The red flags that signal you may be experiencing financial abuse

When the term “financial abuse” first came up at a story meeting at LowestRates.ca, most of us were struck by how recognizable the concept seemed. Yes, we agreed: this was definitely a thing. But when it came time to give the concept a definition — to describe how financial abuse manifests as actions that someone can do to other people — all of us fumbled. What exactly does it look like? And how do we know if it’s happening to us, or to someone we know?

We spoke to Anna Morgan, program manager at Nellie’s Shelter, and Tsering Tsomo, director of employment and training at the YWCA to find out. In their years at the Toronto-based women’s shelters, Morgan and Tsomo have both worked with women stuck in financially abusive circumstances. And if that experience has taught them anything, it’s that financial abuse is something that rarely occurs on its own, in isolation; instead, it often takes place alongside — and works in tandem with — other forms of abuse, whether they be emotional, psychological, or physical. What further complicates things is how many financially abusive practices are actually considered “normal” and enshrined in traditional gender dynamics — making it even harder to recognize unhealthy behaviours for what they are and address them head-on.

Knowing what financially abusive behaviour looks like is important. Money touches absolutely everything, so when someone threatens your access to financial resources, the consequences can be huge. Below, we gather more insights from Morgan and Tsomo on how to recognize financially abusive behaviour, who is at risk, and what resources you can turn to if you find yourself in a such a situation.

What is financial abuse?

In the 1980s, three Americans named Ellen Pence, Michael Paymar, and Coral McDonald developed what they called the “power and control wheel” — a visual representation of the strategies that abusers like to use on their victims. The canonical wheel breaks abuse tactics down into eight categories, all of which were based on the experiences of women whom Pence, Paymar, and McDonald had met with in women’s groups across Minnesota. One of the eight categories was “economic abuse.”

The examples of economic or financial abuse on the wheel include “preventing her from getting or keeping a job,” “making her ask for money,” “giving her an allowance,” “taking her money,” and “not letting her know about or have access to family income.”

To this list, Tsomo adds “allowing you to work,” which seems to directly contradict the first example on the wheel: “preventing her from getting or keeping a job.” But, as both Tsomo and Morgan explain, both scenarios involve someone either giving or withholding permission from you — and that should raise some red flags.

“With any form of abuse,” says Morgan, “I find it’s about the abuser maintaining power and control over the other person. So I think financial abuse is just a way for the abuser to maintain power and control through financial resources over the other person… it does create a financial dependency.”

It’s that financial dependency that makes it difficult for a victim to negotiate or assert their boundaries, wants, or needs — or even to leave a relationship altogether.

The power and control wheel was largely based on the experiences of women in abusive romantic relationships, but financial abuse can definitely occur outside the context of a partnership. Other scenarios that Morgan and Tsomo list include someone:

• Using your money without your knowledge
• Applying for a credit card or other loan in your name, without your knowledge
• Continually borrowing your money without repaying you
• Forcing you to pay all shared bills
• Accessing your financial information without your knowledge and/or your consent
• Pressuring you to leave your job so that you’ll no longer have a source of income by criticizing or minimizing your work, or showing up at your workplace to create issues
• Controlling all of your shared assets, resources, and financial decisions
• Withholding shared financial information from you
• Expecting you to pay for a shared property, but not allowing you to put your name down as an owner
• Pressuring you to share a financial contract that you don’t understand
• Not giving you access to your joint account

Who’s at risk of being financially abused?

Based on her experience, Morgan says that no one is completely immune. “I think it can play out differently depending on your particular background,” she explains. “But I definitely think it affects everyone.”

“We definitely see women coming to the shelter who may have had a fairly privileged life,” she adds. “But because of their financial dependency on their abuser, or their family members, or their partners, they end up in a shelter because they didn’t actually have access to controlling their resources.”

However, Tsomo does think that certain demographics are more at-risk — particularly women, the elderly, new immigrants and people with disabilities. These are demographics that already face relatively high barriers to stable jobs, secure housing, and financial education, all of which could reduce their vulnerability to financial abuse.

Tsomo says her own experiences have helped her understand how easily a person could be taken advantage of if they depend heavily on someone else to take care of all — or even some — of their financial transactions. “Having had a parent — an elderly parent — live with you, you realize that they can be very vulnerable when it comes to their financial security,” she says. “They need somebody to go out and help them take out money from the bank. They might have an asset that they need to protect.

“Abuse doesn’t have to be done by somebody else,” she adds. “It could even be somebody close to the person.”

Unfortunately, social norms can also encourage some people to over-rely on others to take care of their finances — and increase their vulnerability to being exploited. This dynamic is especially prevalent — and even normalized — in heterosexual partnerships.

“If you look at gendered dynamics, or gendered relationships… the man is supposed to have access to the money,” says Morgan. This can make it hard for a person who is being exploited to pinpoint what, exactly, the problem is: when an unfair dynamic is “normal” or common, the person perpetuating it “can kind of deny... the abuse is happening.”

There’s a reason why the concept of a “fuck off fund” (savings that you contribute to regularly and can use to leave a bad situation) or “mad money” (cash that you can use to hail a cab to take you home if you ever find yourself on a “bad date”) is as much of a part of the culture of heterosexuality as, well, marriage.

How to protect yourself

Prevention is key. Learn what the signs of financial abuse are, and — even more critically — learn how the financial system works. This will make it much easier to recognize a compromising situation when you see one. Financial literacy is not only for people who want to “build wealth” or understand the stock market; it’s an essential life skill.

Getting started can be intimidating. Fortunately, says Tsomo, “I have seen quite a few not-for-profit organizations, even in [Toronto], as well as national organizations, making an effort to ensure people are financially literate.”

Tsomo and Morgan recommend the following free (or low cost) programs that can connect you to a financial advisor:

• The Financial Empowerment and Problem Solving program at West Neighbourhood House
• The Financial Empowerment program at WoodGreen
• Credit Counselling Canada offers programs in credit counselling, financial literacy and education, and debt repayment
• Credit Canada, which offers a free first consultation with a credit counsellor  

Most of the listed programs are in Toronto. If you’re reading this from another city, reach out to your local women’s shelter or check their website to see if they know of any free or low-cost financial literacy programs in your area. (Many of these resources cater to people in general who need financial advice — not just women.) And of course, there’s always the internet: we ourselves regularly publish stories on how to navigate your finances.

If you find yourself in a financially abusive situation, Morgan also recommends making sure that you have access to all your financial documents — within reason. “If it’s possible, and within the context of your safety… if you can keep copies of any of your important financial documents, I think that would be important,” she says.

If possible, starting a secret emergency fund is also critical.

Most important, though, is understanding that there are many resources across Canada — including Nellie’s and the YWCA — that can, and want to, help. Reaching out is the first step.