Cash, Impulse Spending, and ADHD

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 cashMoney in physical form such as banknotes and coins. More 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 moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More 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).

• Two-thirds (65%) of diagnosed respondents said ADHD makes managing finances more difficult due to impulse purchases (58%), difficulties in maintaining a budget (51%), and struggling to save money (49%).
• Most individuals with ADHD (60%) estimated that, on average, impulse spending and forgetfulness cost them ₤1,600 per year.
• More women (72%) reported ADHD affected their finances compared to men (56%). ADHD costs women ₤200 more per year than men (₤1,695 compared to ₤1,494).
• A small minority (19%) thought their banks gave them enough tools to manage their finances.

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:

• Testimonies collected by ADDitude magazine evidence this: “I use only cash to purchase things,” said Marilyn from Illinois. Renate from Colorado recommends “cutting up credit cards,” and Linda from Pennsylvania “wrote the word ‘think’ on [her] credit card in permanent ink.”
• Financial planner David DeWitt recommends people with ADHD pay down their credit card balances and stop incurring debt. “Cut up your cards. Lock them away. Freeze them, literally. Take all your cards off all of the sites that you buy things from. Yes, even your Apple Wallet.” DeWitt recommends using only debit cards and cash for at least three months” as a “weaning period” to avoid spending more and getting into debt.
• “Think about leaving your credit and debit cards and checkbook at home, or only bring the minimum amount of [physical] money you’ll need,” recommends CHADD, a U.S. charity. People with ADHD should store their credit cards at home, freeze them to act against the urge to use them and cancel all but one for emergencies.
• Erica Sandberg from Creditcards.com recommends carrying cash and opting for prepaid cards instead of credit cards: “Try withdrawing the amount you need for the week to establish a cash-only habit. Incorporate charging only when you feel comfortable living and spending within that sum.”
• WebMD recommends “cancelling all but one [credit] card” to simplify bills. “Credit cards make it easy to spend money impulsively. If you have access to cash, use that instead of relying on your credit card. Try withdrawing a set amount of cash for weekly spending. Meanwhile, you can store your credit cards in a safeSecure container for storing money and valuables, with high resistance to breaking and entering. More, difficult-to-reach place. You might consider asking a trusted partner or friend to hold onto them.”

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.

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