Rebuilding Finances in Addiction Recovery

Substance abuse can take a toll on many aspects of a person’s life – family, friends, employment, personal health and romantic relationships can all suffer greatly as a result of addiction. Unfortunately, some of the effects of addiction can affect you long beyond the substance leaving your body. Finances, in particular, normally take a huge hit as a result of addiction. The National Institute on Alcohol Abuse and Addiction estimates that alcoholic who binge-drink seven days per week can spend 10s of thousands of dollars each year on alcohol. There are also costs from legal problems, entering detox and treatment facilities and neglecting paying other expenses on time.  

This adds up quickly and can be devastating for your bank account and credit. It can be tough to rebuild finances after addiction, but it is definitely possible. Just like recovering from substance abuse takes courage and patience, so too does rebuilding your finances. Getting back on track financially will give you a sense of confidence in staying sober long term.  

If you have sought recovery and are able to maintain sobriety, you have achieved an incredible feat. The next stage in the recovery journey is beginning to rebuild the damage cause while in addiction.  

Here are a few tips for rebuilding your finances after addiction: 

Secure employment. This may seem like a no-brainer but sometimes recovering addicts and alcoholics may have a hard time securing stable employment in the early stages of recovery. You will not be able to rebuild your finances unless you are gainfully employed. It is important to put yourself in a position to succeed at work. Remember to continue to go to meetings or go to outpatient therapy as you start a job. Continuing on-going recovery activities will give you the tools and outlets you need to manage your stress. Securing employment will also keep you busy and less likely to want to use alcohol or drugs. Your first job after entering recovery may not be your dream job, but keep in mind you need to start somewhere. Finding employment will help rebuild your confidence. Once you are with a company for some time, you can look for ways to be promoted and take on additional responsibility which usually results in a higher rate of pay.  

Create and stick to a monthly budget.  The best way to establish a budget is to track all of your expenses and income. Be honest with yourself about where your money is actually going each month. It can be challenging to look at your money when you first start. After neglecting finances for months, or even years, it can feel scary to dive right in. However, once you do, creating and sticking to a budget is enormously satisfying. Telling your money where to go each month gives you a feeling of control and helps you plan for the future. No matter what your financial dream is, a budget is the first step toward reaching financial goals. It allows you to create a master plan for your money that reflects your goals and priorities, whatever they may be. Every month write out a monthly budget. If you want to stay on track with your monthly budget, it’s suggested to sit down once a week and review where you are at in the month to verify you are staying on track. This can help you make the necessary adjustments during the month so you don’t overspend.  

Establish a savings account. Dealing with current debts is important, however it’s important to establish a savings account for emergencies. Financial guru Dave Ramsey suggests having at least one thousand dollars in a savings account before attempting to pay off debt. He suggests that you need that for any emergencies that come up before incurring any more debt. You can establish a savings account through your local bank or credit union. Many companies offer direct deposit to multiple accounts, savings and checking, so you can set aside a portion of your paycheck to go directly into a savings account. According to Dave Ramsey, you should have at least one thousand dollars in a savings account before you tackle your debt. 

Organize your debt and make a plan. Once you’ve decided it’s time to get out of debt, one of the first steps you need to take is setting up a debt repayment plan. Not only will a repayment plan keep you on task, but it will also help you stay motivated since you’ll be able to see real progress. By applying your extra money to one debt at a time, you will significantly speed up the debt repayment process. If you set up and stick to a debt repayment plan, you may be surprised at how quickly each debt will disappear. First, make a list of all your debts and organize them from smallest to largest. Dave Ramsey suggests paying off the smallest debt first. Once that debt is paid you take the extra money you’d use to pay that debt and add it to the second smallest. Repeat until all debts are paid. If you are having a difficult time repaying your financial obligations, it’s important to contact your creditors and ask for them to work with you on payments. Creditors can be extremely flexible in repayment plans as their goal is to make sure they receive the money back that was lent to you.  It can feel scary to make a call to a creditor but remember, they are there to help you repay them. They would rather get you back on track then lose out on any money that you might owe them.  

After paying off debts, build up your savings account for up to six months of expenses. This may seem like an excessive and overwhelming task, especially for those in early recovery. However, after you’ve paid all your debts, it’s important to start thinking long term. Building a savings account with up to six months of expenses will give you peace of mind for the future. If there were extenuating circumstances that caused a loss of employment, this would be a safety net while securing new employment.  

In recovery, the most important thing to remember is to have a willingness to get your finances under control. Finances will not straighten out overnight, but with a little patience and dedication to building a better financial future, your future self will thank you. Having a strong financial foundation will only add to your long term success in addiction recovery. 

We hope this article helped you! If you or a loved one is struggling with drug or alcohol addiction, please click here for your free benefits review or call us at 1-866-UTAH-HOPE.