ADHD and the Impact on Long-Term Financial Goals
“Adults with childhood Attention Deficit Hyperactivity Disorder (ADHD) are expected to earn $1.27 million less than adults without a history of ADHD, over their lifetime, potentially reaching retirement with up to 75 percent lower net worth.”~ APA PsyNet
It's a daunting statistic, isn't it? When I first came across it, my heart skipped a beat. The average net worth of Americans in 2022 was $1,063,700. Now, imagine if we could bridge that gap. If we could help those with ADHD learn to manage their finances effectively, that $ 1.25 million could be invested and earning 7% (the average stock market return over the past 30 years) over 10 years, potentially reaching a staggering $2,458,939. That's not just a number; it's a world of possibilities that those with ADHD could tap into.
What causes this deficit? It may be that we change jobs more often than others because we are looking for novelty. We get bored and need a new adventure. So, we are losing seniority and starting back at the lower tiers of our jobs. It may be that those with ADHD have an entrepreneurial spirit. And let’s face it, it can be a challenge, requiring many executive functioning skills to keep us moving forward in our pursuits. It simply could be that we have a hard time with long-term goals. I’m not sure of the reason those with ADHD learn less than their peers, but it is affecting our financial health.
Long-term goals are anything that is over a 5-year period. So, saving for retirement is definitely a long-term goal. Depending on how much you want to save, saving for a down payment for a home could also be one—saving for your kid’s college counts, too. Looking that far into the future is difficult for those with ADHD. We have what Dr. Barkley refers to as “Time Blindness.”
What is time blindness? It is our ability not to perceive time. The further something is away, the less we think about it. It’s kind of like out of sight, out of mind, when it comes to things in the future. Time blindness also refers to not realizing how long it takes to do something, showing up late to events, or super early. Managing time is an executive functioning skill.
Why are time blindness and long-term financial goals related? Because most financial goals are long-term, more than five years, we have difficulty planning the next week! Let alone what we will need to have saved over five years in the future. Let’s not discuss how far away retirement is when you first graduate college- 40+ years. How are we to plan this? With faith, trust, and pixie dust, of course!
Okay, faith, trust, and pixie dust won’t get you our retirement fund or down payment on a house. A couple of things will help:
Living A Debt-Free Life: Do not use debt to finance your next vacation, car, or shopping spree. If you use a credit card, pay it off monthly. If you're in debt, devise a plan to pay it off now.
Living On A Budget: Yep, deciding how to spend your money before you actually spend it will help tremendously. This will help you avoid small expenses that may sink your goals. A tiny leak can sink a mighty ship.
Live Below Your Means: Save some of your income consistently every month. For retirement, 15% % to 20% is a good number to shoot for. If you have an employer match, make sure you are contributing to that point.
Increase savings: Yearly, you should increase a % what you are putting back for savings. You won’t notice much of a change if you increase by 1%, but it will benefit you greatly. Also, when you have extra funds, put them back too.
Invest In Your Future: In yourself, to grow your career, and in your finances. Just saving money is not enough; you have to invest it to beat inflation. And realize that your real return rate is lower than what you actually have because of inflation. If you earn 10%, but inflation increased 4%, you have only made 6%. This boils down to saying that your purchasing power decreases over time.
This is a lot of information to take in, and it spun in a way I wasn’t expecting. I know my tips are things you already know; I will do my best to dive into those over the next few months, breaking them down and explaining what I mean and actually do to meet these tips.