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Cash, Impulse Spending, and ADHD

Categories : Cash facilitates budgetary control, Cash is available to all users, Cash is the first step of financial inclusion
October 18, 2023
Tags : ADHD, Cash, Costs of payments, neurodiversity, Social Inclusion
People with attention deficit hyperactivity disorder (ADHD) often engage in impulse spending with credit cards. Cash is a powerful tool to help them manage their budget.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – Mexico and South America, University of Oxford

This post is also available in: Spanish

Credit Card Debt and a Late-Adulthood ADHD Diagnosis

“I have to really remind myself this is not something to feel ashamed about – it’s just about finding ways of making financial things easier and more approachable for people like me.” – Hannah Crawford, theater producer living with ADHD.

I racked up a credit card balance to cover expenses while I lived in New York City to pursue a Ph.D. I thought carrying credit card debt balances made sense, as I would pay them off when I had a job. However, it took two years to pay off my credit card balances. Then, I learned to track my expenses, left my credit cards at home, and only carried cash when going out, facilitating budgeting.

Those habits have stuck with me since. Credit cards are easy to use, but they make it easier for all consumers to spend more money than when they pay with cash. I did not grasp how easily I accumulated credit card debt until I recently received a diagnosis of attention deficit hyperactivity disorder (ADHD).

People with ADHD “can seem restless, may have trouble concentrating and may act on impulse,” says the U.K. National Health Service (NHS). ADHD is a condition that impacts organizational skills and executive functions such as learning, attention, memory, and self-control, manifesting in impulsivity, inattention, procrastination, and hyperactivity. The number of ADHD diagnoses in adults has grown as awareness has increased in recent years.

ADHD and Impulse Spending

“In ADHD, people tend to make slapdash decisions which often leads to overspending.” – Dave Coghill, University of Melbourne.

My diagnosis has shed light on how ADHD impacted my financial well-being. People with ADHD often have difficulties budgeting and paying bills, as we prefer smaller and immediate rewards over larger and delayed rewards (excessive delay discounting or hyperbolic discounting in behavioral finance).

People with ADHD and individuals with “financial trauma” often engage in impulse spending as purchases increase the production of the neurotransmitter dopamine, hampering self-control. “Financial trauma” refers to intense anxiety and negative thoughts caused by past and current financial insecurity and economic crises.

ADHD symptoms correlate directly with credit card balances carried, late credit card payments, and use of pawn services (Beauchaine, Ben-David, Sela 2017). Individuals with severe ADHD symptoms during childhood are more likely to have difficulty paying bills and to be delinquent on bill payments, causing financial distress in adulthood (Liao 2021).

ADHD and Financial Habits

The ADHD tax “is ‘the price you pay for costly mistakes due to symptoms of ADHD’ and can include parking tickets, high-interest credit card debt, a low credit score, excessive spending on high dopamine foods, and last-minute taxi bookings.” – Eleanor Noyce, The Independent

Last year, the digital bank Monzo commissioned YouGov to survey the financial habits of 506 U.K. adults living with ADHD and 2,068 adults without an ADHD diagnosis. The survey showed that individuals with ADHD are twice as likely to experience financial anxiety as those without a diagnosis (see Chart 1).

Chart 1. United Kingdom: Financial Habits and ADHD, 2020

Sources: The Guardian (2022), Monzo (2022).

Cash Helps Controlling Impulse Spending

“When all your banking is online and you don’t use cash, it can really build up and cause a lot of problems.” – Hannah, 31, diagnosed with ADHD in 2020.

Many people with ADHD recommend using cash and forgoing paying with credit cards altogether:

My ADHD diagnosis has reinforced my use of cash in daily payments. Cash helps me control my expenses, as it prevents me from overspending. If anything, my diagnosis has reinforced my conviction that preserving cash is critical to ensure my basic right to financial well-being in a world where digital payments proliferate.

This post is also available in: Spanish