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Overcoming the biggest financial concerns of the queer community

Est. 7 min read

Cities across the country are gearing up for Pride festivals, usually held on weekends throughout the month of June. The overarching theme is queer people embracing and celebrating who we are. But taking pride in who we are is more than one parade a year. It’s a 365-day practice. It’s taking care of ourselves physically, emotionally, mentally, relationally, spiritually, and financially.

We in the queer community could do better as far as the latter is concerned. Though one affects the other, we as a community have two financial concerns: the need to pay off debt and the need to save for retirement.

Missing our financial pride

Prudential’s 2012 and 2016 LGBT Financial Experience Surveys show that over half of the queer community consistently maintains $10,000 or more of debt, slightly more than the general population. Likewise, LGBT respondents to the 2016 survey were “less likely to have started saving or investing for retirement, to have insurance products, and to have a will or estate plan than those [LGBT respondents] surveyed in 2012 or general population respondents.”

MassMutual’s 2016 Lasting Legacy Survey findings support the lack of wills and estate plans within the queer community. MassMutual found that six in ten queer adults (62%) don’t have a will. Two in five (39%) of those same queer adults admitted that they had not documented important financial information, such as beneficiaries, healthcare proxy, and location of will and trust documents.

Maslow’s Hierarchy of Needs suggests that people can’t achieve self-actualization when they are concerned about their safety. Safety applies to one’s financial security, as well as physical security. Anxiety over debt and outliving our money have an adverse effect on us physically, emotionally, mentally, relationally, and spiritually.

The barbell effect of queer lives

In the aftermath of the AIDS crisis, many in the LGBT community, especially gay men, adopted a carpe diem philosophy. Many watched their friends die as early as 20 and 30 years old. The ethos became “live for today ‘for tomorrow we may die.’” We dressed well, lived lavishly, played a lot, and partied hard without regard for our financial lives.

As medications to fight AIDS/HIV have improved, we’re now living longer. We haven’t changed how we spend or manage our money, though. As Prudential’s studies show, “Despite agreement on the importance of saving for the future, LGBT respondents are more likely to consider themselves ‘spenders’ (48%, compared to 32% for general population respondents). And, in fact, LGBT respondents’ current spending patterns suggest that they do tend to spend more, and save less, compared to general population respondents.” Our spending mentality is likely due to several forces working against us.

Many queer people’s lives look like a barbell, bookended by high levels of anxiety and insecurity in our early and later years. During our childhood, we’re bullied and picked on for being different. Many of us are forced to live our childhood years in the closet if we’re not forced out of our homes.

Because federal and state laws have yet to catch up with the Supreme Court of the United States’ legalization of same-sex marriage in June 2015 and because states are trying to weaken the rights of LGBT people, older LGBT people are susceptible to risks of abuse and neglect not dissimilar to their youth. With 40% of homeless youth identifying as LGBT, it’s not surprising that a disproportionate number of LGBT people relative to their heterosexual peers are in poverty.

Due to challenging childhoods, many of us revel in the freedom of our 20s and 30s. We try to make up for feeling inadequate when we were younger, and try desperately to fit in with our LGBT peers or live up to the cliché that gay people are fabulous. This thinking combined with the uphill federal and state legal challenges we face are to the detriment of our long-term financial security.

How we can get more financial pride

We don’t need to live our lives bookended by insecurity. For our personal wellness and the wellness of our queer community, it’s important for all LGBT people to take as much pride in our money as we do in being who we are. The challenge is to get your finances in order by next Pride so you can celebrate your pride in who you are and your financial security.

Build an emergency fund

If you don’t have an emergency savings account, regardless of your financial situation, save at least six months’ worth of expenses before you do anything else. Even if you can get to just $500 in savings, you’ll be better prepared to withstand those unexpected expenses than 63% of Americans.

The benefit of this is two-fold. The first is that you’ll have money in case you miss a day of work because you or a loved one is sick, you get into a fender bender and must pay your deductible or the dog chews your sofa. Likewise, you’ll have peace of mind because you have a little extra security if something goes wrong. This will benefit your physical, emotional, and mental well-being.

Get yourself on a debt payment plan

The most important step to take to pay off your debt, whether student loans, credit cards or another type of loan, is to get on a debt payment plan. Whatever interest rate you’re paying on your debt is detracting from your retirement.

There are several ways to pay down debt. There’s the Snowball Method, which says to pay off your smallest balances first and incrementally focus on your larger debts. This method gives you quick and motivating wins. There’s the Avalanche Method, which says to concentrate on paying off your highest interest rate debt first. There’s also the Debt Lasso Method. This method gets your interest rates as low as possible, including 0% with some credit cards, and pays off your debt as fast as possible.

Start contributing to a retirement account

Prudential’s surveys show a trend of an increasing number of queer people without retirement products, such as a retirement plan. If you have an employer, they may offer a retirement plan. This is usually a 401(k) to which your company provides a corresponding match up to a certain dollar amount. Contribute at least the minimum required to get 100% of your employer’s match, as a corporate match is a great way to expedite your retirement savings.

If your employer doesn’t have a retirement plan, you have other options. One choice is the government sponsored myRa. If you’re starting out with a retirement savings plan and want the security of the U.S. government to protect your savings, the myRA is a good option. The myRA lets you contribute up to $5,500 a year ($6,500 if you’re over 50 years old), $15,000 over the life of the account, at which point your myRA must be converted into a Roth IRA. The benefit of the myRA is there’s no minimum balance fee.

Or you could just open a Roth IRA. Roth IRAs, too, let you contribute up to $5,500 a year ($6,500 if you’re over 50 years old) with no lifetime maximum. If you’re just starting your retirement savings plan, be careful you aren’t charged minimum balance fees.

Create a financial plan

As with creating a debt payment plan, the most important part of creating a more holistic financial plan is to simply start. There are any number of financial plans, from the familiar Carl Richards’ plan to plans for entrepreneurs to plans for busy moms. My husband and I use this 12-step financial plan.

Find a plan that works for you and stick to it. Consistency is the key with paying off debt, saving for retirement, and with successful financial plans.

Get health insurance, long-term care insurance, and life insurance

The state of health insurance in America is a concern for many. What’s more concerning is not having health insurance. If you don’t have health insurance, don’t keep yourself at risk any longer. Get health insurance.

Because approximately 60% of LGBT people don’t and won’t have children, it’s important for us to consider how we’ll be taken care of when we can’t take care of ourselves. Long-term care insurance provides physical and medical care coverage when there aren’t others around to or able to help us—although it can be prohibitively expensive. As an alternative, most life insurance policies can include an accelerated death benefit rider that allows for tax-free payments to cover medical care in certain “critical” circumstances. Life insurance can also help queer people leave a legacy to individuals and organizations important to them.

Because of the additional and unique challenges the LGBT community faces, it’s important for us to take extra care of ourselves and our financial lives. Pride is a celebration of who we are and a reminder of how far our community has come in equality. It’s also a good opportunity to gauge how we’re doing individually and how we can improve over the next year. In the next 365 days, do a 180-degree change with your finances and you’ll achieve a whole new level of pride.

Published on May 24, 2017

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John Schneider has over 16 years of experience writing about money, with a focus on the queer community, being featured in Yahoo Finance, Business Insider, Time and more. With his husband and business partner, he co-owns Debt Free Guys and co-hosts the Queer Money podcast, a podcast about the financial nuances of the queer community.
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