Financial abuse, using money to manipulate and maintain power over another person, is one of the most common forms of domestic abuse. Financial abusers use money as a weapon to assert control over, isolate, and restrict the economic opportunities of another person.
Many of us tend to think of financial abuse as taking place in a romantic relationship, such as between a husband and wife or domestic partners. However, financial abuse can also occur in other relationships, such as between a parent and a minor child or between a caregiver and an elderly patient. Here, we'll discuss the common types of financial abuse, how to identify it, and what you can do to overcome financial abuse if you are a victim.
Signs of financial abuse in romantic relationships
Most couples argue about money at one time or another. Having conflicting money views is one thing, and that can be resolved with open and honest communication. But when one partner controls the finances and uses that control to maintain power over the other person or trap them, it can be a sign of financial abuse.
Sometimes financial abuse begins slowly and builds over time. It is also hard to tell from the outside looking in whether someone is in a financially abusive relationship. There is no “typical” victim of financial abuse. Anyone can fall victim to financial abuse, regardless of their gender, race, income, education level, or job status.
This type of abuse goes way beyond just withholding money. Below are some signs of financial abuse to look for, in both your own relationship and in those of your friends and family. Some signs that could indicate this type of abuse include:
1. Denying a partner access to funds, financial information, or basic needs, including:
- Withholding money
- Giving an allowance
- Demanding receipts for purchases
- Withholding basic needs, such as food, clothing, or medication
- Excluding them from important financial meetings
- Denying them access to family financials and excluding them from household financial decisions
- Preventing them from having or using credit cards or ATM cards
2. Preventing a partner from earning their own money, including:
- Forbidding them from working or attending school
- Demanding that they quit their job
- Forcing them to miss or be late to work often
- Demanding that they have a “lesser” career so they earn less than the abuser himself
- Forcing them to work in the abuser’s business for little or no salary
- Harassing them at their workplace and interfering with their job performance
- Accessing their benefit payments for themselves
3. Forcing a partner to take certain financial actions, including:
- Forcing them to file false tax returns or other legal financial documents
- Coercing or forcing them to take out loans
- Forcing them to sign over stocks, bonds, or other property
- Threatening and forcing them to sign a power-of-attorney so that the abuser can sign documents without their consent
Other forms of financial abuse
Financial abuse can also take place in non-romantic relationships. The most common forms are when children are financially abused by their parents and when older adults are financially abused by their grown children, relatives, or caregivers.
Financial abuse of children
Most parents control their minor children’s personal information and finances, which is absolutely normal. However, when parents begin to take advantage of their children and use this information to their detriment, it veers into financial abuse. Usually, this happens when parents become desperate and have run out of financial options. They end up using their children’s identities to obtain funds.
For example, parents may open a credit card in their child’s name, never intending to pay it off, thus ruining their child’s credit. Or, they may take out a loan in the child’s name and default on the loan. Sometimes parents apply for cable or a cell phone in their child’s name and never pay the bill. Like the elderly who may not be able to speak up for themselves, children are an especially vulnerable population when it comes to financial abuse.
Any instances of financial abuse of children should be brought to the attention of a trusted family member or, if necessary, an attorney who can advise on what steps can be taken to address the situation.
Financial abuse of the elderly
Financial abuse of the elderly is an even more common form of abuse and it can take many forms. Perpetrators can include family members, friends, neighbors, attorneys, and home care aides. These people use their power to take advantage of the older person in their care or who has trusted them with their finances. Often, these people have the power of attorney for the senior person that they use to make poor financial choices.
This type of financial abuse includes misuse of credit cards, ATM cards, or checks, stealing money, property, or other valuables, or borrowing money with no intention of ever paying it back. If you suspect someone is financially abusing a senior in your life, reach out to a family law attorney to determine what can be done to intervene.
What are the consequences of financial abuse?
Financial abuse does not just hurt the victim in the present moment. And it does not just hurt the victim financially. Financial abuse is often an early sign of domestic violence. Aside from the short-term financial problems and the possibility of it escalating to domestic violence, there are long-lasting consequences of financial abuse. This makes it all the more imperative that victims of financial abuse identify the problem and seek help as soon as it is safe to do so.
Victims of financial abuse face long-term financial consequences. They often have low credit scores or no credit history due to a lack of access to financial accounts in their own name. Others have credit scores that were ruined by abusers who run up bills in their victim’s names and fail to pay them back. Additionally, with little or no work history, victims of financial abuse may find it hard to get a job. This can limit their income-generating opportunities long after the abuser is gone.
Common legal consequences of financial abuse include penalties for fraudulent tax returns and punishment for false loan documentation. Victims often find themselves responsible for liabilities that were incurred in their name but without their knowledge.
What can victims of financial abuse do to get help?
If you are in a financially abusive relationship, you do not have to remain in it, no matter how dire your situation seems. The first step is to recognize the problem and decide that you want to leave the relationship. From there, here are the steps you can take to begin to free yourself from a financial abuser:
1. Gather your financial information
Gather any and all financial information you have at your disposal. This includes copies of credit card statements, bank statements, joint accounts, and tax returns. Obtain a copy of your credit report from one of the three major credit bureaus. Additionally, it would help if you have on hand copies of your birth certificate, social security card, health records, and any other important documents.
Be sure to keep these personal records in a secure place. When in doubt, leave the copies with someone you trust who lives outside of the household you share with your abuser.
2. Begin to educate yourself about your finances
After being denied access to your day-to-day finances and household financial decisions, you may not have a strong understanding of personal finance. Begin to educate yourself on the basics, such as understanding your credit score and how that impacts your financial life.
You might not understand just yet about how to manage your own finances, but there is information out there. It might seem daunting at first, but you can educate yourself. With free resources like those offered here at Clever Girl Finance, there are ways to learn all about personal finance.
3. Start to save your own money
While this might be easier said than done, saving some of your own money is a crucial step toward leaving an abuser and if relevant to you, preparing for divorce. While it isn't easy to save cash when you have none, but it can be done. Think outside the box on how you can save. Hide cash tips from your job or reach out to your network and ask a friend for a small cash loan. If possible, apply for a credit card in your own name so you will have a line of credit available to you if needed.
4. Seek help
Most importantly, seek help. Build a team around yourself that includes a counselor, support group, therapist, or another domestic violence advocate. Reach out to trusted friends and family and talk to them about your situation. In addition, the National Coalition Against Domestic Violence offers resources to victims of financial abuse. For financial assistance, consider setting up a meeting with a free consumer credit counseling agency. These organizations provide free financial education and can assist you in coming up with a plan to get out of debt, among other things.
Lastly, your safety is the most important of all. If you are in danger, there are legal steps you can take before you leave your abuser to protect yourself. If you feel unsafe, contact an attorney or legal aid agency to discuss your options. Filing for a protection order or restraining order, which can prohibit your abuser from harassing, threatening, or even contacting you, may be an option.
You can overcome financial abuse
Financial abuse comes in many forms, but it always boils down to one person’s control over another. If you are the victim of financial abuse, know that there is a way out. By educating yourself and seeking the assistance of others, you can get out of an unhealthy situation and recover from financial abuse.