ADHD and: Impulsive spending

It was a spur-of-the-moment buy at the mall. A brand new handbag caught your eye and you couldn’t resist buying it.  For many women with ADHD, moments of impulsive spending can lead to feelings of excitement followed by regret once the bills arrive.

In this episode, host Dr. Monica Johnson breaks down the connection between ADHD and impulsive spending. Listen as she discusses the value of pausing before making a purchase. And gives practical tips on how women with ADHD can build better financial habits and regain control over their spending.

We love to hear from our listeners. Email us at podcast@understood.org.

Related resources

• ADHD and managing money

• What is the ADHD tax?

Timestamps

(00:42) What is impulsive behavior?

(02:03) What is the emotional impact of spending?

(03:54) How can positive and negative emotions lead to poor spending habits?

(06:05) Strategies for managing spending

Episode transcript

Dr. J: Whether it's a spur-of-the-moment purchase at the mall or an online shopping spree that leaves your bank account in the red, impulsive spending is a major challenge, and that's especially true for women with ADHD. What's behind those sudden shopping urges? How can we manage it better?

This is "ADHD and," where we talk about everyday life and ADHD. I'm Dr. J, a licensed psychologist who works with people with ADHD. Today we're talking about ADHD and impulsive spending.

(00:42) What is impulsive behavior?

Impulsive behavior refers to actions taken quickly without careful thought or consideration for the consequences. It's characterized by a lack of forethought, acting on a whim, and prioritizing instant gratification over long-term benefits. Here are a couple of examples of how impulsivity can generally come up for women with ADHD.

So, a common impulsive behavior and ADHD is interrupting others during conversations. This typically happens due to difficulty and regulating impulses, so folks with ADHD might blurt out their responses or their thoughts before the other person has finished speaking. And this is often without an intention of being rude.

Another example relates to a higher propensity for risk. So, people with ADHD are more likely to engage in risk-taking behaviors as their impulsivity and desire for novelty can outweigh considerations of safety or potential negative consequences. So, for example, you keep hashtag TikTok made me buying it when your rent is passed to you.

Emotional states such as anxiety, stress, and boredom play a critical role in spending behavior. And psychological research has looked at how various emotional states influence financial decisions. So, here are some of the emotional impacts on spending.

(02:03) What is the emotional impact of spending?

The first one I want to talk about is what we like to call retail therapy. So, people often engage in retail therapy as a way to cope with negative emotions such as stress, sadness, and anxiety. And it is true that shopping can temporarily improve mood by providing a sense of control or a dopamine boost. But it can also lead to impulsive or unnecessary purchases.

The next thing I want to mention is comfort buying. So, similar to comfort eating, comfort buying is where you buy items that you associate with comfort or happiness. And this can be common when people are feeling low. This behavior is again driven by a desire to alleviate negative feelings. I see this come up often in our self-care trends. I see a lot of people spending money they don't have on expensive beauty products, massages, or vacations, for example.

Now I love a good rub down myself, but if you haven't budgeted for these kinds of things, it can lead to financial problems in the long run. Also, a lot of the things that are actually good for self-care are free or low-cost much of the time. So, this can be things like taking a walk, taking a bath, meditation, or even listening to soothing music.

Negative emotions can also lead to avoidance of financial decisions. So, when women are feeling overwhelmed or anxious, they might want to avoid important decisions leading to procrastination and potentially worsening financial circumstances. This can look like not making a budget, not wanting to view your banking or credit card statements, or not setting up systems that allow you to pay your bills on time.

(03:54) How can positive and negative emotions lead to poor spending habits?

What women often don't understand is that both positive and negative emotional states can lead to poor spending habits. Looking at positive emotions and spending, it can lead to increased generosity. Now, hear me out, positive emotions like happiness and excitement can lead to increased spending, particularly on others. So, when we feel good, we want to be generous, we want to treat ourselves. And also we're encouraged to engage in spontaneous spending.

You might be thinking, "OK, like what is the issue here, though?" For that, I have an example. So, I had a patient who brought her child an incredibly expensive gift for doing well at school. This caused her to go into credit card debt and took well over a year to pay off. By the time it was all over with the interest, she had paid about three times what the item was worth.

It's understandable that you want to reward your kids, but teaching them good financial habits and getting them a reward that is within your budget while creating generational wealth is a much more generous outcome in the long run. I also want to mention optimism and risk-taking. So, for example, positive emotions can lead to an overestimation of financial security. This can actually lead to riskier financial decisions.

So, people might splurge or invest more than they would have if they were feeling more neutral or cautious. For example, you get a new job with a pay raise and you instantly want to get a new car because you can, quote, afford it. Now, you're not thinking about the fact that you already have $8,000 in credit card debt that you should probably pay off first. These types of habits can lead to feelings of guilt around not properly managing finances and can lead to both short and long term issues related to poor spending habits and debt.

Many of the women that I have worked with have had a lot of concerns about planning for their financial futures because of past financial failures. So, let's explore a few tips on how to start managing your spending more effectively.

(06:05) Strategies for managing spending

The first thing I'm going to mention is changing your default answer to no. Impulsivity is all about the power of yes. But did your bank account consent to those purchases? No, it did not. And you have the overdraft fees that show that. When you're thinking about purchasing something that is not a necessity, have the default answer be no.

For clarity, a necessity is something that is required to live. You require food to live. You do not require smoothies from Erewhon to live. If the default answer is no. Then it automatically slows everything down because you have to go and check your budget to make sure you can afford it first.

The next thing I'll mention is to instill a waiting period. So, for purchases that are not necessities, put the item on a wish list and see if you still want it in a month. So many of our impulse buys are things that we use once and then they sit around collecting dust. So, after a month waiting period, if you still want that item and it fits within your budget, you can get it.

Maybe this should have been number one, but you do actually need to have a budget. There are lots of apps for this. There's literally one called "You need a Budget" or YNAB for short. You can also try a method like zero-based budgeting. This is basically where you give each of your dollars a job. So, with this type of budgeting, what you do is you spend your take-home pay at the top of the month.

Let's imagine a universe where your take home pay is $1,000. We're using this number because I'm bad at math. So, what you would do is you would allocate that money across all of your necessary and desired expenses. So, let's say your rent is $300 a month. Your utilities, groceries, and car payment are a total of $400 a month. You put $100 a month towards credit card debt, $100 toward savings, and then you have $100 for miscellaneous or fun purchases. This way you've given each of your dollars a job for that month.

Along with this, some people have found it helpful to have separate bank accounts. For example, they'll have a bank account for their necessary expenses and then they'll have a separate bank account for miscellaneous purchases. So, referring back to my example about zero-based budgeting, that $100 that you put toward miscellaneous expenses, you would put that into the separate account and that is now your play money. That way, your impulsive or non-necessity items are limited by the amount of funds that are within your play money account.

Also, you can change your due dates for many of your monthly bills. A lot of people get late charges because they have money coming out of their account at random times throughout the month. If you like to pay your bills at the beginning of the month, for example, you can call and ask them if they'll change your due date to that time period. That way you can pay everything at once and not have to think about it. This works better for some people rather than just using auto payments alone.

Like all things in life, I want you to have patience and compassion for yourself. Increasing your financial literacy and improving your habits around money is a learning process. Even women without ADHD struggle with this because they may not have grown up in families that taught them how to manage money. And this is often because our parents didn't have anyone to teach them either.

For now, simply focus on the fundamentals. You're going to have some financial losses intermixed with some financial wins. So, please highlight your successes and see your setbacks as growth opportunities.

Thank you so much for taking the time to join me on this episode of "ADHD and." I would love it if you'd let me know in the comments below how you're working on your finances and if you're so inclined, subscribe for more.

This show is brought to you by Understood.org, a nonprofit organization dedicated to empowering people with learning and thinking differences like ADHD and dyslexia. Learn more at Understood.org.

"ADHD and" is produced by Tara Drinks and edited by Alyssa Shea. Our video producer is Calvin Knie. Ilana Millner is our supervising producer. Briana Berry is our production director. Neil Drumming is our editorial director. Our audio engineer and music composer is Justin D. Wright. Our executive directors are Laura Key, Scott Cocchiere, and Seth Melnick. And I'm your host, Dr. J.