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What is Financial Abuse?
Financial abuse is rarely acknowledged, and yet it is one of the most common types of abuse. It often goes unrecognized, and how it presents itself in relationships can be varied. The goal of the abuser is to manipulate, intimidate, and threaten the victim through finances in order to entrap the other person in the relationship.
Most often, financial abuse occurs in a marriage or partnership where there is either physical or emotional abuse, as well. In fact, a study by the Centers for Financial Security found that 99 percent of domestic violence cases also involved financial abuse. What’s more, financial abuse is often the first sign of domestic abuse and is considered a gateway to other types of abuse, such as verbal assaults and even physical violence. Consequently, knowing how to identify financial abuse is critical to your safety and security.
Signs of Financial Abuse
Matrimonial attorney, Joshua Katz, has become all too familiar with recognizing signs of financial abuse in his clients. He shared, “As a divorce attorney, I encounter financial abuse frequently– and it’s astounding to me how many of my clients are unaware they are victims of abuse. It’s often a gradual, rather than sudden abuse, a decreasing spending limit or weekly food allowance as the marital relationship declines. The housewife is trained to feel she’s at fault for an inability to stretch the grocery funds, while her husband is splurging on lavish lunches at work. These clients have no concept of their husband’s income, or any awareness of the marital finances.”
In its most aggressive form, the financial-abuse victim is put on a strict “allowance” and typically is not given access to credit cards. If she can use a credit card, her husband will scour each bill, and some abusers might even get alerts from the credit card company when the card is used so that he can keep tabs on her spending and her whereabouts.
The “allowance” given is rarely enough to provide for basic living expenses for her and their children, creating a cycle of dependence and humiliation. The victim is put in a situation where she must beg for the money until the abuser relents and give her funds for basic necessities.
Victoria McCooey was one such victim, however she believes that being labeled as a victim is dis-empowering and prefers to think of herself as a survivor. Victoria bravely shared her harrowing experience in a financially and verbally abusive marriage that turned physically violent.
Victoria was not allowed access to credit cards and was given a feeble amount of cash to support the entire family. Imagine going to the grocery story with what you knew was not enough money to pay for the food needed to feed your children for the week and given a food list by your husband that you could not stray from. Even worse, imagine yourself doing all of this with a child in tow who is throwing expensive cereals and other treats into the basket that you know you cannot afford and do not have permission to buy. Victoria admitted that the worst part was getting to the register and waiting nervously to find out if her mental arithmetic was correct and if she would have enough cash to cover the cost. Victoria was the primary breadwinner, working as a journalist from home so that she could also take care of her kids, yet she never saw her paycheck. The money was automatically deposited into an account in her husband’s name. Victoria was made to live like a pauper while her husband spent her earnings as he pleased. Surviving an abusive marriage led Victoria into a career in divorce coaching. She has committed her life to guiding her clients out of a toxic marriage and into a life they can’t wait to live.
According to The National Coalition Against Domestic Violence, financial abuse can take many forms:
Employment-related abuse: when the abuser prevents a victim from earning money.
Examples include:
- Preventing the victim from holding a job
- Demanding that the victim quit his or her job
- Preventing the victim from looking for jobs or attending job interviews
- Harassing the victim at work
Coerced debt: when an abuser forces non-consensual, credit-related transactions.
Examples include:
- Applying for credit cards, obtaining loans, or opening accounts in the victim’s name without their knowledge or consent
- Forcing the victim to take out loans
- Forcing the victim to sign financial documents
- Using threats or physical force to convince victims to make credit-related transactions
- Refinancing a home mortgage or car loan without the victim’s knowledge
Other forms of economic abuse involve the abuser preventing a victim from accessing existing funds.
Examples include:
- Deciding when or how the victim can access or use cash, bank accounts, or credit cards
- Forcing the victim to give the abuser money, ATM cards, or credit cards
- Demanding that the lease or mortgage or assets be in the abuser’s name
- Using the victim’s checkbook, ATM card, or credit cards without the victim’s knowledge
Should you leave? What should you do if you suspect a friend, colleague or family members is a victim of financial abuse?
It is important to know that financial abuse is not something that gets better with time. In fact, it often escalates and can lead to other types of abuse. Victoria shared that her low point was when her husband strangled her in front of her children, causing her to blackout. Luckily, a neighbor heard her screams and alerted the police who arrived shortly after Victoria came to.
Typically, there are outward signs of financial abuse, but individuals are wary to get involved. Vicky Dinges, Allstate’s Senior Vice President of Corporate Responsibility shares that, “Every time I talk to a victim’s family or friends, they’ll say they suspected something but decided it was a private matter and that they shouldn’t get involved.”
Not getting involved is not an option. My grandmother was a victim of financial abuse. I could see that, what I didn’t know was that Grandma was also being physically abused. She lived a life of abuse until she died at age 83, after my grandfather pushed her down the stairs in their home. Initially, the story we were told was that she fell. However, Grandpa admitted on his deathbed that he was the one who pushed her.
Despite our many pleas for Grandma to leave, she never did. Grandpa’s hold on her was too tight and her financial dependence left her feeling powerless. I blame myself for not being more forceful in intervening and have consequently dedicated my life to supporting women in gaining financial independence in honor of my grandmother. I wear the badge of shame of not doing enough. Don’t let this be you.
If you are a victim of financial abuse, what are the next steps?
Get a team. Find a therapist, counselor or support group where you can share your story and find support to leave. Make sure that this person is a trained domestic violence advocate.
Define your options. Make a list of options including living with a friend or family member, renting an apartment in a friend’s name or investigating a safe housing option in your community. Be sure to know your legal options and have protection. You will want to understand your options regarding separation, divorce and a restraining order.
Get your finances in order. One of the main reasons women choose to stay in abusive relationships is financial dependence. According to The National Coalition Against Domestic Violence, you should consider the following steps if you suspect that you might be a victim of financial abuse.
- Avoid using credit and debit cards that can enable an abuser track your whereabouts.
- Keep your personal and financial records in a safe location. Leave copies with a trusted friend, relative, or in a bank safety deposit box to which your abuser does not have access.
- Compile an emergency evacuation box with copies of your family’s important records and documents.
- Keep copies of car and house keys, extra money, and emergency phone numbers in a safe place.
- If you use the internet to explore domestic violence issues or to research how to regain financial independence, make sure your abuser cannot trace your activities.
- Take a financial inventory, listing assets and liabilities.
- If your partner controls the money, look for ways to find out more information about his/her income, financial property, real property, and debts.
- If you are considering leaving your abuser, calculate what it would cost you to live on your own, and consider starting to set aside your own money in a safe place, even if it is just a few dollars.
- Obtain a copy of your credit report from any of the three major credit bureaus, review the information, and report any fraud, disputed claims, or identity theft. Under FACTA (The Fair and Accurate Credit Transactions Act) you can obtain a free copy of your credit report every 12 months.
Extreme abuse comes in many forms, not just physical. Many people justify staying in verbally, financially, or emotionally abusive relationships by convincing themselves all is well as long as their partner has yet to physically hurt them. This mindset can be extremely dangerous and unhealthy. If you’re in a relationship in which you feel you are being taken advantage of, manipulated, or belittled, those are signs of a toxic relationship that must come to an end.
As this topic gains visibility, heavy hitters for women’s rights are speaking up. Tennis star, Serena Williams, is an ambassador for the Allstate Foundation Purple Purse campaign, focused on helping to fight back against the cycle of domestic violence. Serena’s mission is to get women and men to talk about financial abuse and arm us all to stand up to these abusers and help empower victimized women to fight.
In a healthy relationship, each partner should have equal control, education and awareness over their finances in order to make the wisest financial decisions for themselves, their relationship and their family. As financial abuse gains more recognition in mainstream society, it is important that we make a conscious effort to support our loved ones that may be in financially abusive relationships and raise awareness about this issue that so many people face.
Related: Why Advisors Need To Act Fast When a Client Seems Cognitively Impaired