Rebuilding Finances After Financial Abuse

By- Madeline Cadiz

While not the most common, non-physical forms of abuse can be detrimental to the victims trapped in their situation (Owsley, 2018). One of these forms is financial abuse, which goes far beyond disagreements about finances. Defined by the Office of Women’s Health, financial abuse is “when an abuser takes control of finances to prevent the other person from leaving and to maintain power in a relationship” (2021). An abuser can show this type of control through many approaches, such as secretly withholding account information, restricting funds for basic needs, not allowing any access to the victim’s credit cards or bank accounts, controlling when the victim can work or not, and much more (Little, 2020; Zelderman, 2021).

Financial abuse is heavily dangerous, and it correlates with every other type of abuse. According to Adam et al’s 2008 study, 99% of women surveyed who had been in a psychologically or physically abusive relationship had also experienced economic abuse (Adams et al., 2008; Adams, 2011). While some victims try to remove themselves from their situation, “financial instability is also a common reason someone may stay in an abusive relationship or return to their abuser” (Sato, 2021). Because these factors forcibly bind victims to their relationships, proactive steps toward financial independence is a must. Victims may struggle to see themselves rebuilding their finances after experiencing troubling times, but there are many ways to set up a financially stable and healthy future.

For getting out of a controlling environment, the first step is assessing the situation. Understand that no one deserves to be controlled by their finances. It is never too late to start a new chapter and gain freedom. Dealing with an abuser from a legal standpoint may be challenging, since “they will deny the behavior unless it can be proven without a doubt,” so a victim might benefit from talking to family members, therapists, and even an attorney about the abuser’s behavior (Zelderman, 2021). Document everything for any future use. If possible, keep records of any violation, to assist in tracking evidence against the abuser (Zelderman, 2021).

After assessing the situation, it’s time to start the journey towards financial freedom. Open a personal bank account and start saving money. This is a priority as it will allow you to have full control over your finances without the abuser managing the account. The process is quite simple with the right identification: your social security number and a valid ID (Little, 2020). It’s very important, however, to know that certain banks may “require minimum deposits for opening certain types of accounts. If you have enough money for the minimum deposit on a savings account, open both a checking and savings account and start contributing to savings as you’re able” (Little, 2020). To prepare for any emergencies, it is wise to save “at least three to six months’ worth of essential expenses” (Little, 2020).

When rebuilding finances, it’s easy to be eager for a quick start. However, understand that saving might not go as quickly as you want. In Starting Over: How to Rebuild Your Finances After Escaping a Financially Abusive Relationship, Donald Owsley shares a couple of methods for budgeting that will bring the best results in the long run:

50/30/20 rule: This rule separates your pay into three percentages. 50% of the salary goes towards needs, such as rent, utility bills, and groceries. 30% of the salary can go towards any wants, like entertainment, shopping, or going out. And the last 20% goes away into savings.

80/20 rule: A more flexible form of the first method is to dedicate 20% into savings and freely spend the rest. This will allow you to put in any percentage into wants and needs, or even place a higher percentage into savings.

Envelope method: This method allows for a more visual approach. Label individual envelopes as broad categories (needs, wants, savings) or more detailed categories (rent, car, groceries, utilities) and place any amount of your salary for that month into each envelope.

Opening a new bank and savings account is a good start, but there may be a time when you need a loan for certain purchases. This requires a credit score. Credit scores enable lenders to assess loan and credit card applicants. The best way to build a stable credit score is to make timely payments each month and not spend more than you can afford (DeNicola, 2022; Little, 2020). Never be discouraged by building credit from scratch if you fall in that situation. It is never too late to build credit, and many knowledgeable banks and credit services will offer help. When starting out, a wise choice is to get a secured credit card with little to no annual fees (DeNicola, 2022). Secured cards will need a refundable security deposit that will be returned once the account is closed and no money is owed to the bank (DeNicola, 2022). Credit scores enable lenders to assess loan and credit card applicants. The best way to build a stable credit score is to make timely payments each month and not spend more than you can afford (DeNicola, 2022; Little, 2020). Check your credit report once a year directly through the three credit bureaus: Equifax, Transunion, and Experian. If you find inaccuracies within your credit report, always report them as soon as possible (Little, 2020).

Growth and rebuilding after financial abuse can come with fears of sabotage from the abuser, yet there are secure ways to maintain accounts and keep them safe. Set up fraud alerts and freeze your credit when you or your lenders find a suspicious action. Fraud alerts “[ask] potential lenders to verify your identity before extending credit,” and a freeze will “[prevent] new lenders from accessing your credit report unless you lift the freeze, making it more difficult for new credit accounts to be opened in your name without your knowledge” (Sato, 2021). Another way of securing accounts is to establish two-factor authentication. This will require any user to input an extra verification form, such as a password plus a one-time code, sent through email or text, to verify the user’s identity. This additional security measure prevents third parties from breaking into online accounts (Sato, 2021). Finally, sign up for transaction alerts for every purchase, which will notify you of any suspicious activity and assist you in keeping track of your spending (Sato, 2021).

The journey towards financial freedom begins with patience. Starting new accounts and using different methods to save money requires time, but will result in financial health lasting well into the future. No one should control someone else’s finances in order to hurt them, especially if the victim’s pay or accounts are rightfully theirs. The abuser may manipulate accounts or credit, even after the victim gets out of the situation, but survivors have great ways to ensure no one unrightfully breaks in. Rebuilding finances after traumatic experiences takes time, but being patient and diligent with saving and building a good credit score will not only help your economic status but also build morale for taking control of your life.

We at ARO are here to support you in your personal healing journey to complete well-being. We bring awareness and education to 13 different types of abuse including Narcissistic, Sexual, Physical, Psychological, Financial, Child, Self, Cyberbullying, Bullying, Spousal, Elderly, Isolation, and Workplace, and help others heal and find peace. Please support our efforts by going to GoARO.org to learn how you can make an impact on the Abuse Care Community.

References

Adams, A. E., Sullivan, C. M., Bybee, D., & Greeson, M. R. (2008). Development of the scale of economic abuse. Violence Against Women, 14(5), 563. https://journals.sagepub.com/doi/abs/10.1177/1077801208315529 

Adams, A. E. (2011). Measuring the effects of domestic violence on women’s financial well-being. Center for Financial Security. https://centerforfinancialsecurity.files.wordpress.com/2015/04/adams2011.pdf 

DeNicola, L. (2022, June 9). How to build credit from scratch. Credit Karma. https://www.creditkarma.com/advice/i/how-to-build-credit-from-scratch

Little, K. (2020, April 9). Starting over: How to rebuild your finances after experiencing financial abuse. Bankrate. https://www.bankrate.com/personal-finance/rebuild-finances-after-financial-abuse/

Office on Women’s Health. (2021, February 15). Financial abuse. U.S Department of Health & Human Services. https://www.womenshealth.gov/relationships-and-safety/other-types/financial-abuse

Owsley, D. (2018, November 26). Starting over: How to rebuild your finances after escaping a financially abusive relationship. Relevate. https://www.relavate.org/counseling-help/2018/11/26/starting-over-how-to-rebuild-your-finances-after-escaping-a-financially-abusive-relationship

Sato, G. (2021, June 25). Financial abuse: How to identify and stop it. Experian. https://www.experian.com/blogs/ask-experian/how-to-identify-stop-financial-abuse/

Zelderman, L. (2021, February 17). Financial abuse: What it is, what to do if you’re a victim. Psychology Today. https://www.psychologytoday.com/us/blog/legal-matters/202102/financial-abuse-what-it-is-and-what-do-if-youre-victim