Why Do We Keep Salary Secrets? with Laura Newman
Why Do We Keep Salary Secrets?
💸 Today's episode is all about breaking the silence around salaries and how to navigate those conversations. What are the common misconceptions people have about discussing salaries? How do we navigate discussions about finances when there's a significant income disparity between partners? How can working with a financial planner help you plan for the future? To gain clarity on these questions, I interviewed Laura Newman, NatWest Premier’s Head of Financial Planning.
#AD: This episode is sponsored by NatWest Premier. Whether it's discovering ways to make your money grow, or planning your next new goal, your Premier Manager will help take your money to the next level so that it serves all your needs.
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The Importance of Open Financial Conversations
According to Laura, the benefits of sharing salary information with a partner extend far beyond mere numbers: "Sharing your salary with your partner allows for effective goal-setting and collaboration." "It ensures fairness in contributions, realistic goal-setting, and access to appropriate support based on combined incomes." By fostering open discussions about finances, couples can build trust, align their goals, and make informed decisions about their future together.
Challenges and Misconceptions
Despite the potential benefits, discussing salaries can be daunting due to various misconceptions and societal norms. Laura acknowledges these challenges: "A common misconception is that individuals fear judgment based on their income level." She emphasises the importance of overcoming these barriers through open and honest communication, highlighting the need to understand each other's perspectives and money mindsets without judgment.
Laura also addresses the psychological factors that contribute to salary secrecy within relationships. "Psychological research has identified two main drivers of financial secrecy: the desire to avoid an argument and the desire to spend money on something for oneself without their partner knowing," she explains. "These underlying motivations can hinder open discussions about finances and perpetuate feelings of mistrust and secrecy within the relationship."
NAVIGATING INCOME DISPARITIES
Navigating discussions about finances becomes even more complex when there is a significant income disparity between partners. Laura advises focusing on shared goals beyond financial considerations. "By aligning on common objectives and addressing any gaps in financial planning," she says, "couples can work together as a team, regardless of income discrepancies." Building a trusted advisor relationship when seeking financial advice can also facilitate these conversations effectively.
Moreover, Laura brings attention to the importance of addressing power dynamics that may arise due to income disparities. "A financial power struggle is another result of money imbalance," she notes. "If one partner earns more, they may feel they have more power over the other, potentially leading to coercive control and significant problems within the relationship."
Addressing Salary Secrecy in the Workplace
The culture of salary secrecy extends beyond personal relationships and can contribute to pay gaps within companies and industries. Laura highlights the responsibility of employers to reduce pay disparities, particularly gender pay gaps. "Fostering transparency and addressing inequities in the workplace is crucial," she affirms. "By advocating for fairness and transparency, organizations can create a more inclusive and equitable work environment."
Moreover, Laura stresses the role of individuals in advocating for fair compensation. "Assessing if we are being paid fairly for our role and experience requires both individual and organizational efforts," she explains. "While individuals can benchmark themselves across industries and seek further information about market rates, businesses have a critical role to play in ensuring parity across gender pay and reducing pay gaps."
Empowering Future Generations
Looking ahead, Laura stresses the significance of initiating financial conversations with children from a young age. "Through sharing knowledge and experiences related to finances," she points out, "parents can equip their children to navigate the intricacies of the financial landscape." By fostering financial literacy and values early on, parents can lay the foundation for their children's financial independence and prosperity.
Furthermore, Laura sheds light on the shift among younger generations towards a more open discussion of earnings. "There has been an increased emphasis on gender pay equality and a departure from traditional expectations of a male provider," she notes. "Younger individuals prioritize overall well-being over purely financial considerations, leading to a heightened awareness of the importance of equitable compensation and gender equality in the workplace."
EMBRACING CHANGE
Finally, Laura acknowledges the evolving landscape of financial discussions and emphasizes the importance of embracing change. "Discussing salaries within relationships is not merely about numbers; it's about building trust, aligning goals, and fostering open communication," she asserts. "By addressing misconceptions, navigating income disparities, and advocating for fairness in personal and professional contexts, individuals and organizations can contribute to a more transparent and equitable financial landscape.
Final Thoughts
The discussion surrounding the transparency of salaries within relationships delves into a complex territory, addressing various elements such as trust, communication, and societal norms. Embracing change, dispelling misconceptions, and advocating for fairness are crucial in cultivating a more transparent and equitable financial landscape, strengthening relationships and promoting resilience.
It is essential to recognize that disclosing salary information to one's partner is a foundational pillar for building a secure financial future together. Beyond simple allocation of finances, it involves collaboratively setting goals and devising strategies to attain them. Research indicates that couples engaging in candid financial discussions exhibit improved sentiments towards monetary management and demonstrate heightened responsiveness to each other's needs, fostering a relationship beyond transactional considerations.
Navigating these conversations may be challenging, as concerns about judgment or feelings of inadequacy can surface. Approaching these dialogues with transparency and fostering an environment conducive to open and honest communication, free from accusatory tones or blame, is key.
Expanding the scope to workplace dynamics, the salary secrecy culture impacts personal relationships and perpetuates systemic issues like gender pay gaps. Therefore, individuals and employers are responsible for advocating for transparency and fairness in compensation practices, thereby reducing disparities and fostering equity.
Early and comprehensive financial education is a pivotal strategy for sharing financial knowledge with future generations. Instilling financial literacy and sharing personal experiences equip children with the necessary tools to navigate the intricacies of financial management, laying a solid foundation for sound financial decision-making in adulthood. Additionally, as younger generations increasingly prioritize holistic well-being over material gain, there is a growing awareness of the significance of equitable compensation and gender parity in professional contexts.
Challenging entrenched beliefs concerning money and relationships and advocating for transparency and fairness are fundamental to nurturing robust and resilient relationships. By championing these principles, individuals and organizations contribute to a more equitable financial landscape characterized by transparency, fairness, and mutual respect.
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RESOURCES:
Salary Secrets – one in five Brits don’t share how much they earn, even with their partners by NatWest
Psychology research mentioned by Laura is by Olson et al 2023