Personal Finance for People in Recovery From Drug and Alcohol Addiction

Updated: November 1, 2024

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Addiction impacts individuals from all walks of life, straining physical, mental and financial well-being. Recovery is a journey towards personal health and a crucial opportunity to rebuild and enhance financial stability. With the right strategies and support, you can regain control of your finances, establish stability and work towards a brighter financial future.

How Addiction Impacts Finances

People struggling with addiction to drugs and alcohol are often tempted to prioritize their substance use above living expenses and other financial responsibilities like loan payments and bills. This can have significant consequences and financial impacts:

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    Missed Mortgage Payments

    Missing just one mortgage payment can reduce your credit score, but missing several consecutive months could lead to foreclosure. Mortgage servicers are not permitted to initiate foreclosure proceedings until the borrower is over 120 days late on payments. If you're behind on payments, it's essential to know your homeowner rights.

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    Missed Rent

    If you are late paying your rent, you'll likely incur late fees. These quickly add to your monthly expenses, making it more difficult to pay additional bills. If you stop paying rent or otherwise break your lease, you can expect to be evicted in a process that can take 30 to 60 days.

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    Missed Car Payment

    Similar to missing home payments, lenders can repossess your car if you stop paying. Many lenders will allow you to defer a payment 30 days but will eventually repossess your vehicle and sell it at auction. You may even be expected to continue paying for a car you no longer have.

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    Lost Job

    The consequences of addiction extend beyond personal repercussions and may also negatively impact your career. One of the most noticeable side effects of drugs and alcohol is compromised productivity, which can put your job at risk. Recurring incidents may also make it harder to return to the workforce after treatment.

Financial Planning in Addiction Recovery: 8 Steps

People who live with a drug or alcohol addiction know that recovery is a lifetime commitment that may look different from person to person. Some people recovering from substance abuse are single, young and on their own, while others have a family depending on them and are looking to rebuild those relationships. Although every situation is unique, there are steps to take to regain steadier financial footing.

Remember to start small — no one tackles finances overnight. List your priorities and work on funding the big things, such as housing and earning an income, first. Setting priorities is one of the first steps to creating a budget. Here are some steps we recommend to establish a solid financial base early in your recovery journey.

1. Recovery Needs

As you create a budget to pay down debts, manage expenses and increase your savings, prioritizing recovery is vital. Your budget items should include the necessary resources for your recovery needs. These expenses include counseling services, medications, medical visits and other items and experiences that enhance your physical well-being. If going to the gym or yoga is essential to your recovery, it should be essential to your budget.

2. Finding Stable Housing

Stable housing is a crucial element of maintaining long-term sobriety. You need to find a living environment that will give you the best chance to succeed in your sobriety. The Substance Abuse and Mental Health Services Administration (SAMHSA) highlights that recovery houses are particularly effective in helping individuals at all recovery stages, offering crucial social support and resources, especially early recovery. As part of its housing recommendations for people in recovery, SAMHSA suggests that potential residents and case managers understand the house dynamic and ensure it's a good fit for everyone.

3. Employment in Recovery

Work can be a trigger for relapse when it's an unhealthy environment. Recognize possible triggers and put yourself in a position to avoid them. If your current job puts you at risk for a relapse, it may be best to seek a new career or employment.

Almost all rehab centers and sober living homes have job placement programs and contacts available. Your county or state may also offer free career counseling services. People in recovery with a criminal record can also get help with job placement. For example, CareerOneStop has job search and skills assessment resources for people with criminal convictions.

4. Avoid Financial Relapse Triggers

Managing your money can be a trigger for relapse, especially if you have disposable income. If cash is a trigger, there are ways to avoid using it. First, set up your paycheck to be directly deposited into a checking account to prevent spending it the moment you get it. Rely on bank or credit cards, specifically without ATM access.

Consider asking someone you trust to co-manage your finances. This person could be a family member, friend or sponsor. This might look like adding to your savings and only making withdrawals with your trusted person's oversight. It can help hold you accountable to a budget while you track your recovery.

5. Pay Off Legal Fees

Unfortunately, some people battling addiction end up facing criminal or civil cases. While you have the right to an attorney in criminal cases, you'll still face high legal fees if you're arrested for a drug- or alcohol-related offense. These offenses can range from possession of illegal substances to driving under the influence. It's important to pay these off as soon as possible. The government can withhold tax refunds to collect on overdue court fees and judgments.

6. Establish Emergency Savings

Creating an emergency saving fund for the future takes time. Still, it's a crucial step in building financial stability and reducing the stress of dealing with unexpected expenses as you make a budget. Start small — even five dollars a month over 12 months adds up. Don't put too much pressure on yourself to save every spare dollar every month. Surprise expenses come up for all of us, but if you include a goal every month, you'll eventually see progress.

7. Bank Accounts and Responsible Credit

Holding yourself accountable for your spending habits in recovery is essential for staying on a budget and sober. Using cash can pose a risk, as it may lead to spending on substances you are striving to stay away from. You can use bank accounts or credit cards to track your transactions.

However, you should only use credit when you know you can pay it back. Credit card debt, fees and interest payments add up quickly and can create more financial stress. True Link offers a prepaid bank card specifically for people in recovery. The sober credit card allows caseworkers, family members or guardians to add money to the card. It limits some transactions and prevents purchases at liquor stores, casinos, bars and other places that could be triggering.

8. Financial Counseling

During your recovery, you'll rely on support from family, friends, sponsors and counselors, including financial counselors. These experts can create a plan to help you achieve financial stability post-addiction, guiding you through debt repayment and savings growth. Counselors also hold you accountable for your spending habits.

Some rehab programs and sober living centers offer financial counseling as part of recovery. If your program does not, you can find accredited counselors to help. Most nonprofit counselors belong to one of two national agencies: the National Foundation for Credit Counseling and the Financial Counseling Association of America. You can use these websites to find an affiliated counselor near you.

How to Pay for Drug or Alcohol Rehabilitation Programs

The cost of substance abuse treatment can vary between $3,000 and $20,000 based on needs and location. According to a national drug survey, cost is the main reason why those struggling with addiction did not seek treatment. However, several options and resources are available to help pay for rehab.

When you begin your search for treatment facilities, ask about financial costs upfront. Facilities should tell you the typical costs for your course of treatment, which services are covered by insurance and which are not and if payment plans are available. Low-cost facilities and state funding resources are available to help you find a treatment option you can afford.

Insurance Coverage for Rehab

Most insurers cover some drug or alcohol rehab, whether it be in a residential facility as an inpatient or on an outpatient basis. You should call the number on the back of your insurance card to learn your specific coverage options. Before seeking treatment, you'll want to know the following details and understand your coverage to know the best health insurance payment options. Here are the key points to discuss with your insurance provider:

1
Verify Coverage for Rehabilitation Services

Directly contact your insurance by calling the number on the back of your insurance card. Inquire specifically about coverage for drug or alcohol rehab.

2
In-Network Facilities

Obtain a list of in-network facilities. Using these facilities typically results in lower out-of-pocket costs due to pre-negotiated rates with your insurer.

3
Coverage Limits

Understand your policy limits on inpatient days or outpatient sessions and the costs you'll incur if you exceed these limits.

4
Medication Coverage

If your treatment includes medications, verify whether they are covered under your plan and any associated costs like deductibles or copayments.

5
Additional Services

Some insurance plans cover extra services like case management, which can provide additional support during treatment. Ask about the availability of such services.

Affordable Treatment Options

Insurance is typically the most straightforward way to pay for addiction treatment. You can enroll in coverage anytime if you have a qualifying life event, including marriage, divorce, having a baby or changing jobs. There are other payment options for you if you don't have insurance. Here are steps to take to help fund rehab without insurance:

1
Reach Out to SAMHSA

The SAMHSA's National Helpline offers online tools and a helpline to connect you with local facilities, support groups or organizations tailored to your needs. Visit findtreatment.gov or call their helpline at 1-800-662-HELP (4357) for confidential and free assistance, available 24/7.

2
Check Medicaid Eligibility

You may qualify for Medicaid, the government insurance program for low-income individuals and families. In most states, individuals earning less than $14,580 per year or families of three earning less than $24,860 are eligible. Contact your state Medicaid agency to apply.

3
Inquire About Income-Based Care

When contacting treatment facilities, ask if they provide care at a lower cost based on your income. Many offer a sliding scale or payment assistance, adjusting costs to your ability to pay.

4
Seek State-Funded Facilities

Look for local or state-funded facilities for more affordable treatment options. Even if your local health agency doesn't offer specific programs, it may have a list of affordable facilities.

5
Ask for a Professional Assessment

The National Institute on Alcohol Abuse and Alcoholism (NIAAA) advises seeking a free consultation or assessment from a health care professional. This initial session, often offered at no charge, can help determine the best treatment course and guide you to resources for further steps.

6
Consider Support from Friends and Family

Beyond emotional support, friends and family might be willing to provide financial assistance. It's worth discussing if they can contribute to the cost of improving your health and well-being.

Grants and Scholarships for Recovery

Scholarships and grants offer a beacon of hope, especially for low-income students seeking treatment for substance abuse but facing financial hurdles. Some individual treatment facilities offer grants and scholarships on a case-by-case basis. Most financial aid is provided directly by facilities, so there is no list to search easily.

Your best resource is your community. Ask your local health agency, social workers, churches or charity groups if they have a list compiled. Nationally, the nonprofit group 10,000 Beds works with local agencies when they have openings and provides scholarships to fill those open beds. Most scholarships won't cover the total cost of a program, so ask what's not included. Also, ensure that you complete the program to avoid losing the scholarship and being financially responsible for all treatment.

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Resources for Recovery From Addiction

Multiple reliable resources are available to help you on your journey to long-term recovery, from finding treatment to counseling after rehab.

  • Alcoholics Anonymous: The most well-known program to help those in recovery from alcohol abuse offers online tools and links to local AA programs.
  • CareerOneStep: For those looking to return to the workforce, the U.S. Department of Labor sponsors this website full of job hunting resources.
  • FindTreatment.gov: This website offers a simple search function to find rehab centers, sober living and outpatient treatment options near you.
  • National Foundation for Credit Counseling: This agency focuses on financial counseling for those looking to get out of debt or build their first budget.
  • National Institute on Alcohol Abuse and Alcoholism: As a department with the National Institute of Health, this agency offers information for those looking for treatment as well as their families.
  • National Institute on Drug Abuse: With a focus on research and facts, this NIH website will help you better understand drug and alcohol abuse and the latest research on treatment.
  • SMART Recovery: With local meetings and an online community, this national support group offers self-management and recovery training.
  • Substance Abuse and Mental Health Services Administration: This government agency is a primary source for finding treatment that matches your needs. It offers a 24/7 helpline for referrals and information.

About Danielle Kiser


Danielle Kiser headshot

Danielle Kiser is an Emmy Award-winning producer and a professional journalist with over 15 years of experience. She writes finance content for MoneyGeek, sharing her knowledge of state regulations, insurance and real estate.

Kiser earned her broadcast journalism degree from the University of Missouri’s School of Journalism.


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