Getting your financial house in order is a tough chore, regardless of your circumstances. But when youâre in the LGBTQ community, it can be even harder. Systemic discrimination, emotional and familial struggles, and sometimes the inability to start a family biologically, can bring additional financial challenges.
âPeople often ask us what makes queer money different,â said David Auten, who with his husband John Schneider, runs the Debt Free Guys blog and Queer Money podcast. They believe 80% of money is the same for everyone â the basic transactional aspects like spending, saving and investing.
âThereâs 20% that is specific to who we are, who we love, where we live and the family structure that we have, and in many cases, the legacy emotional aspects that we bring into life,â Auten said. Growing up being ostracized or bullied creates emotional wounds that can last for a lifetime, prompting people to overspend in attempt to make showy displays of wealth to prove self-worth, he said. âIn our opinion, that has a much bigger role in how we interact with money than the other 80%.â
It takes some extra effort to understand what these challenges are and how to overcome them, but it can be done. If youâre in the LGBTQ community and you need to improve your financial situation, hereâs what you need to know.
The LGBTQ community is up against numerous disadvantages that present financial challenges, said Mariam Adams, a Merrill Lynch Wealth Management advisor in New York City whose practice focuses on the LGBTQ community.
These struggles often start in adolescence, Adams said, since some LGBTQ youth have unsupportive families and are much more likely to end up homeless. Adamsâ parents were from Afghanistan and did not have LGBTQ in their vocabulary. She grew up as a closeted lesbian. Not knowing how her family would react to her coming out, she made sure she was financially secure first in case she was cut off. âI donât think my friends were going through that struggle at the time,â she said.
One in four LGBTQ people have experienced employment discrimination in the last five years, and itâs worse for the transgender community, according to Out & Equal. Transitioning in and of itself can be expensive, but fears of being fired from a job or denied housing simply for being LGBTQ â which is still legal in dozens of states â add more pressure.
Nearly 53% of the LGBTQ community report discrimination negatively affecting their work environment, and this discrimination can be seen in reports of lower income for LGBTQ people than the general population, Adams said. Plus, the gender gap persists; LGBTQ women earn even less than LGBTQ men. And if someone wants to live in a more LGBTQ-friendly city like New York or San Francisco, she said, that adds extra costs, making it even harder to get by.
LGBTQ people also tend to spend more than non-LGBTQ people, Adams said, and theyâre less knowledgeable about finances and donât take as much advantage of financial products or advisors. She said working with a financial professional can make people feel vulnerable and exposed, and not everyone in the LGBTQ community trusts that someone at a financial institution will know how to â or be willing to â help them.
All of these factors take a toll â a recent survey commissioned by the podcast Team Nancy and conducted by polling firm Morning Consult found that 52% of self-identified queer people feel anxiety around their finances, and 25% say their sexuality or gender has impacted their finances. A separate survey by MassMutual found that nearly half of LGBTQ workers between the ages of 25 and 65 did not feel financially secure, compared to 37% of non-LGBTQ people.
Feeling discouraged? Take a deep breath: hereâs what you can do about it.
You might think the first way to get your financial house in order is to make a spreadsheet and a budget, but until you address your subconscious beliefs and emotions around money, itâs hard to make any real progress, Schneider said.
So many people in the community have been ostracized, bullied or picked on when growing up, he added, which results in many limiting beliefs about âwho we are, what weâre worth and whether or not weâre validated by society.â
After Schneider and Auten paid off $51,000 in credit card debt, they had an epiphany about their spending. âWe started to realize one of the reasons why we got into so much debt is we were making up for feelings of inferiority, making up for being bullied and picked on when we were kids, making up for the fact that our families and our churches, our classmates and everyone in our lives basically were reminding us over and over again that because we were gay, we just werenât good enough,â Auten said. âOne of the easiest ways to prove that youâre a good person in this country is to show you have wealth and financial means.â
The couple had 13 years of combined experience in financial services when they finally confessed to each other that they were each struggling financially. âIn theory, we knew better, but we were sabotaging ourselves financially, mostly because the 20% that most affected us was that limiting belief that we werenât really good enough,â Schneider said. So take the time to examine any limiting beliefs or lingering emotions that might be holding you back or causing you to overspend. Meet with a mental health or financial professional if you need help digging deep.
The Affordable Care Act and recent supreme court rulings have increased access to health insurance and healthcare for many in the LGBTQ community. Regardless, discrimination, and past negative experiences with healthcare professionals have caused some LGBTQ individuals to delay access to needed medical care. To help you find a health care provider you feel comfortable with, thereâs a provider directory from Health Profesionals Advancing LGBTQ Equality (formally the Gay and Lesbian Medical Association) that lists practitioners considered to be LGBTQ-friendly.
For transgender individuals looking to transition, hormone replacement therapy can also be difficult to obtain. However, if you have health insurance, be aware that under federal law, itâs now illegal for health insurance to exclude transition-related care. While this doesnât mean an employer has to fully cover every procedure, you may be able to get exceptions if you show that itâs medically necessary. If you face denial or discrimination from a health insurer or medical practitioner, speak up â the National Center for Transgender Equality suggests a variety of options for recourse if you canât get quality care. Also, if you arenât able to afford health insurance, there are clinics around the country, including some Planned Parenthood locations, that offer affordable hormone replacement therapy.
If you want to have kids and arenât able to biologically, prepare in advance due to the massive cost, Adams said. If you donât, it can result in significant debt. She helps her LGBTQ clients save and invest for family planning, and she said itâs crucial to start setting aside and investing money as soon as possible so it can grow through compound interest.
She recommended setting up a separate investment plan specifically for this purpose. Also, itâs ideal to meet with a financial advisor or planner who can help you assess the best way to invest since it will vary depending on how much time you have and how much money you ultimately need.
Adams has found that public adoption through foster care can cost from nothing up to nearly $3,000, but people who go through a private adoption agency can spend anywhere from $40,000 to $60,000.
For lesbian couples in which one wants to carry a baby, intrauterine insemination (IUI) can cost about $3,000 per try, Adams said; thatâs what she and her wife had to pay since their insurance didnât cover it. If that doesnât work, or if one partner wants to carry the otherâs egg, you can try in vitro fertilization, but this is much more expensive. Adams and her wife used this method for their second pregnancy, and it cost them around $30,000 including all of the medications and appointments. In both cases, couples often have to try more than once before they have success. For male couples who want to use a surrogate to have a biological child, Adams typically advises a budget of $125,000 for the entire process, and sheâs never seen it cost less than $100,000 total.
An increasing number of companies now offer infertility benefits in their health insurance, Adams noted. However, if the same-sex couple isnât actually medically infertile, Adams said, some insurance providers wonât cover these services, so donât assume you have these benefits. Adams recommended talking to your HR department to determine your benefits and push for better ones if theyâre lacking.
Additionally, if youâre in a same-sex relationship and youâre not biologically related to your child, itâs recommended to take action to become a legal parent. While some states presume you are a parent if you and your spouse were married when the child was born, the National Center for Lesbian Rights recommends all same-sex couples with children establish a legal connection between parent and child, especially if the child was adopted, so that both parents have full legal rights and can make decisions for the child. It also makes estate planning easier if you are the legal parent, especially if you donât have a will (but you should get a will!).
If youâre coupled up, itâs vital that you talk to your partner about money. Auten said his audience often shares that they struggle to talk about finances with their partners and sometimes avoid it altogether. Heâs not surprised â it took him and Schneider about a year and a half into their relationship to finally get comfortable enough to share where they stood financially.
âIf youâre not on the same page as the person you make financial decisions with, youâre never going to be able to get very far down a road of progress,â Auten said. âIf youâre a saver and theyâre a spender and you put your money into the same account, well, youâll probably never end up actually saving money.â
Not sure how to broach the subject? âOne of the things that we encourage is that individuals start the conversation with their partner in a very non-confrontational way, talking about their hopes and dreams, what they want their future life to look like, or some of the fun things they really want to do together as a couple,â Auten said. Rather than focusing on how to pay off debt, for example, he said instead start by focusing on what the two of you want your life to look like in a year or three years and make a game plan for your debt from there.
If you and your partner arenât married yet, Adams suggested considering it. While some in the LGBTQ community donât feel the need to follow the traditional path of marriage, she said, it can be very beneficial from a financial planning perspective. Since marriage equality came into play, same-sex spouses can file taxes jointly, inherit each otherâs money without paying estate taxes and receive their spouseâs Social Security, VA and pension benefits. These perks can be helpful for your familyâs finances, Adams said.
Itâs hard to save for emergencies and invest in your future if youâre drowning in debt, so itâs key to get it under control. While the snowball and avalanche methods are common tactics to get out of debt, Auten said, he and Schneider donât believe theyâre the most effective.
âNeither the avalanche or snowball focus on eliminating the biggest hurdle to your debt, especially when it comes to credit card debt, and that is eliminating or reducing the interest payments that youâre making,â Auten said. âBoth of those methods are designed around either paying off the largest balance or the highest interest first.â However, Auten said when the pair had $51,000 in credit card debt, they realized they were paying $10,000 a year in interest alone. âWe just knew that there was no short-term path to progress for us if we continued to pay that massive amount of interest,â he said.
Instead, they created their own method, âthe debt lasso method,â which they said entails intelligently refinancing debt so you can pay off more of your principal balance. They encourage people to âlassoâ all of their consumer debt into as few locations as possible. Ideally, you could consolidate your debt under one balance transfer credit card with 0% interest, which allows you to expedite your ability to pay off debt, he said.
If youâre feeling overwhelmed, thereâs plenty of free help out there. Auten and Schneider recommended finding personal finance blogs and podcasts you can relate to â whether its theirs or one of the many others available â to start educating yourself and learning money best practices.
Schneider recommended looking for a Capital One CafĂ© in your area (you can search for locations online). You donât have to have an account with them to get up to three free money coaching sessions. They donât do hard pressure sales on you, he said, and they guide you through emotions and limiting beliefs around money. If youâre struggling to get on the same page as your partner financially, they can also serve as a helpful intermediary, Schneider said.
If debt is a big issue for you, you could also set up a free consult with a credit counselor to assess your situation. There are also digital financial tools that can help, such as budgeting apps like Mint and savings apps like Qapital.
If you need help beyond that, consider meeting with a certified financial planner, who can help you identify goals, create a budget and devise a big picture plan to get you on track. If you have money that youâre not sure how to best save or invest, you could meet with a wealth advisor like Adams, who invests money for clients based on their goals. There are several different fee structures out there; some planners charge a flat fee or hourly fee. If someone is managing your investments, they typically charge a percent of the assets being managed.
Being an LGBTQ person in America poses many challenges that can create financial stress. But being aware of the most common issues and taking steps to overcome them and achieve financial security can make life a lot easier.