How to Overcome Financial Abuse in a Relationship
As millennials, we've been taught to strive for independence, empowerment, and financial freedom. We work hard and make sacrifices to achieve our goals, but those values can feel like distant dreams when you're in a relationship with an abusive partner. As a result, you may feel like you're constantly falling short, not enough, and a failure in life. These feelings can be overwhelming, but knowing you're not alone and hope for change exists.
Key Takeaway:
Financial abuse is a disturbing reality in many relationships, as research shows that it is a factor in 99% of domestic violence instances.
One of the most important steps a victim of financial abuse can take is to build financial independence, which involves gaining control of your finances and resources.
Financially it can leave you feeling like you will never be able to get on your feet again, but there is hope.
What is Financial Abuse?
Financial abuse is a disturbing reality in many relationships, as research shows that it is a factor in 99% of domestic violence instances. Unfortunately, financial abuse often goes unnoticed and can continue for years, causing significant harm to the victim's emotional and financial well-being.
For many survivors, financial abuse leaves deep emotional scars. The trauma of financial abuse can last long after they leave the abusive relationship. It's crucial to recognize the signs of financial abuse and take action to protect yourself or someone you know who may be experiencing it. No one should ever have to endure financial abuse or any other form of domestic violence. Resources are available to help survivors break free from the cycle of abuse and start on the path to healing and financial stability.
Financial abuse is using financial resources to influence and dominate a spouse, making them feel trapped and helpless. Limiting access to financial information or account management or even destroying credit ratings are examples of this. While physical abuse uses violence to control access to finances, leaving the victim with no way to escape, emotional abuse uses money to control thoughts, behavior, and feelings. Financial abuse has catastrophic consequences, and healing can be a long process.
Signs of Financial Abuse
There are many forms of abuse, including emotional, physical, mental, and elder abuse. You may not realize you're being financially abused until it's too late. Signs of financial abuse include when your partner:
forbids you to work
has complete control over how all of the money is spent
does not involve you in financial or investment decisions
provides you an allowance or refuses you money when needed
forces you to falsify financial documents
refuses to work or contribute financially
refuses to pay bills and ruins your credit
withholds money that you or your kids need for simple things like food and medicine
fails to disclose all assets
steals your identity, property, or inheritance
takes your paychecks
empties your bank accounts
limits your access to financial information
takes control of your credit score without your permission.
uses money to manipulate or control your behavior or emotions
These actions can leave you feeling trapped and hopeless, but it's important to recognize that you deserve better. The first step in protecting yourself is recognizing financial abuse signs. This can be difficult, as the signs can be subtle and hard to detect. But it's important to pay attention to any changes in your financial situation or how your partner handles money. If you feel like something isn't right, trust your instincts and seek help.
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The Lasting Effects of Financial Abuse
The effects of financial abuse can be long-lasting and devastating. When someone is financially abused, it can leave them feeling helpless, trapped, and unable to escape their situation. It can cause anxiety, depression, and stress and make it difficult to trust others. The victim may feel like they are not worthy of love or support, and this can affect their ability to form healthy relationships in the future. Financial abuse can also lead to financial hardship, as the victim may have lost their job or been forced to take on debt due to the abuse. Even after the abuse has ended, the victim may continue to struggle with the effects of financial abuse, including poverty, homelessness, and difficulty rebuilding their credit. It's important to seek help and support if you or someone you know has experienced financial abuse, as healing from the effects of financial abuse can take time and effort.
How to Overcome Financial Abuse
There are resources available to help you. Call the National Domestic Violence Hotline at your local emergency services if you're in immediate danger. If you're not in immediate danger but need help, contact a therapist or counselor specializing in domestic violence. They can help you develop a safety plan and provide emotional support as you navigate this difficult time.
It's important to remember that you have options and resources available to you. It's normal to feel overwhelmed and unsure of what to do next, but reaching out for help is the first step towards regaining control of your finances and your life.
6 Steps To Build Financial Independence
One of the most important steps a victim of financial abuse can take is to build financial independence, which involves gaining control of your finances and resources. This process can be difficult but is crucial for long-term safety and stability.
Start by gathering important financial information such as bank account details, credit score, and any joint accounts that you may have with your partner. If your partner controls all of your finances, it may be helpful to open your own bank account and begin saving money.
To begin building financial independence, you should:
Create a budget and stick to it
Determine Your Income: Calculate your monthly income from all sources, including your salary, any side hustles or part-time jobs, and any other sources of income.
List Your Expenses: List your monthly expenses, including fixed expenses (rent/mortgage payments, utilities, car payments) and variable expenses (groceries, dining out, entertainment).
Categorize Your Expenses: Categorize your expenses to clearly understand where your money goes. (Common categories include housing, transportation, food, utilities, entertainment, and savings.)
Set Goals: Determine what financial goals you want to achieve, such as paying off debt or saving for a down payment on a home.
Determine Your Priorities: Review your expenses and determine which ones are essential and which ones you can cut back on. Determine which expenses align with your financial goals and prioritize those.
Allocate Your Income: Allocate your income towards your expenses and financial goals. Start by paying for essential expenses first, then allocate funds towards your financial goals, and finally, allocate the remaining funds towards discretionary spending.
Track Your Spending: Track your monthly expenses and income to ensure you stay within your budget. Use a budgeting app or a spreadsheet to keep track of everything.
Adjust Your Budget: Review your budget regularly and adjust it as needed. Life circumstances can change, and you may need to adjust your budget to accommodate unexpected expenses or changes in income.
Remember, creating a budget is a personal process, and finding the best budget may take some trial and error. Be patient, stay committed to your financial goals, and you'll be on your way to financial success.
Build an Emergency Fund
It is important to have a safety net in place in case of unexpected expenses or emergencies. Set a goal to save 3-6 months' living expenses and put it in a separate account. Start small and work your way up to this goal over time.
This means that if your monthly living expenses (rent/mortgage, utilities, groceries, etc.) total $3,000, your emergency fund goal should be $9,000 - $18,000. This may seem like a large amount, but starting small and working your way up over time is important.
Recommended Read: 30 Creative Ways To Save Money in 2023
Review Your Credit Report
Order your credit report from www.annualcreditreport.com. Check your credit report to ensure no errors or inaccuracies could affect your ability to get credit. If you find any errors, dispute them with the credit bureaus.
Develop a Plan to Pay Off Debt
The first step in creating a debt repayment plan is to list all your debts, including the creditor, interest rate, and minimum monthly payment. Once you clearly understand your debts, you can prioritize which debts to pay off first. It is important to focus on paying off high-interest debt first, such as credit card debt, as this can quickly accumulate and become difficult to pay off.
Consider consolidating your debt into a lower-interest loan, such as a personal loan or a balance transfer credit card. This can help you save money on interest and simplify your debt repayment plan by combining multiple debts into one.
Build Your Credit Score
To build a good credit score, paying your bills on time every month is important. Late payments can negatively impact your credit score and stay on your credit report for up to seven years. Set up automatic payments or reminders to ensure you never miss a payment.
Another important factor in building your credit score is to keep your credit utilization low. Your credit utilization is the amount of credit you are using compared to your total credit limit. Aim to keep your credit utilization below 30% to avoid negatively impacting your credit score.
Additionally, it is important to avoid applying for too much credit at once. Each time you apply for credit, it results in a hard inquiry on your credit report, which can temporarily lower your credit score. Apply only for the credit that you need and space out your applications to avoid multiple inquiries in a short period of time.
Increase Your Income
Increasing your income can be a powerful tool for achieving your financial goals faster. There are several ways to increase your income, including taking on a side hustle, getting a higher-paying job, or seeking out opportunities for career advancement.
One option for increasing your income is to take on a side hustle. This includes freelance work, selling items online, or offering services like pet-sitting or tutoring. Look for opportunities that align with your skills and interests. Even earning a small amount of extra income each month can make a significant difference over time.
Another option for increasing your income is to look for a higher-paying job. This may involve seeking out new opportunities within your current company or exploring job openings in your field. In addition, consider updating your resume and LinkedIn profile, networking with professionals in your industry, and seeking training or education to improve your qualifications.
It's important to stay committed to your financial goals and make consistent progress toward achieving them, even if it takes time and effort. Regaining financial independence after a financially abusive relationship is achievable with perseverance and a solid financial plan.
Focus on your mental health
Financial abuse can have a significant impact on your mental health. It's important to prioritize your emotional well-being and seek support if needed. Consider seeing a therapist or counselor to help you work through the trauma of the abuse.
You can also contact national organizations such as the National Network to End Domestic Violence for support and resources. They can provide information about support groups and other resources to help you cope with the effects of financial abuse.
Recommended Read: How To Practice Financial Self-Care In 5 Steps
Money Takeaway
Financial abuse can cause significant harm to the victim's emotional and financial well-being. It can leave deep emotional scars, and healing can be long. Financially it can leave you feeling like you will never be able to get on your feet again, but there is hope. It's important to seek help and support if you or someone you know has experienced financial abuse. Don't let financial abuse hold you back. Sign up for our email list today and take the first step toward building a brighter financial future.
