Adult ADD and Money

Financial Literacy Quiz

During my tele-seminar that I had on Tuesday, one of the areas that I discussed was making sure that you have basic financial literacy and a full understanding of all of the financial agreements and accounts that you currently have. One way to test your financial literacy is to take this financial literacy test that I found on SavingAdvice.com. The test was given to High School Seniors in 2006. The average score of the high school seniors was 52.4%. I took the test and I got 93% of the questions right. The average score of people taking the test is 70%. If your score is closer to the high school seniors that perhaps you might want to read a little more about finances.

Decision Making and Money Management

Decision making is a core skill that you need to develop in order to properly manage your money. At its root, money management is about making choices about earning, spending, and savings your money. Adults with ADD tend to have more difficulties with decision making than the rest of the population. When reading about money management, I think that most authors tend to assume that everyone who is reading their article has good decision making skills. The good news is that you can improve your decision making skills, here are a few tips to make better decisions:

1. Recognize when you are making a decision. Impulsive or habitual decisions are often overlooked when trying to figure out why you don't have the money to do the things you really wanted to do. Every time you buy a cup of coffee or buy a new DVD you are making a decision.

2. What do you really want to do? Developing goals and values will give you a framework to analyze your decisions. It is easier to make a better choice when you know what you really want.

3. Understanding the consequences. Any decision has the potential for both negative and positive consequences. Focus on the positive benefit of making a decision. For example if you had to decide between paying a student loan or your credit card on time, and you decided to pay your credit card, focus on the fact that you avoided the late fee and your interest rate did not go up, rather than the fact that your student loan is late. You need to realize that just because something negative happened as a result of your decision, it does not mean your decision was a bad one. Sometimes decisions have negative consequences no matter what you decide.

If you are able to consistently make better decisions with managing your money, it is very likely that your financial situation will improve over time.

Repost : Taxes are Taxing

I know you still have about two months until you have to file your U.S. tax forms, but now is a good time to think about taxes.  Many adults with ADD would rather scrub the floor with a toothbrush then work on preparing their taxes. Here are some tips to help make taxes less taxing: ( pardon the pun)

1. Set up a folder ( green, black, or red are good colors) or a box where you will put all of the tax forms that you are receiving now and put it with all of your other important documents.

READ MORE >>

Deal a Dollar

My friends do I have a money management system for you, it called deal a dollar. The system is so easy, when you get paid, you first write checks to cover all of you bills, then you leave a little money into your savings account, after you have done that you can withdraw the rest of your funds in dollars. These dollars come in denominations from one dollar all the way up to one hundred dollars.

Remember the system is easy, whenever you want to buy something you just deal your dollars to the cashier. When you run out of dollars you are through with spending till the next payday. This is not a spending diet it is a spending system that you can use for the rest of your life. Buy my one page book on the deal a dollar system for only $19.95. NO C.O.D's

One challenge that many ADD adults is that they tend to hyper focus on the system rather than the execution of the system. While it is true that you will not have success with a poor money management system, it is relatively easy to set up a good system (not a perfect system) where you will be successful. If you are having problems with sticking to a budget there are often underlying emotional issues or habits that you have to deal with before you can stick to a good plan.

   

Rainy Day Savings Made Easy

By Jennifer Koretsky at ADD Management and Experiencing ADDvantages.

Now that the holidays are over and your December credit card bills are coming due, you may be kicking yourself for overspending.  You always say you won’t overdo it on the gifts, but you do. 

And that holiday money that rich Aunt Edna and Uncle Frank sent?  Well, you planned to put it towards a family vacation, but where did it actually go?  A new iPod for you?  A Nintendo Wii for the kids?  Or just some extras here and there that you didn’t even pay attention to as you added them to your shopping cart?

You have good intentions about saving money for some special things that you don’t want to buy with credit, but somehow all your extra cash finds its way out of your pockets. If you’re an impulsive spender, then “saving money for a rainy day” can be a hard thing to do.  Unfortunately, this is a common problem for adults with ADD.  However, new options in online banking can provide a solution!

Many banks now offer online savings accounts with high interest rates and no fees.  The most popular example is probably ING Direct, but most big banks offer something similar.  (I use HSBC Direct, for example.)  For many people, the benefits of using these accounts far outweigh the drawbacks. 

Because online banks have low operating costs, they can afford to provide you with higher interest rates and little or no fees. And good online banks (like ING and HSBC) are FDIC-insured, just like your local bank. 

Additionally, you may be able to set up automatic transfers from your local bank account to your online savings.  This way, if you plan to save $25 a week, the money is whisked away into your savings before you even have the chance to miss it!

The only drawback to online savings accounts is that you can’t visit a local branch when you want to deposit or withdraw money.  Your local bank account is linked to your online savings account, and transfers to or from this account are done over the Internet or on the phone.  These transactions can take a day or two to process. 

This “drawback,” however, is actually a benefit for the ADDer who spends impulsively.  If you’re keeping your savings in an online account and you see a fabulous new gadget that is begging you to take some of that vacation savings and buy it, your impulse is halted by the fact that your cash is not readily available for spending.  You have to process a transfer to make the money available, which requires going home and getting online and, by then, your impulse to spend has most likely been curbed.  The cash is there should an emergency arise, but it’s not at your disposal when something unexpected catches your eye on a shopping trip.

Online savings accounts are a great way to save for a rainy day!  Compare interest rates and fees before you choose a bank, and be sure that your bank is FDIC-insured.  You’ll be surprised how quickly your savings builds when you protect it from your impulses!

ADHD and Investing Mistakes

One request that I get from adults with ADD is for advice and information about investing. The investing aspect of money management can be very stimulating; it is also an aspect where mistakes can be very costly. Here is a list of 3 investing mistakes that adults with ADD are often more susceptible to.

1. Not paying off high interest loans before investing.
Paying off high interest loans is usually the best investment that you can make because you can get a guaranteed return between 10 and 25%. The impulsive ADD adult can often overlook paying off loans because investing can be more exciting and stimulating.
2. Emotional Investing
ADD adults often rely on their gut feeling when it comes to making decisions. They also tend to invest heavily in people and companies that they believe in. While these are not negative qualities, they can have negative consequences. ADD adults are more susceptible to investment sales pitches pushing products that are not a good fit and/or have high commissions and fees. ADD adults need to make sure that they are not investing too much money into their business or their employer’s stock. Making sure that you have a proper investment mix is important in order to protect your investments. The impulsive nature of ADD adults makes them vulnerable to investing based primarily on the recent history of an investment. It is important to evaluate all aspects of an investment before you decide to buy or sell.
3. Lack of understanding
There are a lot of boring details involved when deciding what investments to invest in. It is easy for ADD adults to get overwhelmed with the details. However if you do not understand what you are investing in, you run the risk of not getting what your investment is worth, getting overcharged for fees, or losing your total investment.

Buying an Automobile

Jennifer Koretsky at The ADD Business Owner, wrote an article about her frustrations with dealing with typical automobile dealerships. I am sure the most of you have dealt with or know of someone who has dealt with deceptive auto dealers. The big question we should be asking ourselves is: If we know that many auto dealers use deceptive and confusing tactics, why do they continue to stay in business?

The are two main reasons why some auto dealers use deceptive and confusing tactics:

1. These tactics work on people who do not know exactly what car they want, or people who have not done the proper research about buying a car in general, and about the specific model they want.

2. Car buying can be an emotional decision, and people can be easily manipulated by the pressure tactics that some salespeople use.

Adults with ADD are prone to making impulsive decisions and can be overwhelmed by figures and paperwork, this makes ADD adults prime targets for less than honest dealers. Before going out to buy car you need to understand exactly what you want, how much it should cost, and what to expect from the car buying process. Here are a couple of good web sites dealing with how to purchase an automobile:

1. 10 Steps to Buying a New Car (edmunds.com)

2. Buying a New Car (Better Business Bureau)

3. Buying a New Car (Federal Trade Commission)

Why Traditional Advice on Money Management might not be right for Adults with ADD Part 2

A good piece of financial advice that many experts will tell you to do is to create a household budget. When many adults with ADD think about a traditional budget they cringe at the thought of doing a lot of math and breaking down budget items to tiny details that they have to monitor. While Budgets are not ADD Friendly you still need to have an idea of how you plan to spend your money. Adults with ADD respond well when they visualize process information. Money planning techniques include:

1.  Putting the money you want to spend on different areas in envelopes

(One envelope for housing, one envelope for food, one for transportation, one for savings, one for spending on yourself, etc.)  This helps with overspending because once you spend the money in the envelope you realize that you should not spend anymore on this are until you get more money.

2. Tracking Income and Expenses using a calendar.

This will visually remind you what bills are due in the future.

3. Using Separate Bank Accounts to track spending on specific areas.

Some people I know have a separate bank account for the day to day expenses and another account for the monthly obligations that they owe. They fund the account for the monthly expenses that they know about, and the rest is in a separate account. This way they do not have to worry about having cash available for the regular bills they owe and the other account puts a cap on the day to day expenses that Adults with ADD can easily lose track of.   

see previous entry Why Traditional Advice on Money Management might not be right for Adults with ADD Part 1

Why online banking is good for ADD adults

Here is a list of reasons why adults with ADD should be doing all of their banking on-line:

1. No need to balance your checkbook.

If you combine making on-line payments with making purchases via a debit card, you will not have to write a check ever again. Since on-line payments and debit cards purchases are taken directly out of you account, you can always find out your true balance just by going on-line. Most adults with ADD have difficulty with tedious tasks, this is one task you can avoid simply by switching to on-line banking.

2. Ability to automatically pay bills.

Adults with ADD have a poor perception of time and when bills are due.  By setting up to pay your bills automatically you do not have to worry about forgetting to pay your bills. With on-line banking you can set up to automatically pay recurring bills on the same day each month. You can also allows utilities and other companies to automatically deduct your monthly bill from your bank account. If you are living paycheck to paycheck with no wiggle room in your check book it is not a good idea to let companies automatically deduct money from your account, if there is no money in your account you will be charged a fee similar to the one you would get for bouncing a check.

3.  Reduces clutter

Adults with ADD have a hard time with organization. By switching to banking on-line you no longer need to get a statement each month. It is one less ting you have to worry about filing or losing.

4. Reduces the time you need to complete your financial tasks.

Adults with ADD have difficulty completing multi-step tasks. By paying your bills on-line you no longer have to write out a check, address an envelope, put a stamp on an envelope, and mail the envelope. While all of these steps are simple it is easy to get distracted or forget one of these steps causing you bills to be paid late.

Preparing a Net Worth Statement

One of the first keys to any type of planning is knowing where you are today.  You can't figure out directions on a map without knowing your starting point and an ending point (your goals).  In order to find your financial starting point you need to figure out your household net worth. Preparing a net worth statement can seems like a daunting task to many adults with ADD.  However it is pretty easy to figure out, all that you have to do is figure out what you own and subtract it from what you owe, this is your net worth.  If someone else in your household is handling your finances you might want to have them prepare this so that you can discuss your household's financial goals with them.  I have attached a net worth calculator from Kiplinger to help you with preparing a statement of net worth.

http://www.kiplinger.com/personalfinance/tools/networth.html

http://www.kiplinger.com/personalfinance/basics/archives/2003/02/networth.html