When most people think of an intervention, they think of friends and family gathered to demand that a loved one seek treatment for alcohol or drug abuse. If it goes well, the person—overwhelmed by the outpouring of love and concern—agrees to receive the life-saving treatment.
The same principles used to intervene in substance abuse can also be applied to someone whose decisions regarding personal finances are becoming destructive and beyond control. A loving confrontation by a small group of people can help someone regain control of problems such as compulsive shopping, gambling, risky investing, falling for scams, and failure to make necessary plans for the future, such as being retirement ready. What it takes is a little courage, a little planning, and a lot of love.
- An intervention may be needed when a loved one has lost the ability to make healthy financial decisions and their behavior has impacted friends and family.
- The purpose of an intervention is for friends and family to stop making the problem worse through their enabling behavior and to provide outside help if the person is willing to accept it.
- A financial intervention should be kept to three to eight people who matter most to the person struggling.
- Each person should prepare a letter expressing why the loved one matters to them, how the problem has affected themselves and others, and a plea for the person to accept help.
- In serious cases, it may be worth consulting a financial planner or attorney to help that person handle their finances.
When Is a Financial Intervention Needed?
There are two primary reasons that interventions take place. First, a loved one has lost the ability to make healthy decisions and is on a path to financial self-destruction. Second, these behaviors are beginning to take a toll on close friends and family members.
Is There a Victim?
Financial interventions are perhaps most important in situations in which a relative or friend is either knowingly or unknowingly being financially exploited to pay for the perpetrator’s over-spending. A successful family-driven intervention to protect an elderly person was reported in the Oct. 4, 2021, issue of The Gerontologist. It was satisfactorily resolved by family members with no reports to authorities and minimal private sector involvement.
Tina R. Kilaberia, Ph.D., MSW, a postdoctoral fellow at the Betty Irene Moore School of Nursing at UC Davis who co-authored the study, says that when financial exploitation is involved, it's important to first find out how the victim wants to proceed and whether it will be reported to authorities and other privacy issues.
Family interventions may be a viable option in these cases since agencies such as Adult Protective Services may not respond to financial exploitation if it is not co-occurring with physical elder abuse. She warns, however, that it is not common for perpetrators “to admit they need help, agree to get help, and actually get help.”
A financial intervention may be necessary to protect the victim from financial elder abuse, where another person takes advantage of an individual's declining health in order to take control of their assets.
Reasons for a Financial Intervention
The most common reason for a financial intervention is compulsive and out-of-control spending, which are two very similar, but simultaneously different, things.
- Compulsive spenders literally cannot keep themselves from making purchases, often due to some type of pathological disorder. Sometimes these individuals have garages and closets full of unopened and unused purchases accumulated over many years.
- Out-of-control spenders, on the other hand, make purchases because they find shopping stimulating, believe it will help them find inclusion, or have unrealistic beliefs about what their purchases will accomplish.
The biggest result of all this spending behavior is mountains of consumer debt that can make meeting daily expenses financially impossible.
Another common reason for a financial intervention is a high level of risk-taking behavior. These individuals may gamble excessive amounts of money on risky propositions, demonstrating a belief that they’re due to hit it big. They often borrow large amounts—whether from a bookie or a margin account at a brokerage firm—in an attempt to just get back to even.
Finally, many people fall prey to scams or financial frauds, often through no fault of their own. Although the elderly are easy targets, even people who are not considered vulnerable can be deceived by scammers over the Internet or telephone. If a person has a pattern of falling victim to such scams, a financial intervention could help them save what's left of their money.
There are times when severe financial problems are symptomatic of another root problem. This always needs to be evaluated, so that precious time and energy are not wasted doing an intervention for something that won’t fix the core problem. This is often the case with drug addicts who have done a good job of concealing their problem but can’t hide the fact that they are burning through cash.
The Purpose of a Financial Intervention
One of the biggest misconceptions about a financial intervention is that it’s an attempt to demand a change in behavior. If the intervention takes this tone, the person will usually feel judged, rejected, and misunderstood. They will likely shut down, withdraw from reason, and retreat to arguing. These types of interventions are most often unsuccessful.
In reality, a financial intervention is an admission by a group of people that they have been powerless in their attempts to stop destructive behavior. They have individually expressed concern, confronted, and even threatened the individual, only to fail in igniting change in the person’s behavior. Thus, because of this helplessness, they’ve made a decision as a group to stop making the problem worse through their enabling behavior. More importantly, they want to provide access to outside help if the person is willing to accept it.
These individual realizations, group decisions, and the offer to help are all delivered in the midst of expressing a deep love or appreciation for the person. The need for change is expressed not in anger or disgust but in sadness and loss. For someone struggling with destructive financial behavior, it can be a life-changing thing to have a room full of the most important people in your life tell you how much you mean to them and how worried they are about you.
It’s within this context of being loved and accepted—instead of being shamed and rejected—that interventions succeed in their final objective: to offer outside help. Because family and friends either lack the knowledge or are too closely involved to be of help, the involvement of a therapist, debt counselor, or financial planner is the crucial next step.
A financial intervention will not work if the subject feels attacked, shamed, or humiliated. It's important to emphasize that you are only trying to help.
How to Conduct a Financial Intervention
If you determine that someone is in need of a financial intervention, your first question is whether you should employ a professional interventionist. The advantage is that such a person will help streamline and organize the process, providing valuable resources along the way. The disadvantage, of course, is the cost of hiring someone.
As a rule, the more serious the problem, the more you should consider professional help. It’s likely that a 24-year-old with $20,000 in credit card debt doesn’t require a professional interventionist. However, a 50-year-old with $100,000 in compulsive gambling losses. For those who are losing their ability to make sound financial decisions, a financial power of attorney can help protect their personal assets.
Select Your Team
A financial intervention should include three to eight people that matter most to the person struggling with negative financial behavior. These individuals will hold the most sway in breaking through someone’s shell of denial and resistance to outside help. People who are strongly disliked by the person who needs help should be excluded, simply because their presence may cause a retreat into defensiveness or anger.
The subject of the intervention is naturally going to be surprised, frightened, and perhaps angry about what is going on. With this in mind, it is important to elect one spokesperson from the group to do most of the talking.
Emphasize Love and Support
The chosen group of people should gather at a private location while one person finds an excuse to go to that location with the person being helped. The spokesperson will explain the reason for the gathering. They should emphasize that this is not about beating someone up; rather it’s about addressing a specific problem. The subject will then be informed that each person will briefly say what they need to say, that there will be an opportunity to respond at the end, and that the whole thing won’t take more than an hour.
Present Impact Letters
After the introduction, each person in the group will read what is called an “impact letter” about the person and the problem. The letter should be no more than two pages and include the following:
- How this person specifically matters to the reader
- How the problem has affected the reader and others
- A love-based plea to accept help
Ideally, no one besides the group spokesperson says anything except for what is in their letters until afterward.
Refuse to Enable While Offering Help
After all the letters have been read, the spokesperson shares the two ways in which the group is going to help from this point forward. First, the group is unwilling to continue to enable the person in making financially poor decisions.
This may mean that they will not, for example, lend the person money, accept extravagant gifts, or engage in discussions about penny stocks with the person for whom the intervention is being held. Whatever the old system is, the individuals in the group have agreed to stick together in their mission to stop being part of the problem.
Second, the spokesperson will inform the subject of the type of outside help that has been arranged and ask the subject of the intervention whether they will accept this help. Anticipating a positive response, the group should already have the first appointment set a couple of hours after the intervention.
What Should You Do If a Person Refuses Help After a Financial Intervention?
The intervention group should agree that, if the offer of help is rejected, each of them will refuse to enable the person's behavior in the future—for example, by lending money, accepting expensive gifts, or joining in discussions of stock investments or sports gambling.
How Can Financial Problems Be Solved?
The first step to solving financial problems is to identify the key behaviors that cause the problem, whether that is overspending, reckless gambling or investing, or simply living beyond one's means. The next step to addressing these problems is to create a budget, identify any unnecessary spending, and eliminate the behaviors that caused the problem. In some cases, these behaviors may be traced back to medical problems such as dementia or drug abuse.
What Causes Financial Problems?
The most common financial problems are caused by high levels of debt, either due to reckless spending, credit card abuse, or more innocuous causes such as student loans or medical debt. These problems can get worse over time, as compounding interest can make the amount owed grow exponentially if the borrower does not make enough income to meet their interest payments.
What Are Examples of Financial Problems?
Common financial problems may involve reckless borrowing, overspending, or investing in high-risk assets. Multi-level marketing schemes, gambling, and scams can also cause financial trouble. If you or a loved one has a pattern of any of these behaviors, it may be worth consulting a financial specialist.
What Personal Finance Mistakes Should Be Avoided?
The most common pitfalls in personal finance involve over-borrowing, especially on credit cards. Credit card interest rates go into the double digits, meaning that a small debt can compound quickly over time. Rather than make the minimum payments, it is important to limit your spending to what you can afford and pay off debts as quickly as possible.
The Bottom Line
Sometimes the subject of an intervention emerges agreeing to accept help. But many successful financial interventions start with the person initially refusing the offer, only to come back and seek help weeks, months, or even years later.
However, this only happens when family and friends stick to their guns and refuse to enable the person to continue in destructive patterns after the intervention. Through those loving refusals, individuals with a problem are eventually forced to deal with the reality of their choices. It’s then, if the offer of help still stands, that they often accept it.