Financial abuse is a situation where someone robs you of your money or other assets by playing on your vulnerability or taking advantage of your trust. For example, convincing you to give them your paycheck, stealing your cash, draining your savings account, maxing out your credit cards, making you sign over your house, or using your name to open loans. Sometimes it's done openly (e.g. "sign your house over to me now or I'll kill you"), but often it's disguised as "helping you manage your finances". Financial abuse usually happens in domestic relationships, i.e. between spouses or adult children and their elderly parents, but can also happen between friends, siblings, dating couples, remote relatives, neighbors, etc. It results in financial troubles (like getting evicted from your own house), stress and anxiety, shame, and damaged family relationships. Financial abuse is a crime, but rarely gets reported and prosecuted because it's painful to admit, embarrassing to talk about, and very confusing. However, avoiding the problem doesn't solve it; the more you know about it, the better protected you are.
Seniors and vulnerable adults
It can be hard to stay on top of your financial affairs when you're struggling with mental or physical health. There's nothing wrong with asking for help, but simply giving someone access to your financial records and accounts is not a good idea. It's unpleasant to think about, but your friend, relative, or neighbor might feel entitled to your money, or simply view you as an easy target, hoping that you won't notice them stealing from you, or won't report them to the police out of shame, embarrassment, or feeling bad for them. They can convince you to sign legal financial documents without reading, or to change the mailing address on bills and other records (so that you won't even know they drained your accounts). To prevent this, insist on opening you own mail and having access to all financial records, don't sign paperwork that you didn't read or fully understand, and use the rule of three: any time you need to discuss money, at least two other people should participate in the conversation.
If you feel that you need someone to manage your finances for you, you need to contact a lawyer or Adult Protective Services in your area. They'll help you file legal paperwork appointing someone as your conservator. It can be a relative, a friend, or someone appointed by the state. That person would have the power of attorney to manage your finances for you; for example, to withdraw money from your bank account in order to pay your rent (if you forgot, were in hospital, etc). Making it official protects you from financial abuse, because a conservator has to act in your best interest and can't use your money for their personal benefit. If they spend a penny of your money on something other than your needs, or if they aren't managing your money well (e.g. you have expensive clothing but not enough food) - please contact Adult Protective Services, they'll get you a different conservator.
Many couples argue about finances: people have different priorities, are unhappy about each other's spending habits, etc. That's unfortunate, but doesn't constitute financial abuse as long as both spouses have access to their shared assets. The line is crossed when your partner assumes full control over the family finances, e.g. denies you direct access to bank accounts, gives you an “allowance”, forces you to account for all money you spend by showing receipts, withholds money for basic necessities like food, clothing, hygiene products, medication and housing, or runs up large debts on joint accounts without your permission or awareness. They might argue that they are the sole breadwinner, that the bank account (or a credit card, or real estate, etc) is in their name, that this money is their personal asset that you have no say on. However, that's not how it works. Marriage means that both of you are entitled to your family's savings accounts, credit cards, real estate, etc, regardless of who earns how much. If your spouse doesn't want to continue sharing their earnings with you, they can divorce you; until then your family assets belong to both of you, and each of you has to have access to them and a say on how they are spent.
Dating couples and friends
Sometimes your friend/boyfriend/girlfriend would ask you to loan them some money, or cover their bills, or put their purchases on your credit card, or quit your job and help them with their business, or other such. They might say that you're practically a family, that they will help you out too when you need it, that you owe them a favor, that if you cared about them you'd do it, etc. Helping out a friend in need is a nice thing to do, but both of you need to be clear on the nature of the transaction. Unlike married couples, friends and dating partners do not share financial assets and have no obligations towards each other. For example, your boyfriend doesn't have to pay for your gas because you aren't a family, he has no financial obligations towards you, and your gas isn't his problem. You can sue him if you feel you were taken advantage of, but it will take time and attorney fees, and you're not guaranteed to win. To avoid this hassle, keep your money separate from theirs, only pay your half of the shared expenses (e.g. rent or dining out), and if they want to borrow money from you - have them sign a legal contract, so that you'll get paid back.
When you were a minor, your parents were legally required to provide you with food, shelter, clothing, medical care, education, school supplies, etc. Once you reached the age of maturity, they have no obligations towards you anymore, and you have to provide for yourself. Most parents don't kick their children out of the house at 12:01AM on their 18th birthday, so you might still be receiving financial support from your parents. However, that's a gift, and they are free to stop giving it at any point. Refusal to pay your bills is not a form of financial abuse, even if you have no means of supporting yourself. Learning to provide for yourself can be a hard transition for a young adult; if you need help, step by your local social security office, adult protective services, or a homeless shelter, to see what programs are available in your area. Don't let this confusion over financial obligations ruin your relationship with your parents: even if you don't love them, they're a valuable resource that you'll be needing throughout your life. They won't provide for you on an ongoing basis, but might bail you out in case of an emergency, would love to babysit your children and invite you for holidays, and are likely to will you their property. All of these things are voluntary, so your chances are higher if you ask rather than demand.
Minors usually don't have an income of a meaningful size and depend on their parents financially. However, there are exceptions (e.g. child actors), and some minors have college funds, savings accounts, trusts, real estate, or other assets. Moreover, minors have identities (social security numbers and names), that can be used for fraudulent purposes. If you're under the age of maturity, your financial affairs are probably managed by your parents (or other custodians). This is done for your protection, so that you won't spend your college fund on a trip to Disneyland even if you really really want to. However, this does not mean that this money belongs to your parents. It's your money that they are holding for you till you're old enough to take over. If they take it away from you or spend it - that's financial abuse. For example, one teen had a college fund that her grandma started, and both the teen and the grandma were adding money to it. Then the teen's mother took over the account, and spent the money on renovating her house. She said that the teen owed her for living expenses (rent, food, etc) and had to contribute to the household, so it was only fair to spend her college fund on the household needs. However, that's not how the law works: minors don't have to contribute to any expenses till they reach the age of maturity, and their money is theirs. If you're a minor and someone (including your parents) took away your money or is using your name to run some shady financial schemes - please reach out for help (a school counselor or child protective services might be a good place to start). This issue needs to be sorted out so that you get your money back and/or your name is cleared of bad credit history; you'll need it to apply for college loans, mortgage, credit cards, car loans, etc.
~ Michel de Montaigne
© 2008-2017 Fort Refuge. Please don't reproduce without permission.