Seeking financial well-being after money troubles
What is the ADHD tax?
“My missed deadlines for student loan repayments cost me about $50,000.”
“I had to go to the city courthouse for overdue library books. The library books were in the trunk of my car and they belonged to the library I passed by every day on my way to work.
“I’m years behind on taxes.”
“I waste so much time doing errands that end up going bad. I waste even more money buying fast food.
“I feel like a bad person because of my money management failures.”**
These comments from ADDitude readers demonstrate how the symptoms and traits of Attention Deficit Hyperactivity Disorder (ADHD) – from impulsiveness to forgetfulness and even emotional dysregulation – translate to very real financial consequences. This is why people with ADHD, compared to their non-ADHD peers…
- …are in a more precarious financial situation and have difficulty making financial decisions.1
- … have weaker skills and financial capabilities.1
- …are more financially dependent on family members.2
- … earn less and achieve lower socio-economic status over their lifetime.2 3
Hence the “ADHD tax” – a term that refers to the obvious and hidden costs of living with the condition.
But the ADHD tax isn’t just collected in cash. Other costs associated with ADHD — like constant guilt and shame, compromised relationships, and poor self-esteem — often weigh more and do more damage than any monetary penalty ever could.
[Read: How Do You Pay the “ADHD Tax?”]
The ADHD tax is taking its toll, but we’re certainly not helpless. (I say this as an adult with ADHD who has paid the ADHD tax far too many times.) We can take steps to manage the symptoms that cost us the most – financially and emotionally.
How ADHD Tax Appears: Signs and Consequences
You can trace each time you paid the ADHD tax to one or more of the following ADHD symptoms or traits:
- Intention-action gap. Russell Barkley, Ph.D., thought “intention deficit disorder” might be a better name for ADHD because it reflects our endless struggle to make decisions (i.e., not do what we know we should do). We plan to have the car’s oil changed. But we don’t, for some reason. Ultimately, that neglected oil change becomes a wrecked engine that breaks the bank and/or leaves us without a car.
- Analysis paralysis. Acting on a decision is a big problem, but so is decision-making. This is a problem often linked to perfectionism, procrastination and difficulty in prioritizing. Many adults with ADHD, overwhelmed by the decision ahead of them, simply stop and delay action further. Cue mountains of paperwork and unopened invoices.
- Forgetfulness and disorganization. How many times have you been blindsided by non-refundable fees after forgetting to cancel a trial subscription? (Maybe you forgot you signed up for one?)
- Impulsivenessusually in the form of less well thought out purchases.
- Think now versus not now. Due to time blindness (and related to the intention-action gap), we seriously reduce the impact of our current choices on our future in favor of instant gratification.
Of course, the ADHD tax translates into everyday annoyances like wasted errands, overdrawn accounts, and late payments. But we must not overlook its long-term costs and other far-reaching hidden consequences.
[Read: How to Spend Less When the ADHD Brain Wants More, More, More]
- Professional issues. From job hunting to navigating job interviews and the workplace itself, people with ADHD struggle with virtually every aspect of employment.4 Careless mistakes can overshadow other work contributions and affect performance reviews. Social challenges and emotional dysregulation make it difficult to connect with co-workers and manage work-related stress. Rejection-sensitive dysphoria can result in missed opportunities and risk avoidance that could make or break a career. Overall, difficulties meeting workplace expectations and keeping a job make career advancement harder – and part of why adults with ADHD earn less over their lifetime compared to their peers neurotypical.
- Damage to credit profile. Missed payments, high credit card balances, collections and other factors can hurt credit scores, which comes with a long list of downsides: high interest rates on loans, applications loan rejections (think car, house, etc.), difficulty getting approval for an apartment, and even a delayed retirement.
- Relationships. The stress of financial burdens costs us our bonds with family, friends and other loved ones, which only diminishes the quality of life.
- Self love. The guilt and shame associated with too many ADHD tax encounters lowers our self-esteem. You might even be digging yourself into a deeper money pit in an effort to keep up appearances and cover up signs of trouble.
How to Reduce the ADHD Tax Burden
Avoiding the ADHD tax altogether might be impossible. (ADHD wouldn’t be ADHD without it.) But a solutions-based mindset goes a long way, as do these tips for minimizing the ADHD tax you pay and mitigating its long-term consequences.
1. Take it off your chest. There’s nothing more therapeutic than admitting a problem and confessing all the ways you paid the ADHD tax. Thinking about how the ADHD tax has impacted your life will allow you to realize your current reality and begin to find solutions. Ask yourself the following questions to encourage self-reflection:
- On a five point scale, with five being the most painful, how much pain has the ADHD tax brought to my life?
- What are my main emotions related to the ADHD tax? Guilt? Shame? Blame? Anger? Frustration?
It’s even nicer to share your ADHD-related tax defeats and triumphs through support groups like those organized by ADD ONE and CHADD. Rena Fimy financial wellness company, hosts classes, expert presentations, and group coaching for people with ADHD.
2. Start small. You can pull yourself out of the ADHD tax hole, no matter how deep, one small, consistent step at a time. (“Slow down to go faster” is my motto.) Think:
- Where do I pay the most consistent ADHD tax? Spoiled races? Replace lost items? Late fee?
- What is one thing that I can change or address right now?
- What will help me to change? A responsible partner? Set up automatic payments? Revisiting my grocery list and shopping habits? Meeting with a credit counselor? Delete a shopping app?
3. Bridge the gap between “now” and “not now”. The gap between intention and action is at the root of so many of our ADHD tax encounters. Whether you feel the need to spend impulsively or delay an urgent decision, ask yourself the following questions to connect with your future self:
- What would my future self think of this decision? (Or non-decision?)
- If I continue to avoid taking action, what opportunities will be taken away from me?
- If I act now, what opportunities will come my way?
4. Embrace discomfort to overcome paralysis. Procrastination has more to do with difficulty regulating emotions around a task than with time management. Receiving another letter from the IRS, for example, naturally arouses fear. But rather than adding it to the pile of unopened reviews in an effort to avoid negative feelings, allow yourself to feel uncomfortable. Open the letter right away. Chances are the letter will say you owe X and offer next steps.
Think of discomfort as an alarm alerting you to worse outcomes down the road. It’s a warning to act on the discomfort before excruciating pain (perhaps in the form of an IRS levy) acts on you.
Often it’s the rustling in the bushes that creates more anxiety than tackling what’s in the bushes head-on. You will find that one easy step leads to another. Before you know it, you’ve snapped out of paralysis and into action.
This mindset can also help you prioritize and reduce overload. Last year’s IRS letter at the bottom of your unopened mail pile might be a moot point today.
5. Optimize your ADHD treatment and management. If ADHD is really causing difficulties in your life, then take ADHD seriously.
- Have you been correctly and completely diagnosed? Are you taking the best medications and doses possible?
- ADHD rarely travels alone. Could you have a concurrent condition, such as anxiety or a sleep disorder, that could explain some of your challenges?
- Could you benefit from seeing a therapist?
- Could an ADHD coach help?
6. Create an ADHD-friendly environment. Strive to lead a life that suits you. (It won’t happen overnight.)
- Develop habits, routines, and systems that decrease your chances of getting the ADHD tax. (See #2 above.) Aim for simplicity.
- Take a hard look at the other facets of your life — from your job to your social circle — that aren’t serving you.
- Don’t forget the essentials essential to a life well lived: nutrition, exercise, sleep, and stress management.
Get RenaFi free tax worksheet for adhd for even more strategies.
ADHD Tax and Financial Wellness: Next Steps
The content of this article is derived, in part, from the ADDitude ADHD Experts webinar entitled “The ADHD Tax: How to Avoid Late Fees and Other Costs of Forgetfulness and Impulsivity” [Video Replay & Podcast #419]with Rick Webster, aired August 30, 2022.
** Quotes are from webinar participants and have been edited for clarity and length.
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1 Bangma, DF, Koerts, J., Fuermaier, ABM, Mette, C., Zimmermann, M., Toussaint, AK, Tucha, L. and Tucha, O. (2019). Financial decision making in adults with ADHD. Neuropsychology, 33(8), 1065-1077. https://doi.org/10.1037/neu0000571
2Altszuler, AR, Page, TF, Gnagy, EM, Coxe, S., Arrieta, A., Molina, BS and Pelham, WE, Jr (2016). Financial dependence of young adults with childhood ADHD. Journal of Abnormal Child Psychology, 44(6), 1217–1229. https://doi.org/10.1007/s10802-015-0093-9
4Adamou, M., Arif, M., Asherson, P., Aw, TC, Bolea, B., Coghill, D., Guðjónsson, G., Halmøy, A., Hodgkins, P., Müller, U., Pitts , M., Trakoli, A., Williams, N. & Young, S. (2013). Occupational problems of adults with ADHD. BMC Psychiatry, 13, 59. https://doi.org/10.1186/1471-244X-13-59