Financial abuse is a regular behaviour where one person tries to control another person’s access to money. This kind of abuse often occurs between partners or other family members. While most victims are women, men too can be vulnerable, particularly if they have disabilities.
It can start innocently enough: Perhaps your partner asks to see a receipt for the supermarket shop or explains that he or she opened your bank statement by mistake. But such habits can build into controlling behaviours, which leave you in fear every time you open your wallet. Financial abuse on a serious level can involve your partner spending your jointly earned money, taking out loans in your name, making you pay the utility bills, or scrutinising every penny you spend.
Gambling addiction is a common cause of financial abuse. This kind of addiction can cause people to spend substantial amounts of shared money with little thought about the significances. This can often be accompanied by a lot of privacy: the gambler may try to cover what they’re doing by hiding statements or letters. In addition, this kind of situation can also develop when someone takes risks with finances in order to start or maintain a business. Also, partners experiencing drug or alcohol addiction can wreak chaos on a relationship, spending shared money to support their (often) secretive habits.
Financially abusive behaviours include:
Controlling your money:
- Taking control of your finances (e.g. overseeing all the household income and paying you an allowance).
- Controlling how all the household income is spent
- Forcing you to claim social security benefits
- Imposing you be a guarantor on a loan or make you take a loan out
- Making you take out a second credit card
- Forcing you to work in a family business without being paid
- Forging your signature on financial documents
- Making you change your will
Stopping you from earning your own money:
- Stopping you from getting a job
- Forcing you from going to work or important meetings by abusing them
- Stopping you to pursue further education or take on a qualification
Limiting your access to money:
- Not giving you access to bank accounts
- Denying you access to money stopping you to afford basic expenses like food or medicine
- Destroying, damaging or stealing property
- Racking up debt on shared accounts or joint credit cards
- Withholding financial support like child support payments
- Refusing to work or contribute anything to the household income
The effects of financial abuse
Financial abuse can have huge effects on a person’s life, that are not just limited to their financial wellbeing, including impacts on their social inclusion, housing security, physical and mental health. The primary effect on a relationship is likely to be a weakening of trust. The person on the receiving end of abusive behaviour may lose faith that their partner will always act in their best interests. The behaviour damages the sense of ‘team’ in the relationship and increases feelings of separation and anger.
Identity theft is a difficult thing to deal with, but it can be especially hard if you find that your family member has taken out loans in your name without your permission. Even worse of they are not helping with the repayments! This is one of the ways that a partner can commit financial infidelity, and it can have a long-lasting effect on your credit score and your relationship.
The way you handle this will likely depend on how you want your relationship to work out in the future. The laws surrounding debt during a divorce for example, will also affect how much of this debt you will be ultimately responsible for paying off.
The damage to these victims’ credit can have an immediate impact on their lives, making it harder to get new housing, a new job, and a new life away from abuse.
In summary, those who have experienced financial abuse may say:
- They were fearful of the other person
- Financial abuse was experienced with other forms of abuse
- There were subtle changes in the other person’s behaviour, and it then progressed over time
- They were made to feel “stupid” or incompetent
- Loans, mortgages, credit cards and accounts were only in one person’s name, and this made them feel powerless and trapped.
- There were no discussions about finance, income and budgets. Decisions were made without their input.
How to rebuild after financial abuse
Once you’ve done what you can to protect your finances, what comes next? The next chapter can feel overwhelming but is an opportunity for you to lay a strong foundation on which to build the rest of your life. Here are steps you can take to establish your financial independence and help ensure long-term financial health.
Open a bank account and start saving
If you don’t already have your own bank account, make it your priority to open one. Choose a reputable bank that fits your needs. Prioritise saving a little of every pay-check in case of financial emergencies. Experts recommend directing 20% of your pay-check toward savings but begin with whatever you’re able to save. Not having the money to cover unexpected expenses can have a lasting impact on your finances and cause you to go into debt.
Aim to have at least three to six months’ worth of essential expenses. Once you have that saved, consider putting money aside for other financial goals (such as a holiday fund, money to go back to education or the deposit on a house) or investing for retirement.
Make a budget
Once you have your own account set up, the next step is to make a budget that fits your needs. A budget will help you understand exactly where your money is going. There is no such thing as a one size fits all budget; determine what works best for you and your financial goals and will keep you from spending more than you make each month.
Start building credit
Lenders use your credit report and credit score to help determine whether to loan you money. Without a good credit score, you may be denied for personal loans, mortgages, car financing and more. Even if you are approved, lenders are more likely to give unfavourable interest rates and terms to borrowers with lower credit scores.
The easiest way to start building credit is to apply for a credit card and make timely monthly payments. If you’re rebuilding your finances or are a first-time credit card user, there are many great options that charge no annual fee so you won’t take on any additional costs that may hinder your progress.
What should you do if you are experiencing financial abuse?
You don’t have to go through this process alone. Surround yourself with trustworthy friends and family, and don’t be afraid or ashamed to ask for help when you need it. There are many organisations that exist out there to help victims of domestic violence. Not only can you use them to do research and find the resources that will help you, but some offer individual guidance and support, as well.
Just to name a few: