Financial abuse is one of those awful topics many of us would prefer to ignore. But we mustn’t, not only to protect ourselves, but also to protect friends and family who could fall victim.
Like most forms of abuse, financial abuse is unfortunately most likely to be committed by someone close to us.
For women, it could be a romantic partner.
For elderly people, it could be their children.
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At its most basic, financial abuse is when money and resources are used to control another person.
This can take many forms. It could be someone taking your money or property without asking, and not paying it back. They could take out loans in your name, or pressure you to take out a loan for them.
If you watch the headlines you’ll see other examples, such as pressuring someone to sell their house so the abuser can use the money.
Others seem smaller on the face of it. One government website says it can be someone living in your home, eating your food and not contributing to any costs.
Listen to the podcast on this topic below and scroll down to listen to more podcasts in the series:
At first blush that’s an awkward moment for a younger generation often dubbed the “boomerang generation”, for their tendency to cope with rising costs of living by moving back home.
But actually yes, that’s the beginning of an unhealthy relationship. No adult should be living off another person and contributing nothing. Even a token amount shows respect for the person who’s taken you in.
Abuse can lead to spiraling levels of debt, losing assets you’ve worked hard to build up, even losing your own home.
It’s bad enough when it happens because of your own bad decisions or bad luck. You definitely don’t want the added sting of it happening because someone took advantage of you.
The difficulty is it’s hard for people in the grips of financial abuse to escape it. Sometimes it’s accompanied by physical abuse. In romantic relationships, the most dangerous time for a person being abused is when they try to leave.
So that’s the bad news. The good news is that there’s something all of us can do right now, to stamp out a culture where financial abuse can flourish.
We need to talk more about money.
When we’re more open about our own financial situation, it gives other people the permission to do the same.
And that’s when we’re able to pick up on the first signs that someone we care about is facing financial abuse.
If they don’t have enough money for essentials like food, power or medicine, or they drop previously important hobbies because they can’t afford them. If money becomes extremely touchy, or they seem confused about big decisions like why they sold the house.
Those are red flags to take seriously.
If it’s an older person, get in touch with Age Concern. They operate all over New Zealand.
For big sums of money, report it to the police. Or complain to the bank, or Banking Ombudsman, if you think they did something wrong like letting someone withdraw money from another person’s account.
Don’t forget to protect yourself, too.
Be extremely cautious before signing contracts, or becoming a guarantor for someone. If they can’t pay, you’ll be responsible for the debt. That’s the whole point.
You don’t have to spend a lot to get independent advice. Drop in to a Community Law Centre as a bare minimum, and talk the situation over.
An unbiased ear can change everything.
- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.
Listen to Cooking the Books podcasts below:
Housing is now a different game from the beginning of 2019
Should you buy a house with your friends?
How to make more money by being lazy
After an investment property? Time to think commercial
How to budget for a house deposit without depriving yourself
How first-home buyers can build their own unique solution
Could the rule of 100 turn around your fortunes?
Is NZ ready for first-home buyer landlords?
The tough talk you need to have when saving for a house
How to house hack your way to smaller household bills
Is now the time to get nervous about your KiwiSaver?
How to solve land headaches
Renovate or detonate?
Apartment v house
How to crush the debt
Tricks for paying off the mortgage faster
The power of location
Negotiating a mortgage
Saving for a deposit
Buy v rent
