Stop Crunching Numbers, Start Making Budget Plans
Does your ADHD make you prone to impulsive spending and poor money management? Learn how a budget based on net spendable income can help get you on track, and how a monthly evaluation can keep things in check.
It comes as no surprise that many people with attention deficit hyperactivity disorder (ADHD) experience financial difficulties. After all, trouble with planning and self-control are precisely the opposite of what’s needed to create a budget. (Ever hear of impulsive spending?) And a budget is the best tool for avoiding financial crises and saving effectively for a home, college tuition, retirement, or another financial goal.
A budget is not a list of what you spend money on. It’s a statement of spending limits based upon your net spendable income (NSI). For most people, this will be their monthly pay after income tax, health-care premiums, and so on have been deducted. NSI is the entire financial “pie” you use to cover all your remaining expenses — from big-ticket items, like housing and transportation, to seemingly inconsequential things, like a daily newspaper and a cup of coffee.
Obviously, your NSI must be greater than your total monthly expenses. So the first step in the budgeting process is to figure out exactly how much you spend each month and what you spend it on.
For one month, keep careful records of every purchase you make. Get a receipt whenever possible, and keep a card in your wallet to record cash purchases for which no receipt is offered. Record all the checks you write. If you purchase something online, print out a record immediately. At the end of each day, tally everything up.
At the end of the month, review your daily tallies and credit card bills to find the patterns in your spending habits. Certain costs, of course, are fixed. But look for areas in which you think you’ve been overspending. Did you buy new books, even though your bookshelves are groaning under the weight of unread ones? Did you buy another outfit, even though your closet is full of clothes you’ve barely worn?
Based on these insights, come up with a budget — that is, how much you think you ought to be spending on various items. As you go forward, check once a month to see how closely you have followed your plan. If you do this faithfully, you’ll make the most of every dollar you earn.
It’s a good idea to save at least 10 percent of your monthly income (although, of course, paying off debt is more important than adding to savings). You should have a minimum of three times your “net spendable income” on hand, in case you experience a cash crunch.
Getting Financial Help
Many of my clients have found it helpful to use a computerized financial program like Microsoft Money or Quicken. If you need help using the software — or if you’re overwhelmed by the budgeting process in general — consult an accountant or a financially savvy friend. You can also find advice at Web sites like www.thebalance.com.