How to Make a Budget When You Have ADHD

The definition of a budget is:

“A plan of how a certain amount of money will be spent during a period of time.”

Usually, the amount of money is your income and the amount of time is a calendar month.

Money management is one of those important life skills that we aren’t formally taught at school. Yet, if it doesn’t come naturally to you, there are negative consequences. ADHD adults find money management challenging because it requires attention to detail, organizing, planning into the future and impulse control. There can often be shame too; perhaps because you don’t feel in control of your finances, you don’t earn as much as your peers or you have debt.

A great step to taking control of your finances and becoming a money manager is to have a budget. I know that word can make you feel constrained and agitated. However, budgets aren’t a punishment.

Benefits of having a budget when you have ADHD:

1. Empowers you to spend money on items and experiences that are important to you.
2. Impulsive spending is reduced.
3. Gives you a framework to help make decisions.
4. Reduces worrying about money.
5. Allows you to spend without guilt.
6. Having rules to follow which feels empowering.
7. Relief from shame about the topic of money and spending.
8. Money doesn’t ‘disappear’; you know where it went!

As you are reading this, I am sure some ‘yeah, but’s’ are popping into your head. Maybe because you think:

1. I am not good at Math.
   The maths involved in creating a budget are simple additions and subtractions. There are no complicated fractions or algebra.
2. I don’t earn much money.
   You don’t have to wait until you earn a certain amount before learning how to be a money manager. In fact,it’s better to learn it now; for 2 reasons:a) When your income does increase,you will already have all the skills in place so it won’t just ‘disappear’.b) When you feel good about how you manage your money,your self-esteem improves, worry is reduced and you feel empowered. You don’t have to wait for a rainy day to experience these benefits.

3. I have too much debt, I shouldn’t be spending anything.
   Even if you have debt, you still need to eat, and pay rent, etc. When you create a budget, it will allow you to pay the debt off faster and help you feel less guilt and shame day-to-day.
4. I am too scared to ‘look’ at my finances.
   This is very common! Nevertheless, it is important to know what is happening in your financial life, no matter how scary it seem. I know quite a few ADHDers who did not dare look at their finances and as a result, the situation got scarier! For example, a $90 parking ticket became an $850 ticket because of late payments. An unpaid $35 store credit card, affected their credit rating, which had more negative consequences.

Whatever your objections to creating a budget are, it’s normal. Becoming confident in money management is as much an emotional issue as it is practical.

Here are some steps action steps:

Step 1 – Rename
Because the word “budget” is such a weighted word, the first step to creating one is to give yours a good name.
Here are a few suggestions:

• Spending Game Plan
• Project Money Management
• Cash Flow Plan
• Peace of Mind Method
• Ninja Money Manager System
• Financial Freedom

Play around with names until you find a name that makes you feel happy, organized and excited. This isn’t a frivolous step! It’s vital for your money management success.

ADHD Entrepreneur, Joe Polish, calls money ‘fun tickets’ because it allows him to have fun experiences.

Step 2 – Incoming
In order to know how much you can spend and save, you need to know how much is coming to you each month. If you are getting a monthly or bi monthly pay cheque, knowing how much you earn is relatively easy. If you work for yourself or are on contract, then you might have a solid figure. One way around that is to look at your past income for last year, then divide that figure into 12 to give you a monthly figure to work with.

Step 3 – Outgoing
Now it’s time to work out what your expenses are. These usually fall into the following categories: fixed, semi-fixed and unfixed.

Fixed amounts
Fixed amounts are the amounts that are the same every month. For example, your mortgage or rent, car payment, student loans, etc.

Semi–fixed amounts
Semi-fixed amounts are those amounts that are somewhat fixed, but they could change a little depending on your behaviour. Your cell phone bill, public transport, internet could be in the semi-fixed category. In the example of your cell phone, you probably have a package with a fixed monthly amount, but you might go over during some months if you went out of town or went over your download limit.

Unfixed amounts
Unfixed amounts are the expenses that trip up most ADHDers. It’s where does the rest of the money goes: restaurants, bars, taxis, clothes, ATM fees, video games, gas, gifts, etc. These aren’t decided for you by a 3^rdparty, such as your landlord or cell phone company. These are amounts that you have to decide for yourself; which can be problematic.

ADHDers don’t usually know how much to allocate for each category or even what categories they should have. There are suggestions online, and they are helpful. Though, a mother of 2 children will have different categories and values than a new graduate living in the city.

Here is how to solve this problem. For the next 7 days, track everything you spend. It’s not forever; just 7 days.

You can write it in a notebook, or in your phone; it doesn’t matter where.
– If you have an $18 cab ride, write it down.
– If you spend $45.19 at the grocery store, write it down.
– If you take out $20 at the AMT, don’t write that down. But do write down what you spent that $20 on.

I have to say, this isn’t easy; but it is doable. Even people who said they never thought they would be able to do this because their ADHD was ‘so bad’, have been able to do it.

That information is like gold, because you know ‘where your money goes’. From there, you can work out what categories your budget needs and how much you can put in each category. We will go into greater detail next week,when you have your 7 days of spending data!

Actions step for this week:

1. Pick a new name for your budget.
2. Work out your monthly income for the month.
3. Work out what your fixed expenses are.
4. Work out what your semi fixed expenses are.
5. Track your spending for 7 days.

Good luck!!!