This blog summarises a helpful video presentation by Estelle Gibson.
Estelle is a CPA and Financial and Business Coach based in America.
Estelle had her own personal experiences of financial dependency. First, from what Estelle observed (as a child) of her parents’ relationship regarding money. Secondly, from her own personal experience of money management within her own marriage (which ended in divorce).
What is financial dependency?
Estelle defines financial dependency as when you are financially dependent on a person, job or situation for money and feel trapped.
Estelle identifies two types of financial dependency. Financial dependency with choice (voluntary) and financial dependency without choice (involuntary).
First, financial dependency with choice is when you hand over financial power to someone else. When you do not want to be involved with the money, with the decisions about the money and the responsibility for the money. So you hand over the responsibility, decision making and participation regarding the money. You end up not being involved with the money, not understanding what is going on with the money and losing any power over that money. Then you become financially dependent on the person who has acquired the financial power over the money.
There are many examples where someone relied on a family member, friend or someone else to manage the money and then becomes broke and betrayed.
Secondly, financial dependency without choice. For example, a person is in a job or career, is unhappy but cannot afford to leave. Someone becomes seriously ill or elderly and then becomes dependent on a family member and leaves the financial control to that family member.
Another example of financial dependency without choice is financial abuse. Where there is a pattern of behaviour used to control and intimidate a partner. As the victim does not have access to money, financial information, financial skill, resources or support, the victim feels unable to leave and feels trapped. Financial abuse often keeps victims trapped in the relationship.
Marriages and de facto relationships can involve financial dependency with choice (Estelle’s personal experience within her own marriage) or financial dependency without choice.
Suggestions
Here are Estelle’s suggestions:
- Obtain information about the money (eg bank statements, investments etc), account passcodes
- Learn healthy money habits and financial skills to make informed decisions. For example, around budgeting, saving, investing and debt
- Participate in decisions about the money
- Knowledge alone is not enough. By self-reflection, with learning about the inner self through books and other resources, you can come to better understand how you got into the situation of financial dependency as well as why and how to avoid it
- Connect with others who can support and advise you along the path to financial skills, responsibility, power and independence
Online Curriculum and Podcast
Estelle mentioned Allstate Foundation’s (USA) Purple Purse Moving Ahead curriculum as a very good resource. The course covers a variety of financial topics, including budgeting, managing debt, improving credit and building savings. It is a financial empowerment program for survivors of domestic violence.
Please visit thelearningcommunitytoendviolence.org/movingahead/moving-ahead-english