Deinstitutionalization has led to greater need for families to care for relatives with severe mental illnesses such as schizophrenia, major depression, and bipolar disorder (1–3). However, caregivers can be overwhelmed by the demands of supporting adult relatives with severe mental illnesses. Studies demonstrate this burden leads to impaired functioning (4), higher rate of relapse (5), and poorer treatment adherence (6) among patients with severe mental illnesses and to depression (3) and poorer physical health (7) among their family members.

One source of strain for families is financial dependency (8–10). Many studies have linked money management problems to both objective and subjective burden for family of adults with severe mental illnesses (11–14). Financial strain due to medical costs, missed work, and patients’ economic dependency are considerable (15–19) and reported across many cultures (17, 20–23). Managing money of adults with severe mental illnesses can lead to family conflict as persons with severe mental illnesses are substantially more likely to become aggressive toward a caregiver when they are financially dependent upon him or her (24, 25).

“Family money management” arrangements commonly involve representative payees. One million adults with severe mental illnesses are determined by the Social Security Administration (SSA) to be unable to manage their disability funds and then formally assigned a payee (26, 27). Payees ensure disability recipients’ needs are met for food, clothing, shelter, and medical expenses (28). Remaining funds are usually less than $100, which payees can use to promote social activities or leverage treatment adherence, such as when recipients are required to attend treatment as a condition of receiving disability (29, 30). Although mental health agencies act as payees (31, 32), nearly three-quarters of payees for severe mental illnesses are family members (26, 27, 33, 34). Of the many mental health policies affecting patients with severe mental illnesses, one of the most frequently encountered is representative payeeship (35). Given the prevalence of representative payeeship, legal scholars have called it “the nation’s largest guardianship system” (36).

Even if a patient does not have a payee, caregivers may act as informal money managers for patients with severe mental illnesses. In one study examining this phenomenon, researchers found that one third of people with severe mental illnesses who did not manage their own money also did not have an official payee assigned by the SSA (33). Instead, these patients set up money management arrangements with another person informally; for example, disability checks would be sent to the patient, who would then hand over the funds to a third-party to pay the patient’s bills. Of note, the vast majority of these arrangements involved family members. Thus, family money management includes both formal payees and informal money managers.

Both can play a central role in helping patients with severe mental illnesses maintain a stable living situation, refrain from abusing alcohol or drugs, and participate more actively in mental health treatment. Most research on money management in severe mental illnesses involves payee arrangements, found to be associated with reduced hospitalization (32), victimization (37), and homelessness (38). Researchers (39) demonstrated enhanced treatment adherence among outpatients with dual diagnoses who have payees compared to those who do not. Another study (40) found that patients with severe mental illnesses-assigned payees displayed four times higher levels of treatment adherence for 1 year compared to subjects not assigned payees. Monetary reinforcement used by payees increased abstinence in dual disorders (41), although this effect has not always been found (38), possibly due to a more chronic population of patients in the latter study. In a randomized clinical trial, representative payeeship was associated with reduced substance abuse and improved quality of life (42).

Nevertheless, family money management can be countertherapeutic. First, such arrangements might exacerbate dependency fostered by disablement. Since patients with severe mental illnesses often experience less incentive to work when they receive disability benefits (43), not controlling one’s money could further exacerbate a dependency role fostered by the disability process. Unless patients are given a venue—which they currently are not— to discuss whether they prefer someday to manage disability funds by themselves, patients are vulnerable to remaining dependent on a family money manager indefinitely (44).

Second, family money management is susceptible to increased conflict. Financial difficulty is frequently endorsed among families with members with severe mental illnesses and money matters are one of the top reasons for family arguments, itself a leading predictor of relapse (45, 46). In a multivariate analysis, family representative payeeship doubled the risk of family violence perpetrated by people with severe mental illnesses (25).

Third, family money management can be implemented coercively. Although family money managers may use funds to improve treatment adherence (47), they can use money as leverage not linked to treatment-related matters (48, 49). Patients’ and family payees’ reports of such money leverage were found not to be predicted by clinically relevant data alone (50), suggesting money was sometimes used as leverage that, at best, was arbitrary and, at worst, was coercive (51). Coerciveness is evidenced by a survey in which more than half the patients agreed with the following: “My payee has too much control over me,” “I was pushed to appoint a payee,” and “I do not agree with the spending decisions that have been forced on me” (52).

Clinical Considerations for Treatment Providers

Despite the prevalence of these money management arrangements, medical students, residents, and other treatment providers may be unaware that their patients with severe mental illnesses have a representative payee or money manager. Clinicians may not fully understand what a representative payee is and therefore be reluctant to investigate further upon learning a patient has a payee. To the best of our knowledge, issues about representative payeeship and family money management are rarely incorporated into the medical training curriculum in the United States. Even if there are formal didactics on this issue, there have been few attempts to prescribe how clinicians should handle these situations.

For example, once a clinician knows a patient has a payee, how can he or she alleviate caregiver burden associated with such arrangements while at the same time ensure that patients feel they are able to control their lives? What can be done by treatment providers to reduce stress, coercion, and conflict that might arise on a day-to-day basis from managing finances of adults with severe mental illnesses? Are there steps clinicians can take to address downsides of such arrangements and encourage potential benefits to be realized? Below, we answer these questions by offering suggestions based on empirical research and actual clinical cases.

Facilitate Representative Payee-Patient Collaboration

Family money management will have maximum benefit if combined with efforts to enhance patients’ sense of self-determination. Studies show patients view third-party money management more favorably if they believe they have independence and freedom with respect to managing their mental illness and lives (53). Similarly, a literature review concludes “a good payee retains a balance between professional beneficences and respect for the client’s autonomy” (29). Thus, money management arrangements run optimally if patients are involved as much as possible in financial decisions (47).

At the same time, barriers to patient involvement need to be addressed. One such barrier is the potentially stigmatizing effect of not controlling one’s own money. Patients with more education are significantly less open to having payees use money as leverage to improve adherence (53), ostensibly because they feel relatively more shame being reminded they do not control their own finances. Feelings of empowerment are closely related to issues of stigma (54), and perceiving one is not in control of one’s finances may be more significant for adults who accomplished certain levels of mastery but lost them due to mental illness.

To illustrate, a clinician met with a patient (daughter) and payee (mother) to discuss treatment planning. Although the patient said, “My mother keeps me off the streets,” she also revealed feeling embarrassed she did not have more control over money for daily purchases such as buying a cup of coffee or going to a movie. The patient admitted she felt “incompetent, like I cannot live my own life.” The payee indicated she had not realized her daughter felt this way. With the guidance of the clinician, the patient and payee deepened their understanding about the effect of payeeship on their relationship and ultimately generated a list of everyday financial decisions the patient could make (e.g., grocery shopping, socializing with friends). Thus, clinicians can facilitate a dialogue and communication between the payees and patient about the representative payee arrangement itself, modeling how collaborative discussion can occur in the future.

Increase Knowledge about the Social Security Administration

Family money managers and patients often do not understand the parameters of Social Security Administration (SSA) disability funds or the representative payeeship itself (55). The SSA acknowledges that recipients commonly are confused about how disability funds work. At the time of payee assignment, SSA caseworkers are not required (or trained) to ensure that caregivers or people with severe mental illnesses understand the payee arrangement. SSA caseworkers spend a disproportionate amount of time investigating payee complaints not because of intentional abuse but because of inadequate knowledge of representative payeeship (55, 56).

Correcting misconceptions about money management can thus help reduce conflict between family and patients. For example, a patient (son) and his payee (mother) told their clinician that they thought if the payee and patient lived together, the patient needed to complete household chores to obtain benefits. This, in turn, led to arguments between the two. The clinician was able to provide education about appropriate parameters of representative payeeship. Additionally, the payee and patient engaged in a problem-solving exercise to disentangle disability funds and household chores. In the end, the patient voiced preferences for specific chores and both he and his mother developed plans for him to do these chores on a regular basis.

Although problem-solving skills and basic education are helpful, not all clinicians will know details about disability funds and representative payeeship. Therefore, the clinician can call, or help patients and family call, the SSA information hot line at 1–800–772–1213. To illustrate, a patient (mother) and payee (daughter) believed the patient would lose benefits if she worked. The clinician called the SSA information hot line and all parties talked on the speakerphone with a representative who was knowledgeable about SSA policy. The representative answered the payee’s and patient’s questions and provided information about the SSA Ticket-to-Work program. Because of this phone call, the patient started working part-time within 2 months. While the clinician was present for the entire call, this was not essential. The critical role for the clinician was as a facilitator: helping identify the problem and connecting the patient and family money manager with the SSA.

Improve Money Management Skills

Of all the goals for psychiatric rehabilitation, patients perceive improving money management among the most important (57–59). Balancing a checkbook, developing a budget, and evaluating money decisions are critical skills that clinicians can help improve in several ways. At a minimum, patients can be taught to apply basic skills; for example, clinicians can work with patients to write up a simple budget of monthly expenses. Or, clinicians can use psychiatric rehabilitation modules designed to improve money management skills in severe mental illnesses (60, 61). Research shows improved handling of finances is linked to better community functioning in severe mental illnesses, including reduced alcohol and drug use and enhanced employment outcomes (62–64). Interventions improving money management also reduce risk of homelessness and relapse (65, 66)

To illustrate, a clinician reviewed the budget of a patient (husband) and payee (wife) and learned they spent $140 a month on their cable bill because they frequently purchased ‘On-Demand’ movies. The couple indicated they had no savings (despite wanting to buy a car) and mentioned being in debt at the end of some months. Consequently, the clinician helped them develop a budget and encouraged them to open a savings account in which they would deposit $50 a month. The clinician also helped the two think about ways to reduce cable expenses. The couple decided to go to the local library where they used the computer to sign up for a mail order movie service and change to a more basic cable plan. In 6 months, the couple was able to purchase a car, which not only improved the family environment and patient’s quality of life but also provided ready transportation to the mental health center and pharmacy.

In highlighting the benefits of addressing money management skills, this case also demonstrates that clinicians cannot assume only patients need assistance: caregivers may appreciate the chance to learn money management techniques or the opportunity to work together with the patient to improve money management skills. The clinician can show the caregiver how to continue teaching the patient money management skills at home, beyond the treatment setting. Clinicians thus review techniques with the caregiver and patient together and increase chances of financially responsible money management.

Prepare Individualized Money Management Plans

Finally, clinicians can facilitate discussion about how the patient and caregiver wish to implement money management in the future. Providers can focus on how the patient might eventually terminate the money management arrangement or on how to increase patients’ involvement in money decisions while maintaining family money management. Without a venue for exactly this type of discussion, family money management could foster dependency and disablement (25, 44).

In one case, the patient (daughter) and payee (father) discussed ambivalence about the representative payee arrangement. The patient felt safe knowing her father was helping stop her from purchasing drugs; however, she wanted more autonomy on a daily basis to buy the things she wanted. Both the payee and patient revealed monthly arguments about money. Rather than debate past conflicts, the clinician asked how this ambivalence could be resolved in future implementation of the representative payeeship. With the help of the clinician, the patient and payee agreed to meet at the start of each month and decide together how to spend disability funds. This way, the patient would have a regularly scheduled opportunity to have a greater say in her spending.

Another case involved writing a plan for the family representative payeeship. Here, the patient (nephew) worried that when his elderly payee (aunt) died, he would start using SSA funds to purchase cocaine. The clinician used several strategies to prepare an individualized representative payeeship plan. First, the payee and patient together generated a list of three candidates who they could trust to take over the representative payeeship in the future. Second, the payee and patient signed a written commitment stating the patient would call the SSA in the event his aunt passed away. Third, the clinician informed the rest of the treatment team about the plan, sharing how the representative payeeship helped the patient stay clean. By creating such plans, treatment providers can help family and patients implement money management in a way that is collaborative, beneficial, and long lasting.

For people with severe mental illnesses, family money management poses potential problems but holds great promise. On the one hand, it can lead to a host of countertherapeutic consequences, including stress, conflict, violence, coercion, and dependency. Family money managers are provided with little guidance, and, if misunderstood or misused, such arrangements could undermine even the best of rehabilitation efforts in treating severe mental illnesses. On the other hand, since one out of every three adults who receive SSA income for severe mental illnesses has a payee and even more patients have a caregiver informally manage their finances, family money managers represent a valuable, yet largely untapped, resource to help patients with severe mental illnesses build independent living skills, use money for socialization rather than substances, and strive toward realistic life goals.

Given the potential impact of family money management on patient outcomes, medical students and residents should be provided information about the prevalence of these arrangements as well as their positive and negative mental health consequences. Moreover, trainees should utilize the aforementioned techniques in order to address problems and maximize effectiveness of family money management among people with severe mental illnesses. Didactics, grand rounds, and clinical case conferences could be used to illustrate how family money management affects patients’ daily lives. Most importantly, trainees should be helped to reframe family money management arrangements for people with severe mental illnesses: instead of viewing the family money manager as one person controlling the money of another person, clinicians can think of family money management as a therapeutically rich opportunity in which two people work together on collaborative decisions, promoting community functioning on a day-to-day basis.

The clinical considerations offered above draw on empirical research and actual cases to help clinicians minimize barriers and capitalize upon benefits offered by family money management. By facilitating collaboration on money matters, increasing SSA knowledge, improving money management skills, and developing plans for financial decision-making, mental health treatment providers can promote independent functioning and family support for a substantial number of individuals with severe mental illnesses.

This work was supported by the John D. and Catherine T. MacArthur Foundation Research Network on Mandated Community Treatment.