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Managing finances can be a challenge for people with ADHD. The symptoms of procrastination, disorganization, and impulsivity can wreak havoc on your finances. A recent study found that adolescents impacted by ADHD are more likely to have greater financial stress in their late 30s than those who are not impacted by ADHD.
If you would like your finances to be hassle-free, without the fear of being overdrawn on your checking account, being turned down for a loan, or having your lights turned off, you’ll need a plan. In order to make a plan that you can stick to, you’ll need to recognize your weak areas so you can work around them.
The following suggestions and strategies are based upon best clinical practices and the application of behavioral and financial principles. They are designed to help you understand how to:
It is possible for an adult with ADHD to be a successful money manager. Plan time in your daily and weekly routine to incorporate these steps, and seek out any support you may need to start and maintain these steps.
Clarify Your Vision
Every good financial plan begins with a vision of an ideal lifestyle. A vision is a blueprint of your lifestyle that reflects your unique values and interests. Everyone needs money for shelter, food, transportation, and clothing. But beyond these necessities for survival, there are countless other items that you can buy with your disposable income. For instance, some folks value beauty in their home so they may spend more on decorating and home remodeling than someone who values adventure and travel. Some people may value education more than a new car, while for others may value having the latest safety features from driving newer cars. Some people may value services like personal assistants, organizers, coaches, and therapists more than having the newest and most advanced television or smartphone.
Also, every person has a unique family situation―some are married; some have children to support; some have elderly parents who may need assistance or may provide them with an inheritance. Some people have retirement plans provided by their employer; others must save for retirement themselves. Whatever your special circumstances, you will need to clarify your values and how much money you will need to live the life you desire.
Four reasons to clarify your vision:
Clarify Your Values
Take some quiet time to reflect on what you value. Don’t allow your inner critic to judge your thoughts and ideas. Just let yourself day dream.
During this exercise, jot down notes to yourself until you get some clarity. The following questions may help you:
If you’re more of a visual and artsy person, you could make a collage or painting with pictures that depict ideas, scenes, activities, moods, or objects that you would like to have.
Once you have your list of ideas, take a break. When you come back to your list, see if you have new items to add. Then, prioritize your list into two groups:
Look at your list of essentials. What are the top three to five things? These are the values that are most important to you.
Needs vs. Wants
In order to manage your finances in a sustainable manner, begin with a clear picture of your current living requirements, to define your:
Be sure to include not only the expenses you see every day, week, or month, but think about your quarterly and annual expenses such as taxes, homeowners’ fees, and memberships.
What’s left over after those expenses is your disposable income. This is what you will use for future expenses, such as those unexpected repairs, vacations, college, retirement, etc. What you do with your disposable income will depend on:
Your personal situation:
Your lifestyle preferences:
Be sure to determine whether your living requirements and lifestyle preferences are in line with your vision and values.
Establish Short-, Mid- and Long-Term Goals
Now you have a framework that includes your vision, values, fixed and variable expenses. The next step is to set short-, mid- and long-term goals for improving your finances.
Prioritizing these areas poses a special challenge for someone affected by ADHD because successful money management means paying attention to all of them. It is advisable to break down each task into small action steps and incrementally build your confidence until you are attending to the whole financial picture. You may need assistance from a friend, therapist or coach. Don’t be afraid to ask for help if you need it.
Identify Problem Areas with Money
Most people with money problems believe that not having enough money is their primary problem, and are unable to pinpoint their specific difficulties. Upon further analysis, many adults with ADHD have one or more of the following specific issues:
Which of these do you struggle with? Are there others that are negatively impacting your money management? How are they impacting you and your finances? Having a clear picture of your challenges is critical to effectively managing or overcoming them.
Organizing Financial Papers
Many individuals with ADHD get into financial trouble because they lose money, bills, and checkbooks; can't find the necessary papers at tax time; or just don't plan. This disorganization is no different than the general disorganization of an individual with ADHD. However, losing financial papers often can have serious consequences, such as not being able to do your taxes correctly or on time, having your insurance cancelled from not paying your premiums, late fees and negative reports on your credit.
To avoid misplacing or losing financial papers, have a special spot in the house where all financial papers can be stored. For important papers like titles, birth certificates, wills and deeds, you will need to keep the original documents. Label file folders with the name of each document and store them in a file cabinet.
For documents related to money management, use file folders or envelopes to organize them and store them in a file cabinet, desk drawer, special box, large plastic envelope, or a large basket. This central location should be near where you open the mail. You can also include a calculator, stamps, envelopes, and anything else needed for paying bills.
Daily Mail Routine. It is often helpful to develop a daily routine for opening the mail in a timely manner, particularly money papers. This means that when the mail arrives and is opened, money papers are immediately separated from the rest of the mail and placed into the special container or space you have chosen. Money papers include checkbooks, bills, bank statements, legal papers, insurance papers, checks to be cashed, and extra checks. Anything that has a designated account number is important and needs to be immediately separated from the remainder of the papers.
Files with Dividers. Dividers with file names such as home-related, grocery, gifts, utilities, bank statements, personal, car and fuel, hobbies, and insurance can be placed in the container. These file names should reflect your lifestyle and should be kept simple. Some people find it helpful to color code or label files that are needed at tax time. A sophisticated filing system is not necessary at first―at the very least gather the money papers in one spot. Over time, this organization will become routine. Consult Getting *(and Staying!) Organized for more organizational tips.
Paperwork Flow System. A "paperwork flow system" may also be helpful. This is a system in which all the money papers "flow" to one central location. For instance, "temporary holding tanks" are designated in the wallet, purse, planner, and car, which hold money papers and receipts until they can be placed in the special money location. These temporary tanks can be clear plastic envelopes, fancy shoeboxes, plain envelopes, or even more simply, a special spot in the wallet for receipts. Once a month or so, these papers can be transferred to the central location.
Know Where Your Money is Going
Successful money management demands that you be able to account for your money. Keeping a record of purchases helps curb impulsivity and lets you know whether you are spending your money where you want to be spending it—toward the things you love and toward your vision and values.
Carry a little notebook or use smartphone apps, a day planner, or an extra checkbook register to keep track of all of your purchases. Record even small purchases, such as 30 cents for the parking meter or $1.39 for a candy bar. Don’t forget to record your online and mobile purchases as well.
As spending is tracked, certain categories will naturally emerge. These categories are different for each person, but the main categories for many include parking, groceries, restaurants, snacks, coffee shops, books, movies, gasoline, clothing, newspapers, cosmetics, household items, donations, and hobbies. As you continue to record your spending, you will no longer have to wonder where all your money goes.
It may be difficult for adults with ADHD to write down all of their expenses, but do the best you can. Try keeping track of expenses for one week or two weeks at first. Enlist the help of a spouse or a trusted friend in recording all your expenses to remind you if you forget. Try dictating them into your smart phone or send yourself an email to yourself to record your expenses. Even if you do not keep a perfect record of every expense, the records that you do collect will help you move forward in developing healthy money management habits.
Plan for Expenses and Develop a Spending Plan
One secret to healthy financial management is to plan for all expenses every single month. For instance, many people with ADHD have difficulty remembering that the insurance bill is due in 2 months so they impulsively spend or splurge on the latest electronic gadget or a vacation. The impulsive, live-in-the-moment lifestyle of the individual with ADHD makes it difficult to remember upcoming expenses.
A spending plan or budget can help keep these upcoming expenses at the top of your mind and ensure you plan for them every month and don’t forget. It involves figuring out a certain amount of money that you will require each month for each spending category in your life. It is easier to construct a spending plan monthly rather than annually since most utilities and installments are paid monthly.
Follow the steps below to develop a simple spending plan. Spreadsheet software can be helpful in developing this spending plan, as many include a template for this purpose.
Once you set up your spending plan, here are some suggestions helping you stick to your budget and track your purchases.
Paying off debts
Success with finances demands the elimination of debt and the prevention of new debt. To pay off debt, make a list of all your debts. Include credit cards, outstanding debts to doctors, friends, and family, and any loans from insurance or 401K plans.
Make a chart like this so you can see your total debt:
Total Balance Due
Payment Due Date
If you are in serious debt, this may be an emotionally painful task. Do it anyway. Talk with a trusted friend or therapist to help deal with the emotional pain. Call creditors to ask for a lower percentage rate or reduced late fees. Arrange regular payments with creditors and stick to the plan. Do not promise more than you can realistically pay. They are less likely to cooperate if you don't keep promises or don’t stick to what you have agreed to pay monthly.
The savings habit should begin immediately, even if it means starting with a piggy bank and making weekly deposits of small amounts, even 50 cents or $1.00. No matter how high the debt load, a savings habit needs to be developed. Start small and be patient with yourself as you learn this new habit. There are different purposes for saving money:
Make saving money fun and visual. For instance, make a visual thermometer or graph to track your savings. Some people find it helpful to use a cute piggy bank for certain expenditures, or an envelope with a photo of whatever you are saving for glued to the outside. You can open a special bank account for a particular goal and have automatic deposits taken from your paycheck. If necessary, open this bank account at a different bank—across town so you'll be less tempted to withdraw from it.
Curb Impulsive Shopping
Impulsivity, one of the hallmarks of ADHD, can lead to financial difficulties. Impulsive shopping and spending is defined as any purchase you did not plan to make when you left the house that morning, any purchase that is not a part of your budget, or any purchase that you don't need. For an adult with ADHD, this spending happens spontaneously and without warning. Here are suggestions for curbing impulsive spending:
Managing Credit Cards
Credit cards and the debt that can easily accrue can take a person in the wrong financial direction. Balances build up rapidly from interest, late payment fees, and over-the-limit charges. This accumulation will rapidly turn small purchases into very large expenses. Paying only the minimum amount due on a large credit card debt means it could take 30 years to pay off the entire balance. If you are in the habit of not paying off credit card balances each month, stop before you use it again. Ask yourself if you love the purchase enough to pay for it over 30 years.
If you run into significant issues with overspending, think of storing your credit cards in a safe location at home so you don’t carry them with you. Some individuals have even put their credit cards in a container filled with water and freezing them. By the time they defrost the credit card, the urge to make the purchase has often dissipated. Or, cut them up so you don’t use them.
Quick Tips For Managing Credit Cards
If you have large balances on your credit cards and don't remember what you purchased, you may be better off without a credit card. Write to the companies and close these accounts even if there are balances to pay off. Be aware that if you take this step, it will likely negatively impact your credit rating so this should be a last resort. But, it may be your best option. Consult with a financial advisor to determine the best strategy for your situation.
Find Support and Incorporate Other Resources
Some people may be able to implement the suggestions given here on their own. Others may need the assistance of a friend, therapist, or coach. An individual providing support can help you make budget categories and monitor and regulate spending. If you take medication as part of your treatment, make sure that the medication is active in your body when you are working on financial tasks.
It is possible for an adult with ADHD to be a successful money manager. In this sheet, the task of managing money has been broken down into a number of steps, and suggestions have been given for carrying out each of these steps. It is crucial for the adult with ADHD to plan time in their daily and weekly routines to implement these steps, and to seek out the support systems necessary for bringing these steps to fruition. Because money is a daily event, some action is needed every day. If consistently applied over time, these suggested techniques will help the adult with ADHD improve his/her money management.