I want to know more about ADHD and debt. I know a lot of ADHD folks have trouble managing their money, and neurotypical solutions don’t really work for us. I’m hoping that you can help create some solutions for either saving money or trying to pay off debt. I personally have student debt, and some credit card debt that is from impulsive spending. What is the best way for me to cut back using a sustainable solution, keeping in mind my ADHD tendency to have trouble following too much structure?
ADHD impacts an estimated 8 million adults in the US. It can affect impulsiveness and executive function, making money matters harder. People with ADHD report higher levels of debt, impulse buying, difficulty saving money, and trouble understanding bank protocols — you might be able to relate to this, and you’re not alone. It’s hard when commerce has been designed to eliminate every barrier in the way of spending money; no wonder impulse buying makes up between 40% and 80% of all purchases.
I brought your question to David DeWitt, a 32-year-old certified financial planner at DeWitt Capital Management in Wayne, Pennsylvania, who works specifically with clients who have ADHD. He also has ADHD himself and had to get out of credit card debt from impulsive spending years ago.
DeWitt creates systems for his clients to save and curtail spending that automate as much of the work as possible. “The hardest part is getting the energy to set it up and doing the groundwork to figure out what your total recurring expenses are, and how much needs to go towards this and that. But once it’s set up, it’s automatic,” he said. Many of his clients who have ADHD have already spent a lot of effort creating budgets, but as you mentioned, that sort of structure can be hard to follow. “One small wrench in the system, and you just self-sabotage and give up — and I can relate to that,” he said; it feels overwhelming, so you abandon it. His tips aim to “put up walls that don’t fall down” when you “get blown up mentally.”
Impulsive Spending and Cutting Back
Cutting back on spending is often the first step to paying down debt as long as you put that unspent money toward debt payments. “The real work comes down to working on yourself and learning how to stop impulsive spending if that’s why you have debt,” DeWitt said, noting that some people are triggered by stress or anxiety, or seek a dopamine hit from shopping. “There’s no magical hack for ADHD,” but there are concrete steps people can take that may help themselves in a world meticulously crafted to encourage impulse purchases:
- To create awareness of your spending, for three months straight, write down every single time you buy something, the moment you buy it, and keep a running total. This is something he tells all his clients to do. “It’s actual magic, because you quickly see how much it adds up. You see how quickly the page fills up. You see the ridiculous amounts of money you’re spending, and it starts to offend you,” DeWitt said. “That’s what changed my entire life. From that moment on, my impulsive spending has almost completely evaporated — and I was bad.”
- Use only debit cards and cash for at least three months — “a weaning period,” as DeWitt calls it — so you don’t spend more than you make and get into more debt. Research shows people spend a lot more when they use credit cards. The ceiling becomes your credit limit, not your income. (You can read my column about paying off credit card debt and switching to cash and debit cards here.)
Once you’ve made the switch, you don’t want to overdraft and pay those fees, so monitor your account frequently (even daily). This will also give you a chance to review transactions so you begin to notice patterns and build awareness of your spending, allowing you to make better decisions in real time.
- Cancel subscription services and memberships that enable easy shopping (like Amazon Prime, recurring shipments on Subscribe and Save, etc.) to test if you’ll actually still want them. Often, “it’s just dopamine searching,” DeWitt said. “If you have to pay for shipping, you really have to want the product.” While you’re at it, cancel any subscriptions you just don’t use anymore.
- Use app and website blockers (some are impossible to reverse until the block period is over) to break habits. Many people are swayed into buying “the shiny new thing on Instagram.” DeWitt said he reviews a lot of credit card statements for his clients and “food is the Number 1 biggest problem” because delivery apps have made it so easy to order takeout. DeWitt said, “So many people have told me that after several months of not spending $200 a week on DoorDash that they don’t miss it.”
Manage Money to Pay Off Debt and Save
As for reliably paying off debt and saving money, DeWitt said reverse budgeting could help. This is where you set aside money for savings and investing first (and based on your concerns, student loan and credit card debt payments) and then budget out the rest of your spending. It’s the reverse of what most people do, which is to save what’s left at the end of the month. “A lot of my clients will come up with goals, like 500 bucks a month towards debt, and we’ll start with that,” DeWitt said. The important thing is to look at the money coming in and out every month, decide how to allocate your dollars, and then automate as much of it as possible.
- DeWitt suggests creating several bank accounts that each serve specific goals, and give them specific nicknames. For example, “Monthly Bills and Expenses” — (which includes loan payments), “Emergency Savings,” “Housing Fund,” “Money to Invest,” “Spending Money.”
“If you label your accounts very specifically, you’re much more likely to stick to it,” DeWitt said. If you’re planning a trip to, say, Italy in October, “You can’t just have a “Vacation” account; that’s too easy to steal from because it’s not real yet in your head. It has to say, ‘Vacation 2023 to This Place.’”
For the “Monthly Bills and Expenses” account, add up all of your recurring expenses and use that amount to dictate how much you’ll deposit into that account, preferably through direct deposit from your paycheck. You should have a separate “Spending Money” account for discretionary purchases, so these things don’t get muddled.
- If your employer can split your paycheck into these different bank accounts based on your budget, take advantage of this option rather than relying on auto transfers from your bank account, which are too easy to turn off. “For ADHD people, I totally want them to go through the employer and set up direct deposits,” DeWitt said. “If you create more friction to turn off things, it’ll be easier to stick to.”
- Critically, your “Spending Money” account must stay above zero so you don’t start stealing from other accounts. You don’t have to sit down and make an elaborate spending budget if that seems overwhelming, DeWitt said, “but you have to make it last.”
- DeWitt tells clients to automate their bill and debt payments to keep them from ever snowballing. “Get all your bills on autopay, and have the correct amount of money always flowing into that checking account, so that you never have to even worry.”
Dewitt said “ADHD helps explain your behaviors, but you’re still able to get out of your situation. At the end of the day, you need to take care of yourself.” ●