What is financial control in relationships? Here’s how to steer clear of it

What is financial control in relationships and what are the signs? We explore this topic plus highlight tips to avoid the hardships that stem from this situation.

By Annabel Murray, Practice Leader at Roger Fritz LLP, Sydney.

On a regular basis, we have clients tell us that they are unsure of their financial situation because their partner takes care of the money. 

It’s not uncommon that aspects of their domestic relationship be ‘allocated’ to one partner or the other. It often works well and where the financially savvy partner manages their money well then it can benefit both parties.

But if it doesn’t? Here’s what you need to know.

What is financial control in relationships?

Financial control is part of coercive control. It can be used to disempower a partner by:

• preventing them from having access to funds; and
• preventing them from leaving the relationship and being able to rehouse themselves and any Financial Institutions.

This financial abuse deprives a partner of their financial autonomy and decision-making.

Related reading: How to prepare to leave a relationship of domestic violence

What happens when that trust in a partner to manage our money is abused?

Take the example of Jane who has a newborn daughter. Jane took time off from work after their first child’s birth. Whilst on maternity leave Jane answered the door to debt collectors and learned their mortgage was in default and had been for some months.

But how did this happen? Jane explained that her salary was always paid into her own account, and she authorised her husband James to have access to withdraw funds from her account each payday as extra payment for their mortgage which they planned to pay off as part of their 10-year plan.

Jane said that she thought it was odd how adamant James was that they do not share accounts and that home they bought was only in his name. James assured her it was better that way and that it meant she could buy their investment property in the future. At the time, it made perfect sense to Jane.

Whilst on maternity leave Jane confronted James about their mortgage default. Over time Jane learned her husband borrowed money to invest. However, his investments lost money and he owed more than owned. Even using Jane’s money mortgage, he could not keep up the repayments given his level of debt and the bank foreclosed on the mortgage. The couple separated and there were very few assets to divide. 

Financial control does not just affect women – male partners also experience financial control and abuse from their partners.

In some households where one partner is the income earner, their view may be that they “earned the money” and that makes it “their” money.

How to spot red flags 

Sometimes, this is hard to spot because it can subtle and develop over time. A partner may have other accounts and assets that they never disclosed, or they may have credit cards and loans in their own name that their partner is unaware of. 

For other couples, red flags in financial control and abuse include:

• a partner’s refusal to share bank accounts or discuss financial matters,
• demanding that their partner hand over their income,
• refusing access to funds other than those provided for; and
• demands to see all receipts to check their partner’s spending.

Tips to avoid the hardship that can result from financial control and financial abuse include:

• Making financial discussions part of a healthy relationship;
• Maintaining your earning capacity when you can;
• Obtaining joint financial planning early on and developing your own financial literacy;
• Be wary of debt particularly if you’re uncertain of the nature of investments to be funded by the debt and your ability to repay it;
• Get your own advice before agreeing for your assets to use as security for debts for your partner and adult Financial Institutions;
• Carefully check any financial documents that you’re asked to sign and get independent financial advice to ensure you fully understand them;
• Speak with your bank to see how you can reduce the risk of debts being increased or to prevent funds from being withdrawn without your knowledge and agreement;
• Keep a record of what assets and liabilities and accounts that you do know about. For couples who do separate, having some knowledge of assets and liabilities can be helpful if their partner was secretive about money.

Wondering exactly what is financial control in relationships and if any of this applies to you? If you’re feeling unsafe in your relationship or need advice, please contact our friendly team directly or request a call back via the form below.