The ‘ADHD Tax’ and its impact on financial health

April was Financial Capability Month, created to emphasize financial literacy and empower individuals to build productive financial habits.

Managing money and working toward financial goals can be challenging for people of all backgrounds. Finding financial balance often means staying informed, keeping an eye on spending, and managing impulsive decisions, things that can be especially tricky for people with ADHD.

Research has shown that, in the U.S. alone, annual national “excess costs” for ADHD range from $143 billion to $266 billion. These extra expenditures have gained recognition as the ‘ADHD Tax.’

Why is life so much more expensive for people with ADHD, and how can we change that?

Defining the ADHD Tax

Affecting an estimated 366 million adults worldwide, ADHD is defined by three core symptoms: hyperactivity, inattention and impulsivity. These symptoms frequently lead to executive functioning problems, especially when unaddressed. People with ADHD may find it more difficult to make decisions, manage time and money, stay organized, or prioritize what really matters. All of that can make the day-to-day responsibilities of adulthood feel overwhelming, and that’s where the ‘ADHD tax’ often comes in.

The ADHD Tax encompasses a wide array of experiences, but each can be summarized as a cost the individual would not have incurred were it not for their ADHD. It commonly manifests as a direct financial cost: In one study, 60% of respondents with ADHD estimated their impulse spending and forgetfulness cost them more than $2,000 per year.

Overspending can sneak up on people with ADHD, often without them even realizing it. A few common ways extra costs sneak up are:

• Late fees from occasionally forgetting to pay bills on time
• Impulse buys near the checkout every time you go shopping
• Forgetting about recurring subscriptions you no longer use
• Frequent take-out meals because meal planning or grocery runs did not happen
• Hobby hopping, where last month’s gear sits unused while you invest in the next interest

On their own, these may not seem like much, but over time, they can add up. And if someone with ADHD also struggles with budgeting and tracking money coming in and out, those incidental costs can quickly pile up to thousands in unnecessary expenses.

These extra expenses can also contribute to emotional distress: the same survey found that those with ADHD are twice as likely to report financial anxiety as neurotypical respondents. Furthermore, it’s also common for people with ADHD to experience low self-esteem, often shaped by years of feeling misunderstood or falling short of expectations. This can lead to feelings of guilt and shame about their poor financial habits, especially if they are also dealing with common comorbid conditions like depression and anxiety, which can make these negative feelings worse.

Then, there’s the long-term consequences of the ADHD Tax. In one study, male participants with ADHD were projected to earn $1.27 million less than controls over their careers and retire with up to 75% lower net worth.

You might be wondering what’s behind this gap. Many individuals with ADHD take longer to finish college, and many drop out before earning a degree. This can lead to higher costs and sunken expenses. How many people with ADHD have been passed over for a promotion – or even lost a job – due to their executive functioning challenges? With fewer opportunities to advance, several individuals with ADHD lose out on potential earnings.

Beyond reduced potential earnings, extreme credit card debt and low credit scores due to impulsive overspending and inattention to bills can make it challenging to attain necessities like housing and transportation. In the most extreme cases, financial mismanagement and other challenges exacerbated by ADHD can even lead to incarceration or homelessness.

These worst-case scenarios may not be common, but they illustrate how poor financial decision-making can quickly and dramatically reduce one’s quality of life. The ADHD Tax is a clever name, but it describes a severe discrepancy in life outcomes between neurotypical people and those with ADHD. 

They deserve better – so how can we help? It starts with accurate ADHD diagnoses.

Early Diagnosis and Intervention Strategies to Mitigating the ADHD Tax

Research has shown adults with ADHD often exhibit significantly worse financial outcomes. This suggests that just as children with ADHD may take longer to reach certain developmental milestones, adults with ADHD may take longer to reach financial milestones.

If an adult has ADHD but isn’t aware of it, they may follow standard advice and still find themselves struggling to keep up, leading to feelings of inadequacy. Many women with ADHD, for example, make it well into adulthood without receiving a diagnosis. They often feel like they’re failing, when in reality, they have a real condition that needs support and treatment.

A correct diagnosis can be a turning point, allowing for targeted support and treatment. Proper treatment, coaching, and other interventions are designed to help people with ADHD tackle their symptoms and improve executive functioning skills. A recent study even found that treatment may prevent premature death. 

Unfortunately, studies show as few as 20% of adults with ADHD are aware they have it. 

Why? Getting a diagnosis can be challenging. The traditional approach to ADHD testing hinges on in-depth subjective assessments. They are valuable (but expensive), time-consuming, and don’t always paint the whole picture, especially for adults seeking evaluation.

ADHD is a lifelong condition, meaning to diagnose an adult, a clinician must be confident their symptoms were present in childhood. How many adults can truly look back and recognize ADHD symptoms in their childhood? Some might be able to ask parents or former teachers for insights, but that’s not an option for many. Without this critical component of patient history, a clinician may not feel confident in their decision to either diagnose or rule out ADHD.

There is a solution: objective testing. These tools analyze biometric data to assess patients’ hyperactivity, inattention and impulsivity, producing data that clinicians can leverage alongside a subjective assessment. With evidence-based insights, clinicians can feel confident in their decision to diagnose or not diagnose an adult with ADHD.

Objective testing can also help ensure more people are diagnosed and begin receiving support in childhood. Research suggests the earlier an individual is diagnosed, the better their quality of life and long-term outcome. Many girls and children of color have been historically overlooked and underdiagnosed, leaving them without the support they deserve. Objective testing offers a chance to change that.

Easing the Burden: How to Reduce the ADHD Tax

In the realm of financial capability, early, accurate diagnoses empower people with ADHD to seek the support they need to manage their finances successfully. Along with getting a diagnosis, another key part of reducing the ADHD Tax is finding organizational strategies that align with, rather than fight against, how ADHD shows up in daily life.

For example, a neurotypical person might keep important papers on their desk. Someone with ADHD, however, might find it helpful to place them in an unusual, eye-catching place until the related tasks have been completed. It works because many people with ADHD are highly driven by novelty and interest; when things are where you’d expect them to be, they can easily fade into the background.

Another example is reorganizing the refrigerator. There are no rules for putting vegetables in the produce drawer or condiments in the door. Arrange your fridge – and the rest of your home – however, you need to improve your executive functioning and reduce unneeded expenditures. It doesn’t matter if it is how a neurotypical person will do things if it helps you.

Of course, universal advice is also salient to address the ADHD Tax – track expenses. While this can be intimidating to someone who struggles with organization and other executive functioning skills, it is vital to improving your financial habits. Fortunately, countless apps and online programs are available to help. It’s also never a bad idea to reach out to a trusted friend, family member, or professional who can help you get started.

The ADHD tax can present a significant barrier to achieving positive long-term outcomes for people with ADHD, but it doesn’t have to determine the future. With accurate diagnoses, proper treatment and organizational strategies designed to work with ADHD symptoms, people with ADHD can reduce the ‘tax’ and attain better life outcomes.