your savings can be used to build for the future rather than protect yourself from the past.

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There are other reasons for secret savings that may not go down so well with your partner – including the one in three who are saving in case something goes wrong in the relationship. It can be a tough thing to come to terms with, but this is a very sensible idea given that two in five marriages end in divorce. Women are more likely than men to be saving just in case the relationship ends (35% compared to 30%). It may reflect the fact that on average they’re more likely to earn less and have more caring responsibilities, which could mean more immediate financial problems in the event of a split.

If you discover this kind of account, bear in mind that it may be no reflection at all on your relationship. It doesn’t mean your partner wants to leave. In fact, in many cases, it’s because they’re worried you will. I’ll hold my hand up and admit that negative experiences in past relationships means I will always have secret savings for this reason. It makes no difference that my husband is lovely and we’re very happy. I promised myself I’d have a safety net and I’m not going to let myself down.

There are other reasons for secret savings that may quite rightly ring alarm bells. Our research showed that a quarter of people with secret savings are putting money aside for something they don’t want their partner to know about. This is more likely among men (27% compared to 19% of women with secret savings). If this is a nice surprise, then there’s no harm in it. However, if you’re prioritising your own needs, especially at the expense of the wider family, you may need to consider whether this is a sensible approach. Likewise, if it’s something you wouldn’t be happy for your partner to know about, you have to ask yourself if it’s really something you want to spend money on.

Whatever your reason for saving on the side, if you’re putting it away at the expense of your partner and leaving them struggling with the weight of responsibility for the finances, it can cause all kinds of problems. If you have secret savings, it’s worth spending some time considering whether you can afford them, why you have them, and whether it’s the best approach.

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For some people, it’ll be the moment they realise they should come clean about their savings, especially if they’re among the third of people who have agreed to tell their partner everything about every aspect of their finances. You don’t have to declare every penny, but there’s nothing to stop you explaining you have a small fund put aside just in case.

For others, it’s a valuable sense-check that reminds them of how vital their secret savings are. For me, secret savings are always going to be part of the picture, unless of course my husband picks a particularly inopportune moment to break his decade-long commitment to never reading a word I write.

Jobs

Take the time to bask in your pay rise, and enjoy the feeling of having a bit more breathing space in your budget. This week, government figures revealed pay is still rising at 4.8% - or 1.9% after inflation, and there’s a decent chance we may well look back on this as a golden age.

Darker days aren’t set to descend imminently. From here, wages are actually likely to climb more quickly for a while. The Budget pledged public sector wage rises and minimum wage hikes, so the Office for Budget Responsibility has boosted its forecast for wage growth by a percentage point this year to 4.7%. This is exceptionally good news for those on the lowest wages – particularly young people. Next year isn’t looking bad either, with a forecast rise of 3.5% - again better than had been expected, thanks in part to more spending.

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However, from 2026 onwards, the Budget is expected to have a sting in its tail, because the hike in employers’ National Insurance is expected to mean employers hold back pay rises, to claw back some of the extra costs the tax has presented them with. The OBR expects an average of 2.25% growth for the rest of the forecast.

Given that inflation expectations have also been pushed up by the Budget, and it’s forecast to be over 2% by 2026, it’s going to mean that in a couple of years’ time, we’re likely to end up having to stretch our money as far as possible to make ends meet again.

It’s means it’s vital that we make hay while the sun shines. This is the time to revisit our overall financial position, and make sure we have the emergency savings in place for when times get tougher. We also need to look further ahead and see if there’s more we can do to get our pensions on track and invest for the future. The stronger we can be when pay misery strikes, the better.

SARAH COLES Head of Personal Finance and Podcast Host for Switch Your Money On Headline Money Press Team of the Year Hargreaves Lansdown

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