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Financial Issues, Part II: Strategies for Those in Recovery

Financial Issues, Part II: Strategies for Those in Recovery

In my previous article, I discussed common financial problems among clients with behavioral health (BH) disorders as well as causes and effects of these. I stated that recovery may involve physical, psychological, social, family, spiritual, financial, and lifestyle domains, depending on the problems and needs of the clients.  


This follow-up article reviews strategies to promote responsible financial behaviors in recovery. This is not meant to be financial advice as one would get from a certified financial advisor; my intent is to provide strategies to help clients address and manage money issues in recovery.    


Evaluate Habits and Attitudes about Money


Clinicians can help clients become aware of how they think about money matters, and how these beliefs affect their habits. What did they learn from their caretakers about money and financial issues? What are their spending and shopping habits? How do they use loans and credit cards? Do they follow a budget? How has substance use affected their financial condition? If in an intimate relationship, how does the client and spouse or partner deal with financial matters?


Review Assets and Liabilities


Clients can make a list of financial assets such as money in a checking or saving account, or other accounts; a home, car or other items of value; or investments. Then they can make a list of bills such as money owed to credit cards, loans for a vehicle, home or school tuition, and other bills. Some people in recovery from addiction have no net worth due to the financial chaos caused by the addiction. Others have to start with a plan to get a regular source of income, and learn to manage money in a responsible manner. 




Knowledge empowers! The more information your clients have about budgeting and other financial matters, the better prepared they will be to identify financial problems, goals, and plans to achieve these goals. Knowledge can help them make good decisions on how to manage their money and deal with debts.  


Keep Track of Spending and Saving


Suggest that your clients record how money is spent for designated period of time. This helps them recognize patterns of spending and saving, and how they use their money. Perhaps they spend a lot more than they thought they did. Some clients realize that little purchases add up, such as buying several cups of coffee or soda every day or buying lunch instead of packing it. Electronic records are excellent ways to track income, expenses, and how bills are paid. Also, many bills can be paid online, which provides clients better records of how money is managed.


Develop and Follow a Budget


A budget helps clients manage their money and track how income is spent. Knowing where money goes can help the client figure out how to cut back on spending. Keeping a budget also is a way to monitor progress towards financial goals such as saving money for an emergency fund or reducing credit card, loan or other debts.


A budget includes fixed expenses and other expenses. A client can list what is spent on housing and utilities, payments for loans, food, entertainment, auto/travel, clothing, entertainment, savings or other expenses. Budget books and electronic programs list many specific categories to help a person track where their money goes.  


Keeping to a budget takes time, patience, and discipline—similar to following a program of recovery. Any behavior change requires practice, and a willingness to learn from mistakes and stick with a plan.


Set Goals and Develop a Financial Plan


A plan gives clients a sense of direction, and may include short-term (less than ninety days) and long-term (over ninety days) goals. This plan can also include obstacles or what could get in the way of following this plan, and how to overcome these.


Clients who are married or involved in a close relationship, in which money and assets are shared, should develop a plan with their spouse or partner. Working together gives the couple a greater chance that the financial plan will succeed.


Live within Financial Means


This means that clients should not spend more than they make or bring in. If clients do not have enough money to cover living expenses, they may need to find a better paying job or other legitimate ways to make more money.


If clients cannot afford to eat dinner out regularly due to a tight budget, then they may need to learn to control their desire to eat out. If they cannot afford clothing they want, they need to find less expensive clothes. If they have limited money to spend on special occasions, they can send greeting cards or give inexpensive gifts.


Reduce or Get Rid of High Interest Rates


Much money is wasted in interest paid on loans and charge cards. Charge cards often have high interest rates above 20 percent! Loan sharks and payday loans have even higher interest rates. Some people pay more in interest than the loan itself because when they are late making a payment or they borrow more money, which leads to more debt due to high interest.


Paying off loans and credit cards can help your clients get their financial house in order. Not only does this prevent money from being wasted in paying interest charges, but it reduces the amount of money paid every month on loan or credit card payments.


Shop Around for the Best Interest Rates


Interest rates for loans for a house, vehicle, home improvement, education or other things vary. A difference of 1 percent on a car loan, for example, can lead to saving $10 to $20 per month. This may not seem like much of a savings, but multiply the number of months a car payment is made, and the savings add up. Clients know how bargain shopping saves money on buying food or clothes. The same holds true for loans—shopping for the best rates can save a lot of money.


Consider Refinancing a Home Loan


Interest rates change often. Your clients may benefit from refinancing a home mortgage. In the long run this can reduce the amount of money paid for interest on a mortgage loan. In the short run, it can reduce monthly payments, sometimes by a significant amount.


Paying off a mortgage early can lead to savings. For example, one extra mortgage payment each year over time can cut years off of a mortgage. Even modest amounts of extra money paid towards a mortgage can make a big difference in how long it takes to pay it off or how much you pay in interest over the life of your mortgage.


Also, changing a thirty-year mortgage to a fifteen- or twenty-year mortgage is often a wise financial move. The difference in monthly payments on a fifteen- or twenty-year mortgage versus a thirty-year mortgage may not be much higher, but the savings over time can be significant.


Refinance School Loans


Many people have loans from college, law school, medical school or other educational institutions. Some have loans from multiple sources with different interest rates.


The government and some banks offer programs to consolidate educational loans for a lower interest rate, which leads to lower monthly payments and less money paid for interest. Also, the government has a program for those employed by nonprofit organizations where the loan may be “forgiven” after making consistent payments for a designated number of years. If a client has considerable educational debts, encourage them to check to find out if they are eligible for any of these loan programs. The idea is to reduce the interest rate as well as the monthly payment.


Avoid Aimless Shopping and Impulsive Buying


An easy way to get in debt is to shop when there is no need to do so or to “look for bargains.” Avoiding aimless shopping decreases the chances of impulsive buying. Most things bought on impulse are not things people need, but things they want. Clients can be encouraged to ask these questions before an unplanned purchase: “Do I really need this?” “Can I afford this?” “Why do I want this?” or “What would happen if I wait a day or two before I decide to make this purchase?”


Plan for Retirement


Many employers match money put into a retirement plan. Putting money in a retirement account reduces current taxes and helps the client prepare for the future. Many people later regret not contributing to a retirement fund offered by their employer because they choose to take the money rather than invest it, even if it means losing the “match” by the employer and the tax savings. For example, if an employer matches a retirement contribution by 50 percent, and a person is in the 25 percent tax bracket, the return from day one of this investment is 75 percent!  


Cut Down on Daily Expenses and Increase Savings


There are many ways for clients to cut down on expenses, save, invest or reduce debt. Here are a few ways that others have used:


  • Buy food and other household items in bulk quantity. Look for special sales and buy some items as discount stores
  • Buy generic food and medicine products instead of name brands
  • Look for items needed at yard sales, garage sales, estate sales or advertised in the newspaper or online
  • Take a lunch to work and carpool to work when possible 
  • Use the library instead of buying books or exchange books, magazines, and music with friends
  • Shop and buy only items from a list and don’t shop on an empty stomach
  • Cut down the time spent on making long-distance cellphone calls
  • Rent items seldom used instead of buying them


Be Realistic about Giving Financial Support


Many people provide financial support to their children or grandchildren. There is nothing wrong with helping loved ones if people have the financial resources to do this. There are many instances where parents or grandparents give too much, give money they can’t afford to give, go into debt for loved ones or allow adult children to take advantage of them. This is a tough area that may require consultation with a confidante or other person. 


Use a Financial Counselor or Consultant


A financial counselor can review a client’s debts and help find strategies to get out of debt and save. A financial investment planner can evaluate financial status and make recommendations on taxes, insurance, funding a child’s college education, funding retirement, making major purchases such as a home, and developing a strategy to handle debts and assets. Financial consultants may work independently or be part of a brokerage firm. Many professionals are certified financial planners who are highly trained and experienced in money matters.




Daley, D. C. (2015). Your money and recovery: Strategies for financial health (revised ed.). Murrysville, PA: Daley Publications.
Quinn, J. B. (2009). Making the most of your money now. New York, NY: Simon & Schuster.