Ask the Expert: How financial empowerment helps women escaping domestic abuse

This article originally appeared on LocalLove.ca—a digital magazine powered by United Way—on October 23, 2019. It has been edited and condensed for length.

Domestic violence is an #UNIGNORABLE issue faced by too many women in our community. Women trying to escape abuse can often become vulnerable to poverty and homelessness, which can make it harder for them to leave an abusive partner. One of the ways United Way agencies support women fleeing violence is by helping them to regain their financial well-being. We asked economist Samra Zafar, who wrote about her own experience leaving an abusive marriage in her bestselling memoir A Good Wife: Escaping the Life I Never Chose, why supporting women to become economically independent is so important. Here the founder of Brave Beginnings ­explains how financial empowerment can help women experiencing and fleeing abuse.

What are some of the key things survivors need to achieve financial autonomy?

Number one is education. I know I could have left my marriage a lot sooner with a post-secondary education. I didn’t even have a high school certificate when I got married.

And having your own stream of income, where you can make decisions on how to spend it is extra important. It’s OK to be working together in a marriage and contributing to household expenses, but you need your own nest egg or source of income to maintain some independence.

It’s also good to have a financial planner or advisor who will help you think about future goals for yourself and your family. A planner can help women get a will and investments in place, for long-term security on a solo income.

Your organization, Brave Beginnings, supports survivors of abuse and oppression. What day-to-day money skills do you teach there?

Budgeting, because sometimes, in an abusive marriage, women have not had the experience of running a household budget. Financial control is one of the main types of control abusers use to keep them trapped.

I budget like crazy. Knowing what your income is and operating within that is so important, if you want to thrive. It’s so easy, when you’re a parent and your kids are pulling on your heartstrings, to feel pressure to spend more than you have, but you have to have your priorities and your goals.

How else might an abusive partner exert financial control and how do you advise women to protect themselves?

My husband was maxing out our credit card and making me sign joint loans with him. I actually had to sign a consumer proposal the year before leaving him. When I left him, I was in such dire circumstances: I was on OSAP [Ontario Student Assistance Program] and welfare, and I couldn’t even rent a place because of my poor credit. I’m still rebuilding my credit to this day.

Having lived that personally, I always suggest to women that they talk to their banker or advisor privately, if they’re facing these types of abuses, because it isn’t always easy to do with your spouse present. And you absolutely need to read what you’re signing and insist on independent legal advice. My husband signed over our matrimonial home to his mother and he had me sign for partner consent at the lawyer’s office. After we divorced, I had no recourse to what was in the home I’d lived in for 10 years.

If you’re mentoring a woman with little work experience and education, how do you advise her to generate an independent income?

There is always a way. I tell women, ‘Pick up a job on the side.’ One of my mentees right now is a student and I told her to pick up something on campus because she’s going there anyway to study. And there are jobs you can do from home, online, like tutoring kids.

I also recommend having multiple sources of income. When I was at University of Toronto, I was doing night shifts at the student centre—I could study there, because it was quiet at night. I was also working as a student mentor, a teaching assistant and a research assistant. I love cooking so I was cooking food and selling it to students on campus, too. These five jobs at the same time added up to my independence money. I’m a big believer in multiple sources of income because that provides a safety net.

The onus still seems to be on the survivor to create her own escape plan. How can employers better support women seeking financial security to flee abuse?

Companies need to create inclusive environments where women feel safe to speak up about what’s happening at home and don’t feel like it’s a career-limiting move, or that they’ll lose their job or be judged. There can be signs about domestic abuse and resources around the workplace; that shows female employees it’s OK to talk about these things here.

They can also train leaders to know what kind of language to use and what resources to point a woman to, if she comes forward. There can be people trained to help her build financial autonomy, for example to open a separate bank account and invest in an employees’ savings plan, so some of her earnings are set aside before they even show up on her pay cheque.

Employers can also make paid leave available to a woman who is trying to leave domestic abuse. It’s not only the right thing to do, because it could potentially save lives, it’s the smart thing to do. Companies would save hundreds of millions of dollars every year on rehiring, retraining and absences. And if you support someone on that journey, imagine the employee loyalty and productivity after that?

How can we be more supportive as a society?

When women come to Canada, they should be put into a mandatory course where they learn about their basic rights under family law and under violence law—what is abuse and what is not. They should learn how to access a lawyer and know there are shelters, food banks and resources in their community, so they will not have to worry about being destitute and on the streets if they leave.

And our school curriculums need to include topics like healthy relationships and abusive behavior, so our children and our youth can be more proactive, rather than doing damage control after abuse has happened. We need to teach our girls more life skills, with financial literacy being a big part of that.

When my eldest daughter turned 14, which is the minimum age you can work in Canada, I told her, ‘You’ve got to get a job.’ She got her first job at 15, in a bubble tea place. Now she has all kinds of money management skills. She knows what to do if she gets laid off and needs to find something else. And she knows how to deal with a difficult boss. She has skills that I maybe learned at the age of 35. My ex-husband was flabbergasted that she was working and asked if we needed money. But it was never about the money. I wanted to make sure she had those skills.

If you are experiencing domestic abuse, you can call Assaulted Women’s Helpline toll-free, 24 hours a day, at: 1-866-863-0511.

Ways you can help:


5 ways to trick yourself into saving

When it comes to saving money, it can sometimes feel like you have to give something up in order to make any progress—but it’s hard to maintain motivation if you feel like you’re constantly depriving yourself. Luckily, “there are ways to save without feeling the pinch,” says Michelle Dagnino, Executive Director of the Jane/Finch Community & Family Centre, a United Way–supported agency. She works with families, many of whom are living on a low income, to help them find ways to save while still paying the bills. Here are her tips for making saving easier on all of us.

1. Thwart add-on costs

Dagnino often sees issues arise when people purchase big-ticket items that have recurring costs they didn’t factor into their budgets. “They think of a major purchase as a one-time cost, when, in fact, there may be additional associated fees attached,” she says. Think kids’ activities that require uniforms or equipment, or a new vehicle that needs insurance and gas. She suggests doing some research and making a budget that includes all of those costs. Ultimately, you may have to decide on a vehicle that uses less gas, or choose sports that have fewer add-on expenses, but then you won’t have to dip into savings when bills come due.

2. Start saving automatically

You can’t spend money you don’t have, right? So pretend that you don’t have it. Set up a savings program with your bank that automatically diverts a percentage of your paycheque to a savings account you can’t access with your debit card. Chances are you won’t even miss that spending money, and you’ll see your savings grow.

3. Pay down your debt

The old adage is true: it is important to pay yourself first. That is, unless you have significant debt. Accumulating interest can hobble your ability to save long-term, so it’s worth diverting funds to debt repayment. First you need a plan, which should include switching to low-interest credit cards. Once your debt is gone, set up an automatic withdrawal that deposits the money that would have gone toward it into your savings.

4. Learn what you don’t know

Think you’re financially savvy? You may be missing crucial information that could help you get ahead. And no, you don’t have to spend money to get educated. “Communities offer free resources that provide excellent opportunities for saving,” says Dagnino. “The library is a great place to start for courses on financial literacy.”

5. Shop smarter

Bad shopping habits can zap your savings. “Establishing healthy patterns around purchasing can help you spend less,” says Dagnino. Planning ahead is key. If you’re running out to the corner store because you forgot to pick up dish soap on your weekly grocery shop, you’re paying higher prices for convenience. Shopping around for the best prices will also help you save. For example, farmers’ markets or urban farms sell fresh, healthy, organic food without the high price sometimes found in big-name grocery stores. Case in point: Black Creek Community Farm at Jane and Steeles sells produce without the markup.

To learn more about some of the difficult financial decisions faced by people living on a low income, try our online poverty simulator and challenge your perspectives on poverty. You can also brush up on your financial skills or find additional support in your neighbourhood by calling 211 or visiting the Jane/Finch Community & Family Centre, an agency committed to advancing financial literacy through support services, such as income tax clinics and workshops.

What do these things have in common?

1. A time-pressed CEO, faced with a week of triple-booked meetings and urgent decisions to be made.
2. A person on a diet, counting calories.
3. A low-wage North American city-dweller, counting pennies.

According to Dr. Eldar Shafir—a professor of Psychology and Public Affairs at Princeton University, and the co-author of Scarcity: Why Having So Little Means So Much—the answer is simple: They’re all facing some form of scarcity.

“When you’re facing a lack—of time, money, food—you tend to focus obsessively on the object of the scarcity,” says Shafir. “That leaves less mental room for other aspects of your life.”

This drain on what Shafir calls “mental bandwidth” explains why poverty can be so taxing, emotionally and intellectually. But poverty, says Shafir, is even more stressful than many other forms of scarcity, because the stakes are so much higher. “If a middle-class professional makes a bad call at work, they might fail at a particular task or project,” he says. “But if a person living at the precipice of poverty makes a bad decision, the result could be far worse—eviction, for example.”

With over half a million people in Toronto living in poverty, that’s a lot of lost bandwidth. And with the release of Ontario’s new Poverty Reduction Strategy, United Way Toronto and the Wellesley Institute co-hosted a presentation and discussion with Shafir last month to dive into the psychological issues related to poverty.

“There’s lot of data indicating people living in poverty don’t do well with decision-making. So the question is: Are they in poverty because of bad decisions, or are the bad decisions somehow the result of poverty?”

Shafir cites studies indicating that people living on significantly low incomes often perform poorly on intelligence tests, when simultaneously contemplating difficult financial scenarios—but those intelligence deficits disappear when the money concerns are removed. Similar results have been observed in people living with any form of scarcity, including time scarcity, which impairs decision-making in a way that also has a measurable effect on intelligence tests.

Comparing poverty to other, relatable forms of scarcity (like the aforementioned time scarcity of the busy executive) help to create what Shafir calls an “empathy bridge.”

“The behaviour of people living in poverty looks a lot less strange when you consider that any form of scarcity lends itself to making snap decision, often bad decisions,” he says. “Like when we’re juggling a lot of demands on our time.”

No surprise, then that he supports public policy that can help with that everyday juggling, and “simply, provide more bandwidth.”

“I believe in government intervention,” he says, “so in many ways Canadians have it better than Americans….The five year plan Ontario has is a wonderful way to conduct policy and think about these things on a regular basis. Just keeping this in the public discussion—that’s one of the most important things we can do.”

Interested in knowing more? Check out this 2011 TedX presentation by Dr. Shafir:

 

When good advice goes bad

This week, Imagine a City is joined by guest blogger John Stapleton, founder of Open Policy Ontario and a fellow with the Metcalf Foundation. He has some much-needed financial advice for low-income earners, just in time for Financial Literacy Month. Here, he provides a rundown of what low-income earners really need to know, and how the financial-services industry can serve them better. (For more, see his comprehensive report, “Planning for Retirement on a Low Income.”)

People living on low incomes might wonder how the financial advice they receive differs from the advice given to middle- and high-income earners. The reality? It doesn’t. That’s a problem, because it can be toxic to those facing poverty. They live in a parallel universe where most, if not all, of the rules are different.

When assisting low-income people, for instance, many advisors will tell them to max out their RRSPs, forget about Tax Free Savings Accounts (TFSAs), and wait until 65 or later to sign up for Canada Pension. They’ll also be advised to look closely at their taxes to capitalize on tax credits.

This is the same advice given (rightfully) to middle- and high-income earners, but for people making ends meet on lower incomes, it’s exactly wrong.

Low-income retirees are likely to receive something called the Guaranteed Income Supplement (GIS), paid in addition to Old Age Security. So they should actually do the following: cash in their RRSPs before age 65, load up their TFSAs (if they have any savings), and apply for early CPP, around age 60. They should also forget about the non-refundable tax credits they will likely not need.

So, why is the right advice typically not given to low-income earners?

Two reasons: The first is that the GIS is an entitlement—the dreaded “E” word—and not a tax credit. Financial advisors are loathe to tell anyone to organize their affairs to maximize entitlements because entitlements are often seen as a drain on the public purse in a way that tax credits are not. The second is that the financial-advisory community doesn’t generally know much about the GIS.

Perhaps there’s a third reason. I’ve heard it before: there simply isn’t much money to be made advising low-income earners. And that’s true if information isn’t tailored to their specific needs, but if these individuals got the right advice up front, they would have money. A lot more money. Maybe financial institutions would even be justified in charging them for it. It’s just good, useful advice, after all.

Making the most of what we make

DSC_6265Maria is a 24-year-old single mother to three young children, living near Jane and Finch in Toronto. While taking care of herself and her family as she looked for employment, she found that her limited finances didn’t stretch very far. At least, they didn’t until recently.

At a local community agency, Maria enrolled in a financial literacy workshop that is tailored to people living on a low income. She learned the basics of how to track her finances, how credit ratings are determined and other important financial information that gave her the foundation to realize a new financial future for herself and her children (you can read more of Maria’s story here ).

The barriers faced by Maria are like those of countless Torontonians who are not only living on a low income, but also facing other mounting challenges, including an unemployment rate of 8.6% in the Greater Toronto Area (above the national average of 6.9%) and record levels of household debt.

November is Financial Literacy Month, a great time to reflect on why financial literacy matters, why it’s a skill we have to learn and, in terms of the information offered, why one size doesn’t fit all. Over the next few weeks, we’ll be posting some information about United Way’s work in financial literacy , profiling some of our incredible partners and other organizations who are doing impressive work in the community on this very issue. You’ll also meet a few people whose lives were changed when they connected with programs geared to their particular situation. Check it out this month by liking us at Facebook.com/UnitedWayToronto and following us on Twitter.

By subscribing to the blog, you can join us November 18, when we tackle the gap between the financial literacy advice that is generally offered and the needs of lower-income earners—and why that gap is a serious concern.