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How to Budget in 10 Steps
For most people — especially impulsive and energetic people with attention deficit disorder (ADHD or ADD)— even the thought of sitting down and creating a budget sparks dread and anxiety. What's more monotonous and depressingthan meticulously calculating exactly what you can't afford? But figuring out a personal finance plan that you can live with doesn't have to be torture. With our 10-step guide, you can create a money planthat will keep from spending too much money, and leave a little room for the occasional splurge.
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1. Define the Budget
Sit down and define what "budgeting" means to you, and why you need it. Be honest with yourself, and admit if you inherently hate the word. Then re-position the budget as a necessary step that will let you plan ahead, and not worry about having money to pay your bills. Make a list of 10 good reasons to create healthy spending habits, then frame it and put it where you pay your bills. Individuals with ADHDthrive with specific action plans. This is your financial to-do list.
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2. Don't Spend More Than You Make
The key to an effective budget? Spend less than your total income. Sounds simple enough, but it actually requires careful financial record keeping — not usually our strong point.For one month, record every purchase you make. Get a receipt whenever possible, record your checks,and print out receipts of online purchases immediately. Consider using a service like Mint.com orSlice to help you keep track of spending on the go. [Self-Test: Could You Have an Executive Function Deficit?]
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3. Tally Up Your Lessons Learned
During your month of tracking, use a money journalto increase your spendingawareness — and question whether eachpurchase is worthwhile. Adults with ADHDare prone to overspending, especially during the holidays. Willpower alone can't stop it. Instead, take five minutes a day to write down who you are buying for, and set a cap forhow much you will spend. Record your feelings when you make certain purchases.
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4. Ask, 'What Can I Change?'
At the end of the month, review your journal and look forpatterns in your spending habits.Look at what you spentmoney on. Ask yourself:
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5. Cut Costs
Certain costs, of course, are fixed. So look for discretionary places you've been splurging. Did you buy new books, even though your shelves are groaning under the load of unread ones? Did you buy another outfit, even though your closet is full of clothes you've barely worn? Did sale items lure you in? Or did you go crazy at the grocery store?
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6. Devise Solutions
Try these ideas toavoid overspending: If your bank kills youwith administrative fees, change to a free checking account and set up automatic bill paying. If you're making impulsive purchases, leave credit cards and extra cash at home. If it's ADHD treatment that's draining your wallet, look into state programs that help cover the cost of medical expenses, plus tax deductions. [Self-Test: Could You Have an Executive Function Deficit?]
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7. Create Your Budget
Now, it's time to list out all of your expenses — fixed and discretionary — for a typical month. Aim to save 10 percent of your monthly income, and always have three times your spendable income (after taxes) in the bank just in case.Then, adopt an attitude of gratitude. Your budget meets your basic needs, so you're not "doing without." You'll be more likely to stick to the plan if it includessome fun spending, too.
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8. Plan for Budget Busters
No matter how well you plan, unexpected events and emergencies are bound to pop-up. The best budgets account for this. Take preventative measures to stave off big expenses. See a doctor regularly to manage your family's health. Complete routine maintenance on your home and car. Have extra money set aside, just in case, for when these events inevitably occur. Include the amount in your savings budget.
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9. Organize the ADHD Way
Keep your financial documents in order all year long so you can get the best tax refund possible. Use an ADHD-friendly system. Have a folder for each month to store critical financial records. Color-code any additional folders for the type of document they hold. Bribe yourself with a special treat to ensure that you organize the papers once a month.
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10. Get Help When You Need It
Many people find it helpful to usea computerized financial program like Microsoft Money or Quicken. If you need help using the software, or if you're overwhelmed by the process in general, consult an accountant or financially savvy friend. You can also find advice at websites likeMint and LearnVest. [How to Reduce the High Cost of ADHD Treatment]
