Attention Deficit Disorder (ADD) is when a person has a hard time concentrating on a particular situation for a short period of time. It is believed that 4% of Americans today have ADD. In my experience coaching individuals and couples, a far greater percentage suffer from what I call Financial ADD.
Financial ADD is simply trying to do many things with money at once, and therefore not getting any traction and failing to complete any of them. These things can be all good things such as:
But when we try to do all of these things at once we fail. That's because our money is finite and we can only do so much at a time. One of the reasons Financial ADD is so prevalent today, in my opinion, is due to the personal finance blogs and podcasts out there. Yes, I'm including myself. Often we write articles on the importance of avoiding debt, saving for retirement, saving for a home, having an emergency fund, and enjoying your money. However they are read out of context and we can think that we need to do all of these things today. That is simply not true; instead I recommend focusing on one or two things at a time.
There is a power to focusing on one thing instead of being all of the place. That's because if you stay focused and complete a task, you are more likely to start and finish another task and ultimately reach your goal. To avoid Financial ADD, I recommend doing the following steps in order with your money:
Save $1,000 in an emergency fund
Pay off all non-mortgage debt
Save 6 months worth of expenses in an emergency fund
Then start to save for a house, vacation, or other major purchase
Start to invest 15% into retirement
Focus on saving for your child's education and paying down your mortgage
The more I see Financial ADD, the more I see how it can harm us financially. We get frustrated that we aren't seeing our goals completed, we give up and say things like, "It's impossible to win with money." However if you stop trying to do everything at once and focus on one thing, you will start to see progress.
My hope is that this will get you thinking about if you have Financial ADD going on in your life or not, and, if so, figuring out what you need to cut out of your life to reach your financial goal.
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