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April is Financial Literacy Month, part of a national campaign to raise awareness about the importance of financial education in maintaining financial well-being. It’s true that financial education is an important component of building wealth, but the reality is that it does little to address the racial and gender disparities in wealth.
White people tend to have more wealth than Black people; men tend to have more wealth than women; Black women tend to have lower levels of wealth, especially in later life. A finding that gets less attention is that Black women with limited economic mobility are particularly vulnerable to intimate partner violence.
Evidence suggests that the experience of abuse, particularly physical and financial, is closely linked to financial strain. And the lessening of financial abuse, research finds, leads to a decrease in financial strain over time.
To reduce racial and gender inequalities in wealth, policymakers need to improve the financial capabilities of victim-survivors of violence through unconditional cash transfer programs — a.k.a. guaranteed income. Going beyond literacy to change, beyond individual solutions to systemic ones, will lead to true well-being for victim-survivors.
I myself experienced financial abuse during a four-year relationship. My ex would start and stop employment whenever he wanted. Though I was able to maintain a “good” rating on my credit report, I was always taking out personal loans from my financial institution to support us, whether that be to furnish the house we were renting or to pay for moving expenses. My credit card was always maxed out. I was always in the red. He restricted my finances to the point that we were sharing fast-food combo meals. He deliberately sabotaged my financial stability, stripping me of any opportunity to accumulate wealth. I was put in a position of constantly needing to borrow money and never being able to save.
And I know I’m not alone. Financial abuse is a common form of abuse that involves using coercion, fraud or manipulation to restrict an individual’s access to money, assets, credit or financial information to exert economic power and financial control over someone. In one study of 103 victim-survivors, 99% experienced financial abuse. Such restrictions hurt victim-survivors’ capacity to keep and grow financial resources to create lifelong financial stability.
We know that intimate partner violence restricts victim-survivors from accumulating wealth through wages. Research shows a link between employment and intimate partner violence: Decreases in gender wage disparities, for example, have been shown to reduce violence against women.
We also know that intimate partner violence restricts victim-survivors from accumulating wealth through homeownership; in fact, domestic violence is the leading cause of homelessness for women and children. Women who experience such abuse are four times more likely to report housing instability than women who do not. Black women experiencing violence become particularly vulnerable to housing instability, which can include difficulty paying rent, mortgage, or utility bills, frequent moves, overcrowded living conditions, or doubling up with family or friends.
And a solution is in plain sight. Over 150 guaranteed income programs for vulnerable groups are already being adopted across the nation. Hundreds of studies from around the world show that even relatively small unconditional cash transfers can be life-changing.
Victim-survivors can use these cash transfers in conjunction with asset-building strategies such as individual development accounts. IDAs are matched-savings programs sponsored by community partnerships between community-based organizations, foundations, and local or state governments. Meant to help individuals save to purchase a home, start a business or attend college, IDAs have been used in domestic violence programs in St. Louis to build the economic stability of victim-survivors. And research suggests that when participating in these programs, victim-survivors can successfully save up and purchase assets that can contribute to their economic stability – or their freedom.
In his State of the Union address, President Biden laid out his vision for transforming women’s health research and improving women’s lives. He called on Congress to make an investment of $12 billion in new funding for women’s health research. If our government is serious about protecting women and their health, then we must begin to provide funds directly to those impacted by abuse through social safety nets.