By Imani Williams
Money trauma can have a lasting impact on your financial well-being. This article explores the complexities of money trauma and financial abuse. By the end, you’ll know more about what it looks like, how to protect yourself from it, and how to heal if it’s something you experienced yourself. Our goal is to shed light on the importance of recognizing and addressing money trauma, offering insights into its psychological implications and practical steps to foster financial resilience.
Understanding Money Trauma & Financial Abuse:
This article from Nav.it describes what money trauma feels like in a really compelling way.
"It’s like having an abusive partner—the kind of person who controls your finances and puts you in life-altering debt. They’re the kind of person who never listens to reason and leaves you feeling embarrassed, scared, and helpless every time they open their wallet. Money trauma can haunt you for years after the relationship ends."
Financial abuse, a tactic used by abusers for power and control, is a prevalent issue in many relationships. It’s typically most common in abusive romantic relationships as well as toxic family relationships; elderly individuals are especially susceptible.
It can manifest subtly or overtly, diminishing a survivor's ability to stay safe after leaving an abusive situation. Research indicates that financial abuse occurs in 99% of domestic violence cases, emphasizing the need for awareness and preventive measures.
What are the most Common Methods of Financial Abuse?
Financial abusers employ various methods to gain control, including forbidding the victim to work, controlling spending decisions, and withholding access to bank accounts. This form of abuse may start subtly and even appear as loving gestures at first. It is crucial to recognize early signs and take preventive steps.
Your loved one may say something like this,
"I know you're going through a tough time; I want to take care of you. Let me handle the finances and I'll give you an allowance for anything you want or need."
This is a person that you love and feel that you can trust, so you may willingly surrender control of your money and its use. But over time the abuser gradually reduces your "allowance."
Once you decide to reclaim control over your finances, you may experience a few different challenges.
- You may discover that accounts have been moved or that you no longer have information or access to family funds.
- The abuser may retaliate by threatening they’ll take some sort of unpleasant action if you try to reclaim financial control.
- The abuser may overtly use violence or threats of violence to intimidate you from working or having access to the family funds.
Whether done subtly or explicitly, abusers employ various tactics to establish financial control over their victims.
These tactics may include:
- Prohibiting the victim from pursuing employment.
- Undermining work opportunities through stalking, harassment, or physical abuse before crucial meetings.
- Restricting participation in job training or career advancement programs.
- Dictating all spending decisions.
- Excluding the victim from investment and banking choices.
- Denying access to bank accounts.
- Withholding money or providing a limited "allowance."
- Coercing the victim into writing bad checks or filing fraudulent tax returns.
- Accumulating significant debt on joint accounts.
- Refusing to contribute to the family income.
- Withholding funds for essential needs like food and medicine for the victim or children.
- Concealing assets.
- Stealing the victim's identity, property, or inheritance.
- Compelling the victim to work in a family business without compensation.
- Neglecting bill payments, adversely affecting the victim's credit score.
- Pressuring the victim to surrender public benefits or threatening to report misuse.
- Filing false insurance claims.
- Avoiding child support payments
- Manipulating the divorce process by concealing assets or prolonging proceedings.
How do you protect yourself from Financial Abuse?
To prevent financial abuse, it's essential to take it slow in relationships. Financial abusers often target individuals with low self-esteem or those who are lonely. Recognizing signs of control, such as an unusual interest in your finances or discouragement from working, is crucial.
Be sure to take these practical steps
- Take charge of your phone.
- Open your own mail.
- Never share your PIN fiercely
- Keep your checks, bank cards, and payment methods in a secure location known only to you. If anything goes missing, report it to your bank and the police.
- Regularly review your bank statements independently. If you notice anything unusual, contact your bank promptly.
- Avoid leaving money or valuables in plain sight.
- Never endorse a blank check. Seek assistance from a trusted third party if you need help with check writing.
- Refuse to cosign loans.
- Avoid opening joint checking, savings, or credit card accounts with a new partner who entered your life very recently.
How do you heal?
Acknowledging money trauma is a crucial step towards healing. Ignoring or suppressing its effects won't make it disappear. Instead, it's essential to address the underlying emotional issues. This can involve open conversations with friends and family or seeking professional help from a therapist specializing in financial well-being.
Practicing mindful spending is another powerful approach to addressing money trauma. This involves assessing wants and needs, considering the emotional triggers behind purchases, and making informed financial decisions. Mindfulness can lead to a deeper understanding of your relationship with money, fostering healthier financial choices.
Money trauma and financial abuse can have profound effects on your well-being. By recognizing these issues and taking proactive steps, you empower yourself to break free from the cycle and build a healthier relationship with money. Remember, financial wellness starts with understanding, acknowledging, and actively addressing the impact of your past on your present financial decisions.