The 50/30/20 budgeting method. Explained by an ADHD person
Also, if you have the ability to do auto-pay on your bills, sign that sh*t up, and let this account do all the work for you.
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In the summer of 2023, I decided to be more serious in my budgeting and savings journey while also making it my content for content creator journey.
Now a year later, after figuring out what works for me, I think I finally found a method.
If you have been struggling with budgeting for the LONGEST time but then you later found out it’s because you have ADHD (like myself), and your biggest culprit is your impulsive spending, then I would definitely suggest trying the 50/30/20 method.
What is the 50/30/20 method?
The 50/30/20 method is when you split your money into these percentages:
- 50% is your needs
- 30% is your wants
- 20% is your savings
Take the time to look at your bank statements, calculate all of your expenses and categorize them.
- Needs: groceries, rent, utilities (electricity, water, etc)
- Wants: monthly subscriptions, dining out, entertainment (concerts, movies, etc)
- Savings: emergency fund, car, house/apartment, vacation
On NerdWallet, they say you do this for your monthly budgeting, but if you’re on a bi-weekly pay, I would suggest doing it for every paycheck to make your life a bit easier. For an “advanced hack”, if you receive your paycheck through direct deposit, ask your employer if you can add multiple bank accounts, then split it up with those percentages.
Use and open up multiple bank accounts
YES. You heard me, ask if your Payroll department allows you to add multiple bank accounts for your direct deposit, and then SPLIT. THEM. UP.
So, if you currently only have one checking account and one savings account, I think it’s time to open ANOTHER bank account to hold your money. (Perhaps opening an Ally account? You'll get $100 for opening one with them!)
Trust the process, just wait. So this is what you need to do:
- checking account #1 - 50% needs
- checking account #2 - 30% wants
- savings account #1 - 20% savings
I’ll explain why you need to do this, especially if you’re neurodivergent.
Checking account #1: your Needs account
Checking account #1 has all your Needs: your rent, groceries, & bills.
These are usually your fixed expenses, the ones that you know the amount every month. This will live in checking account #1 and YOU DON’T TOUCH IT. Not for shopping or when you need extra cash.
Do NOT transfer money out unless it’s for those important expenses. This is for your important bills and they will always be covered no matter what. Don’t even bother putting the debit card in your wallet because you'll barely use it.
Also, if you have the ability to do auto-pay on your bills, sign that sh*t up, and let this account do all the work for you.
Checking account #2: your Wants account
Checking account #2 is your Wants account.
This one is what I would like to call your Daily Spending account. Buying lunch, some shopping, etc. THIS is the account where you can swipe your debit card on a daily basis.
This is why you’ll need the 2nd checking account, because you can spend your money however you like, and not have to worry about your bills not being paid on time.
BUT if you want to buy that expensive video game or Chanel bag that you’ve been eyeing on, but you don’t have enough money in this account, then start being mindful of your spending! (Very demure)
This is also now the perfect segway to talk about the next account… your savings account.
Savings account #1: your Savings account
Savings account #1 is of course where you’ll put your savings in here. I recommend a opening a High-Yield Savings Account or HYSA since it will have a high interest rate.
Don’t have enough money for that amazing dress for your friend’s wedding or need that new Google Pixel? Yes, I’m an Android user, don’t come for me, then start transferring some money in this account.
What I found super helpful is having a goal. Having the motivation to continuously save for that big purchase of your dreams will help drive you to your goal. Without a goal for your savings, you’re more likely to take it out whenever you need money. And as someone who grew up with undiagnosed ADHD with impulsive spending habits, I did this PLENTY of times in my lifetime.
It wasn’t until I made it a goal for myself to see the Rio 2016 Olympic games, and that’s when I started to really discipline myself to save my money for my first dream trip.
It was hard to make those money decisions and sacrifices, but I made it happen, and I made it happen again for Paris 2024.
Bonus: Savings Account #2 or #3 - more savings goals
Once again, if you have ADHD and you fall into the “out of sight, out of mind” mindset, then maybe opening a second or third HYSA will help you reach your goals.
As much as I LOVE my Ally HYSA, I do need to have a separate bank account for my long-term goals such as my Emergency Fund and possible Van Life future. The reason for this is because if I see I have money, sometimes I know I’ll be tempted to touch it, so I would rather keep it “out of sight, out of mind”.
And once that's out of your visual presence, you'll forget about it, and surprise, you'll have growing savings account with compounding interest.
And there you have it! I highly recommend this method for the ADHD person struggling to manage their personal finances. Over time, I managed to tweak a few things around, because personal finance is personal. But let me know in the comments if a different method works out for you.
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