What does financial abuse really look like?
Sally is in her 20s, lives in a dilapidated rental home and works three jobs. Fifty-something Sarah owns a large home, drives a Mercedes and is a corporate executive. Pensioner Scott, in his mid-70s, still lives in the home in which he and his late wife raised their children. Who would you say is more vulnerable to financial abuse?
The answer, you may be surprised to learn, is all three. Financial abuse, according to the government’s MoneySmart, is a type of family and domestic violence:
“It often happens alongside other types of violence, such as physical or emotional abuse. It can leave you feeling vulnerable, isolated, depressed and anxious. It can also take away your independence.”
Commonly a spouse or partner is the perpetrator, but it can come from any relative or friend. A 2022 Commonwealth Bank report suggests over 623,000 Australians experienced financial abuse in 2020 alone – roughly one in 30 women and one in 50 men. Anyone – regardless of age, wealth etc. – can be a victim.
Financial abuse has many faces
Just as finances are complex, so too is financial abuse, which can be viewed from many angles:
- Couples: One partner controls everything money related. I know of one instance where a woman’s partner went so far as counting coffee pods; another checked car mileage to stop his partner driving further than school drop-offs.
- Exes: Not working specifically to avoid paying child support; withholding information to delay settlement; bullying into a menial settlement.
- Multi-generations: Children or grandchildren milking elderly relatives; seizing control over their finances and living arrangements.
- Non-relatives: Such as friends buying property together without properly documenting everything, then fighting come sale time.
- Business relationships: Duped signatures on trust and business documents; hiding debts; impeding or undervaluing someone’s exit.
Warning signs
There are common warning signs that you, or someone you know, is suffering financial abuse:
- Pressure to make decisions: to invest your money or superannuation in crazy things that go bust, or to do nothing and not keep up with inflation (let alone grow your wealth), go guarantor on a loan, or sign power of attorney.
- Draining money: using your money to fund their business or investment on the promise a return is coming that never does (which could be poor management or deliberate deceit). This could continue for years until you’re left homeless and bankrupt.
- Unfair claims: your partner came into the relationship with nothing and stays just long enough to make a claim on your home.
- Controlled spending: this may start small (‘Don’t spend so much on clothes!’) but can become extreme.
- Blackmail: I’ve heard of people denied access to their grandkids unless they gave their son/daughter money or amended their will.
- Restricted access: you’re denied access to your own or joint finances, from having your own accounts, or are banned from working to earn your own income and superannuation.
- Tracking: sharing your location by smartphone may sound practical or safe but is open to abuse.
- Social isolation: cutting you off from friends and family; pressing for an interstate move.
- Reckless spending: your money is spent haphazardly – you may be kept in the dark or pressured not to ask questions.
- Tying down: trapping you into a big mortgage to crimp your freedom.
- Guilting: I have seen wealthy adults guilt their less fortunate parents into paying their bills, and gambling addicts guilt partners into paying their debts (with no intention to address their addiction or plan to pay it back).
Protecting yourself
The best prevention of all is to avoid thinking ‘it won’t happen to me’. So many victims of financial abuse once thought exactly the same.
Other tips include:
- Speak up: Sometimes, starting a conversation can be enough to deliver positive change and even save a relationship (avoiding divorce is cheaper for everyone!)
- Have an emergency fund – cash only you can access, easily, in a crisis.
- Keep separate bank accounts – deposit your income here, then transfer money for joint bills into a joint account.
- Make decisions together – don’t leave money matters to your partner/children. It’s your money too.
- Get outside perspective: financial advisers are accountable to you as their client and help provide visibility over your assets, liabilities and risks. Ensure they are qualified and currently practicing.
If you think you may be a victim of financial abuse, I beg you – seek help immediately. Suffering in silence and letting the situation snowball is the costliest thing you can do. Both financially and emotionally!
Lifeline - 13 11 14
1800RESPECT - 1800 737 732
Family Relationship Advice Line - 1800 050 32
Good Shepherd Australia Financial Independence Hub - 1300 050 150
National Debt Helpline - 1800 007 007
Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
Image credits: Getty Images