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Are You In A Financially Abusive Relationship?

Money is frequently a touchy subject to discuss, particularly when it comes to talking abut 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 anytime someone you know, trust or love takes economic advantage of you,apostrophe 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,apostrophe 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 “freeloaderapostrophe 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 “borrowsapostrophe 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.,apostrophe 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.apostrophe

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 “loanapostrophe 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!apostrophe Instead, try: “I want to talk to you about our relationship as it pertains to finances. I’ve started to feel uncomfortable with …apostrophe and then fill in the blank with whatever is appropriate (i.e. “loaning you money so frequently,apostrophe or “having to pay for everything when we go out,apostrophe 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.apostrophe

  • 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 “treatapostrophe her friend might suggest: “Let’s pick up a bottle of wine and rent a video to watch at my place.apostrophe 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.apostrophe

  • 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 “testapostrophe 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 inapostrophe 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,apostrophe 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.apostrophe

For more information about Khalfani, or to receive her free personal finance newsletter, please visit her website at