Personal Finance Expert Says 3 out of 4 Americans Endure Financial Abuse
Money is frequently a touchy subject to discuss, particularly when it comes to talking about sensitive financial issues with spouses, family members and friends.
But what do you say to a loved one when you find yourself in a financially abusive relationship?
"Simply put, you're in a financially abusive relationship any time someone you know, trust or love takes economic advantage of you," says money coach Lynnette Khalfani, author of The Money Coach’s Guide to Your First Million (McGraw Hill; Sept. 2006). Khalfani estimates that tens of millions of Americans – as many as 3 out of 4 adults in the U.S. – are battling various forms of financial abuse. “Unfortunately, this kind of mistreatment keeps people from reaching their personal goals and achieving financial freedom in their lives,” she adds.
According to Khalfani, there are several classic types of financial abuse victims, including:
THE PUSHOVER PARTNER: Your spouse/partner runs up household bills, negatively impacts your credit, or engages in out-of-control spending that he or she can't afford.
THE FREELOADER'S FAVORITE: You are the parent (or child) of
someone who asks you to pay for everything he wants, takes out credit
in your name, enriches himself at your expense, or engages in
"freeloader" tactics – and then makes you feel guilty if you point out
his misbehavior.
THE HUMAN ATM: You have extended family or friends who always
manage to dip into your wallet … like the office colleague who
"borrows" lunch money every other week and never bothers to re-pay you;
the girlfriend who always wants you to foot that expensive restaurant
tab; or the sibling who calls you up to bail him or her out of trouble
when the rent is due and the lights are about to be disconnected.
THE EXPLOITED EMPLOYEE: You work for a slave-driving boss who
demands 60-hour work weeks, but offers no overtime compensation -- and
may have even slashed your pay and benefits.
If any of these situations sound familiar (or if they describe your own
behavior toward others!) you could be in a financially abusive
relationship.
“Financial abuse is at epidemic proportions in the U.S.,” says
Khalfani, a former Wall Street Journal reporter for CNBC. “It’s time we
started teaching people how to fight it – just like we do for victims
of physical and emotional abuse.”
To avoid financial abuse, Khalfani recommends establishing boundaries
in your relationships as early as possible. For instance, the first
time a friend asks for money to get out of a jam, it’s OK to help him
or her out. But if they come back for a “loan” a third or fourth time,
especially in a relatively short period of time, clearly a pattern is
being established. That’s the time to express that you’d prefer not to
mix friendship and finances, in order to avoid potential problems
later.
Khalfani says there are four smart ways to end financial abuse:
Bring the issue to the forefront
Avoiding the problem or silently brooding about the situation only
prolongs it. Sometimes you can end the cycle of financial abuse just by
pointing it out to the other party. Anyone who truly has your best
interests at heart – whether a family member, friend or someone else –
will not want you to feel exploited. The trick, though, is to be
direct, but not accusatory or confrontational or in this initial
conversation. Don’t say: “You always freeload off of me, and it’s not
fair!” Instead, try: “I want to talk to you about our relationship as
it pertains to finances. I’ve started to feel uncomfortable with …” and
then fill in the blank with whatever is appropriate (i.e. “loaning you
money so frequently,” or “having to pay for everything when we go out,”
etc.). Then add: “I know it’s not your intention to take advantage of
me, but sometimes I do feel like I’m in an awkward position in these
situations.”
Set limits
For instance, parents should let teenage children know that
just because their friends may walk around with cell phones,
iPods, and designer clothes doesn’t mean that all teens get the same
luxury goods.
Change the setting under which financial abuse most often occurs
Let’s say financial abuse occurs among two friends, who frequently go
out together on the weekends. You can head off the inevitable financial
dilemma by suggesting alternative activities that are either a) less
expensive, or b) free. For instance, among two women who typically go
to the movies and a club on Friday night, the one who always has to
“treat” her friend might suggest: “Let’s pick up a bottle of wine and
rent a video to watch at my place.” Another option might be to say: “I
know your funds are tight, so let’s go to that free jazz concert in the
park, or someplace else that doesn’t cost a lot of money.”
Be prepared to be tested
Once you’ve been entangled in a financial abusive relationship,
it’s hard for both parties to end the bad habits that have defined the
relationship. So you should expect the other person to “test” you, by
continuing to ask you for money or financial help – even after you’ve
clearly communicated that you don’t want to do that anymore. Be firm in
reiterating your position until it “sinks in” for the person that your
relationship has forever changed, and that you’re not going to tolerate
financial exploitation, even if it’s unintentional on their part.
“It may take time, but financial abuse can be ended in all
relationships – even as the relationships themselves survive and
thrive,” says Khalfani, whose previous book, Zero Debt: The Ultimate
Guide to Financial Freedom, landed on The New York Times bestsellers
list and won enthusiastic praise during her appearance on “Dr. Phil.”
For more information about Khalfani, or to receive her free personal
finance newsletter, please visit her website at
http://www.themoneycoach.net.
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