At PolicyGenius, we believe in equality – financial or otherwise – for all. The LGBTQ community faces some unique civil rights challenges, but they also have unique financial concerns.
As we’re celebrating Pride Month, let’s not forget to take a moment to also take pride in our finances. A stronger financial community is better for everyone. We asked three of the biggest financial experts of the LGBTQ community – John Schneider of Debt Free Guys, Brian Thompson, CFP, and West Hollywood Financial Planner David Rae – about their biggest financial obstacles, how they tackle money issues, and the best advice they’d give to the LGBTQ community. Here’s what they said.
Live a lifestyle that works for you
One of the biggest challenges members of the LGBTQ community face today is not being accepted. Schneider says that this can lead to bad money habits.
"The biggest obstacles we had to overcome were our limiting beliefs about ourselves, money, and what we were worth," he says. "Having grown up LGBTQ and being bullied and picked on, banished from family, we harbored these insecurities that manifested in us trying to maintain the gay cliche of the ‘fabulous life’ when we couldn't afford it."
"Being part of the LGBT community can be fun and fabulous. But keeping up with the gay Joneses can leave you broke and depressed."
Instead, Rae offers this alternative: "Look for friends who know how to have a good time, and know how to handle their finances."
Living within your means is a crucial step in achieving any financial goal. The best way to do this? Make a budget. Figure out how much you’re bringing in every month, what your fixed expenses are, what your long-term goals are, and what you have leftover to spend on wants.
You don’t have to do this alone. There are an endless number of budgeting apps out there. Some of our favorites include You Need A Budget, which is a hands-on approach to managing your money, and Clarity Money, which provides additional help in the form of suggesting credit cards that match your spending habits and helping you automatically save on bills.
Living within your means can be hard when there’s a lot of temptations out there. Manage your deprivation, and don’t be afraid to give yourself small, responsible treats every now and then to avoid big splurges.
Most importantly, find a system that works for you. Everyone has a favorite system or app, but the only one that matters is the one that lets you manage your money in a way that works for you. Plus, finding that perfect match makes it that much easier to stick with it.
Have a plan for your money
Part of having a budget is having a plan for your money. How much will you need for retirement? Do you ever want to own your own house? Any plans to have kids, adopt, or send those kids to college?
Rae’s motto is, "Live for today and plan for tomorrow." He thinks it’s important to save for your future not in place of having fun, but because that allows you to have fun. "Making smarter financial decision today will make it easier to have more fun in the future. Hate to break it to you, but fun often costs more when you are older."
Thompson says you should not only figure out what you want to achieve with your money, but "why those goals are important to you and how your money can help you get there."
According to Thompson, you should "proactively strategize protecting the foundation of your plan with things like proper investing, insurance protection and estate planning to make sure unfortunate events don't take you too far off track."
And this is important no matter the political climate that members of the LGBTQ community face.
"No matter the political turmoil, and there is a lot right now, if you can know what you want and develop a plan to get it, you'll be okay," says Thompson.
There’s a lot to consider, but as with budgeting, a plan and a few smart tools can help you manage the future. Opening a retirement account, whether it’s an IRA or a workplace 401(k), keeps your retirement plans on track. Investing has never been easier, whether you want to go the relatively safe route with robo-advisors like Betterment or Wealthfront, or use Robinhood to buy stock. A 529 college savings plan helps ensure your children can afford higher education.
And, of course, a safety net is important for keeping your plans on track. Have an emergency fund on hand so you can cover any curveballs that come your way, and make sure there are no gaps in your insurance.
Life insurance is a self-completing financial product, meaning that while it might take years or decades to save for a home or retirement, the value of a life insurance policy is instant; if you die, your loved ones immediately get the death benefit to keep their financial goals on track.
Similarly, health insurance, car insurance, and renters insurance protect you and your family from financial hardship in case of accidents.
Just having a plan isn’t enough; you need to make sure you have the right protection in place so your family can see the plan to its end.
Make paying down debt a priority
One of the biggest financial hurdles for our experts – and for many people – is debt, and the impact it can have on your finances.
Schneider tells us that the "trying to maintain appearances" resulted in piles of credit card debt for him and his husband.
Similarly, Thompson graduated from law school and, like many young people, found himself flush with student loan debt – $58,000 in federal loans and $108,000 from private lenders. He had trouble finding a job at first, then found a low-paying job before finally finding sure footing with a higher-income opportunity. It wasn’t easy, and Thompson describes keeping a detailed budget and "shopping at three grocery stores every weekend to get the best deal."
Paying off your debt should be a high priority because it holds the rest of your plan hostage. Not only do you have to pay of the original debt, but every month it hangs around means another month of interest being added on top of it. There can also be serious consequences from unpaid debts, whether it’s harming your credit score or potentially leaving a cosigner on the hook.
There are different schools of thought when it comes to paying off debt. The Snowball Method advocates for paying the debt with the smallest balances first, providing psychological wins before you tackle bigger debts. Meanwhile, the Avalanche Method says you should pay off the debt that’s costing you the most first, so you can put that money into other debts.
Schneider has shared with us before the journey he took with credit card debt, and the "Debt Lasso Method" he and his husband devised to negotiate a lower interest rate on their existing credit card, and then looking for the right promotional credit cards to help them pay off their debt.
Thompson’s journey was also difficult – but rewarding. Facing 9% interest on his student loans, he came up with a plan, started paying off the plans with the highest interest rates first, and stuck with it for seven years. He described feeling "really empowered" making that final payment.
Work with your support system
Another outcome of Thompson’s victory over debt was the positive effect it had on his relationship with his husband. Thompson’s husband was able to use his job to help support the couple while Thompson found a job and began tackling his student loans. He says that "having shared that struggle with my husband has also brought us closer."
A key aspect of facing financial challenges is realizing they aren’t challenges you have to handle alone. Thompson was brought closer to his husband by paying off his student loans; Schneider and his husband devised their debt payment system together and paid off their shared debt.
This is especially important because your financial decisions almost always affect your loved ones. Rae shares a story of how one of his biggest financial challenges was combining his finances with his husband’s when they got married. "We’d been together for years, and had a financial plan together," he says. "Still, there was more melding to do once you have to actually file your taxes together."
Be open and honest about money with your partner, and don’t be afraid to talk about it. The worst thing you can do is not deal with important issues because you feel like you’re alone.
Having finances under control isn’t important just for individuals – it can be important for the entire LGBTQ community. As Schneider explains, taking care of our finances is one less thing to worry about, and we can focus your energy on the continued fight for equality.
"Especially in these times when the fight for LGBTQ equality has migrated to the states, among other concerns, we cannot afford to be distracted by debt, lack of retirement savings or other financial insecurities," Schneider tells us. "If we're distracted by these things, we can't be fully engaged in our continued quest for equality and we won't have sufficient time or money to donate to the organizations and causes fighting for our civil rights."