Read an Excerpt
If you have Attention deficit disorder (ADD), you know that it can affect your ability to keep track of your finances and save up money for your future. You may have struggled with debt or impulsive spending. Maybe you have had a relationship fall apart because your partner thought you were irresponsible with money. All of these problems are difficult and painful, not to mention inconvenient and expensive. They are also more common when you have ADD.
This book can help. Stephanie is an ADD coach and the author of two successful books about living with ADD. Karl is a corporate attorney and has an educational background in finance. Together they will show you how to resolve conflicts about money with your spouse; weather life changes like marriage, divorce, births, death, and medical catastrophes; invest your money wisely; organize your finances in a way that is easy to maintain; budget wisely; spend responsibly; manage loans and debts; make the best use of bank services; and teach your children about money.
With some perseverance and the tools in this book, you can overcome the financial challenges you have faced due to your distraction and impulsivity. There is hope for you to have a successful future and a good relationship with money.
What Is ADD?
Attention deficit disorder (ADD) is a genetic disorder that affects 4.4 percent of the U.S. population (Kessler et al. 2006). If you have ADD, there is a 75 percent chance that you inherited ADD genes from at least one of your parents (Rietveld et al. 2004).
The Use of "ADD" vs. "ADHD"
You probably have heard both the terms "ADD" and "ADHD" used to describe a pattern of inattention and impulsivity. While the proper clinical term is "ADHD" (even if you do not have hyperactivity), the most common term used by the public is "ADD." Therefore, in the remainder of the book, we will use the term "ADD."
Types of ADD
There are three subtypes of ADD: inattentive, hyperactive/impulsive, and combined (American Psychiatric Association 2004).
Symptoms of the Inattentive Subtype
- Difficulty paying attention to detail
- Difficulty focusing during tasks
- Difficulty following through with tasks
- Avoiding tasks that require sustained mental effort
- Losing items often
- Not appearing to listen when spoken to
To meet criteria for the inattentive type of ADD, at least six out of nine inattention symptoms must be met.
Symptoms of the Hyperactive/Impulsive Subtype
- Often "on the go" or acts as if "driven by a motor"
- Excessive running or climbing, or a feeling of inner restlessness
- Excessive talking
- Difficulty engaging in leisure activities quietly
- Interrupting or intruding on others
- Leaving seat when remaining seated is expected
- Blurting out answers before questions are completed
- Difficulty waiting turns or standing in line
To meet the criteria for this subtype, you must have at least six out of nine hyperactive/impulsive symptoms. If you have six out of nine symptoms for both the inattentive and hyperactive/impulsive subtypes, you may have the combined subtype of ADD.
In addition, according to diagnostic criteria, ADD symptoms must have been present since the age of seven. About 50 percent of people retain symptoms of ADD into adulthood (Wilens 2004). However, as an adult, you may experience your symptoms a little differently than you did in childhood. An adult with ADD can appear less hyperactive than a child with ADD. For example, instead of climbing on the furniture, you may now have a feeling of inner restlessness.
ADD and the Brain
People with ADD have difficulties with executive functions, which are processes located in the brain’s frontal lobes. Executive functions include tasks such as processing information, initiating tasks, regulating moods, planning future behavior, and learning from consequences (Barkley 2005). In a study by Biederman et al. (2006), adults with ADD had significantly more deficits of executive functioning than those without ADD. In addition, the adults with ADD had a significantly lower socioeconomic status, lower academic achievement, and significant functional impairment compared to those without ADD.
How ADD Affects Money Management
Not only does ADD affect scholastic performance, work performance, and the quality of your relationships, it also affects your ability to earn, keep, and manage money. Studies have shown that people with ADD have a greater amount of debt, more difficulty paying their bills, and less money saved up than people without ADD. People with ADD have lower incomes than those without ADD, even when they have a similar education level (Barkley, Murphy, and Fischer 2008). People with ADD also miss more days of work due to "unofficial" absences (Secnik, Swensen, and Lage 2005). They are also more likely to take risks that lead to a loss of money (Dreschler, Rizzo, and Steinhausen 2008).
In addition, people with ADD have higher medical costs, prescription drug costs (for all medications, not just those for ADD), and more total medical costs than those without ADD (Secnik, Swensen, and Lage 2005).
There are several books available regarding money management. However, these books can be overwhelming—they can be too detailed and are not written specifically for a person with ADD. And while those books may give you the tools for getting started on your plan to regain control of your money, it can be difficult to keep up the money management and organization tips that these books offer. For people with ADD, maintaining a new behavior, such as learning to use money management software, can be more difficult than getting that new behavior started.
Financial Portrait of a Person with ADD
If you have ADD, you may have found yourself experiencing one or more of the following:
- You lose time and money due to your inability to stay organized.
- You bounce checks.
- You pay your taxes late or wait until the last minute. You may even be in trouble with the IRS.
- You have lost money on tax deductions because you don’t keep track of your receipts.
- You get late fees on your bills because you forget to pay them on time.
- You make impulsive purchases.
- You pay extra to get out of what you consider to be detailed and boring tasks, such as washing your car or mowing the lawn.
- You buy items at the last minute, resulting in a higher cost to you.
- You don’t know where to find important financial documents.
- You have a poor credit rating due to late payments or defaulting on loans.
- You "guestimate" how much money you have in your accounts.
- You have a significant amount of credit card debt, and you may even have difficulty making the minimum payments.
- You have considered filing for bankruptcy due to poor money management.
- You have never balanced your checkbook. You may not even be sure what that means.
- You frequently argue with your spouse/partner about your lack of money management skills.
Even if you are currently experiencing several of these issues, there is still hope for you. Continue reading to find out what your life will look like when you become comfortable with money management.
Financial Portrait of a Person with Good Money Management Skills
You have just read (or experienced firsthand) what the combination of ADD and poor money management looks like. For a contrast, here’s how to recognize someone with good money management skills. When you want to improve your money management skills, it’s important to have a positive idea of what a person with good financial sense looks like:
- Understands the value of money but does not let it control his life
- Lives beneath her means—doesn’t spend more than she earns
- Has an emergency savings fund equal to three or more months of living expenses
- Has a good credit history
- Educates his children about saving and spending
- Has a limited amount of debt or no debt
- Understands that minor financial setbacks can be normal and are fixable
- Educates herself about money management by reading books, websites, and/or the newspaper
- Plans ahead before going to the store to avoid buying items at the last minute
- Can locate financial documents fairly quickly and has those papers filed in a systemized manner
- Stays away from extended warranties
- Looks for the best deal on an item (within reason)
- Has a list of immediate and long-term financial goals
- Uses money management software and updates it regularly
These may seem like unobtainable or unrealistic goals to you right now, but you do have the ability to be successful at money management. Continue reading to learn how to reach your potential.
The Link Between ADD Medication and Financial Success
If you have been diagnosed with ADD, you may want to consider taking medication to reduce your symptoms. One of the benefits of medication is that you become better organized and better able to prioritize—which can make you better able to manage your money. Also, medication can actually help people with ADD accrue more money. In a study by Cynthia Pietras and colleagues (2003), study subjects who were on stimulant medication chose to wait a longer time to receive a larger amount of money rather than wait a short period of time for a smaller amount of money. Those who were not on stimulant medication were significantly more likely to choose the short wait, suggesting that someone with ADD who is not on medication may have difficulty seeing the long-term benefits of saving up money or investing.
You may be concerned that taking medication for ADD may increase your risk for addiction. However, studies show that taking stimulant medication actually decreases your chances of abusing substances (Biederman, Monuteaux et al. 2008). Not only that, but the risk of substance abuse decreases significantly the earlier in life a person starts taking medication (Mannuzza et al. 2008). In addition, there are nonstimulant medications available for the treatment of ADD. Speak with your doctor if you are interested in medication treatment for ADD.
Today’s Financial Climate
In addition to the money management difficulties you may be experiencing, the current economy has made the process even more challenging. In March 2009, bankruptcy filings increased 24 percent in one month and increased 41 percent from the same time period in 2008. It is predicted that there will be 1.4 million bankruptcy filings in 2009 (American Bankruptcy Institute 2009). Many people are feeling anxiety from the financial crunch. For people with ADD, this feeling of panic is magnified, especially when people generally considered financially savvy are now filing for bankruptcy.
Money Management Skills Can Be Learned
Up to this point in the book, the information you have read may seem pessimistic. However, just by being aware of the relationship between ADD and money management, you are headed in the right direction. Money management can seem scary and daunting at first, but after you jump in, you usually find that you have more money (and hope) than you originally thought. And there is something powerful about being able to know how much money you have in the bank and watching that amount grow due to your newly honed money management skills.
It’s important to remember that money has no intrinsic value. It is neither good nor bad; it just is. Money is simply a tool for obtaining the things you need and want in life. When you take away the emotional value you have placed on money, it can be much easier to deal with it. Remember that from this point on, you are starting anew, regardless of the difficulties you have had with money management in the past.
Why This Book Is Useful
The goal of this book is to help free you from money worries and increase your ability to be financially successful. You may have suffered from insomnia due to anxiety over how you are going to pay this month’s bills, save up enough money for retirement, or avoid foreclosure and/or bankruptcy. When you have a good grasp of your money situation, you are able to sleep better at night—money worries no longer wake you from your slumber.
Most people with ADD tend to be competitive, so it helps to view money management as a kind of game: you and your money are on one side of the field, and banks, lenders, and creditors are on the other. This book will help you understand the game so that you can not only learn to "play" it successfully, but can also work cooperatively with the other "team" to further ensure your success.
Inside This Book
In the first chapter, you will learn how your money management challenges affect your relationship with your spouse or partner. Chapter 2 details how life events such as marriage and divorce (which happen at a higher rate in the ADD population than in the general population) affect finances (Barkley, Murphy, and Fischer 2008). People with ADD can have difficulty visualizing long-term needs, so in chapter 3, you will learn about financial planning for your future, including your retirement. Chapter 4 gives details on investing in a way that is understandable and applicable to your life. You will also learn about the different types of financial professionals and how they can best help you. Chapter 5 will help you organize your money in a way that is ADD-friendly, including offering solutions for the zillions of receipts that take up space in your home.
Chapter 6 will show you how to set up a budget that you can follow and stick to over time. Chapter 7 will teach you the joys of rational spending, including information on what you definitely don’t want to skimp on. Chapter 8 will tell you about the different types of debt and teach you how to get control of the debt in your life. You will learn about bank services, including electronic banking, in chapter 9, and chapter 10 will give you tips on teaching your kids about responsible money management. There is also a Resources section at the end of the book.
Money Terms Used in This Book
You may be familiar with several of the terms in this book, while other terms may leave you scratching your head in confusion. Here’s a quick glossary:
- Asset—any valuable item, especially something that can be converted into cash
- Bankruptcy—a legal process whereby a judge eliminates your debt or creates a payment plan that you must follow
- Budget—a realistic list of your expected income and expenses for a certain period of time
- Debt—a promise to pay or give something back to another person Mortgage—a loan to finance the purchase of real estate (typically with periodic payments and a stated interest rate) along with an agreement to sell some property, usually a house or condo, if you fail to pay the loan back on time
- Insurance—an agreement a company makes that, in exchange for a small payment from you, the company agrees to make a much larger payment in case of a loss
- Investing—putting money or capital into a business with the expectation of profit
- Loan—a promise to pay someone back if they give you money (called a promissory note if written on paper)
- Will—a legal document that says what should happen to your personal belongings and money after your death