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- For years, the LGBTQ+ community has had to focus more on survival than wealth-building.
- But, experts say, we’ve reached a moment when LGBTQ+ wealth-building is more possible than ever.
- Reducing the burden of financial stress frees LGBTQ+ people to deal with other issues facing the community.
With at least 7% of Americans identifying as LGBTQ+ in 2022, our community is the fastest growing minority group in the United States, according to recent census data reported by The Pride Co-op. The community packs spending power of nearly $1.4 trillion.
Yet, LGBTQ+ Americans are less likely than Americans overall to use financial tools like retirement savings and estate plans, and two-thirds experience a high amount of financial stress tied to keeping up with basic living expenses, according to a study from investing services company The Motley Fool and LGBTQ+ personal finance blog Debt Free Guys.
It’s no surprise wealth-building is a relatively new topic of conversation for our community. For most of history, queer and trans folks have been preoccupied with survival.
“For so many years, we couldn’t acknowledge that we even existed,” said John Schneider, who co-founded and co-owns Debt Free Guys and co-hosts the “Queer Money” podcast with his husband, David Auten. “It’s a little bit hard to focus on abundance when you’re trying to stay alive or not get beat up that day … I think we’re finally at that phase in our history where we can maybe start actually having that conversation.”
Why we need to build wealth in the LGBTQ+ community
If you hear words like “wealth” and “investing” and cringe, you’re not alone. Nearly half of LGBTQ+ Americans have experienced discrimination by someone in financial services, and all of us live under a system where corporations and financial institutions are incentivized to support leaders who routinely work against our interests.
What reason should we have to participate in a system that, until recently, hasn’t even bothered to acknowledge our existence?
Here’s one: Wealth in our culture means security and power, and the LGBTQ+ community can wield those to make a difference.
“If we can reduce the mental health impacts of financial stress,” said Auten, “it gives us the opportunity to be able to be a little bit more stable when it comes to dealing with some of the other things that we’re under attack from.”
Schneider added that building wealth in the community means we can also become self-sustaining and stop relying on corporate donors to fund the organizations, like the Human Rights Campaign, that advocate for our rights.
“That abundance, that wealth-building, will give us the time, money, and the autonomy to be able to fight for our rights on our own terms and conditions,” he said.
The duo pointed out that queer media heavily covers the threats to LGBTQ+ rights around the country, but rarely offer practical steps to fight back. And few are making the connection between that fight and the power of building wealth within the community the way that many other historically marginalized communities have done.
“There’s much more we can do than just vote every couple of years,” said Schneider. “We can do something in the interim and achieve that financial abundance so that we can fund the organizations and people and causes that are fighting for our rights.”
How LGBTQ+ folks can start building wealth
Loren Mattia, head of marketing at LGBTQ+ banking platform Daylight, encourages us to look at our relationship with money and take steps sooner than later to improve it.
“Building a healthy relationship with money can be challenging at first, but it’s always worth your while,” said Mattia.
Wealth-building for LGBTQ+ folks doesn’t look vastly different from that for our cishet peers. But the relationship with money we bring to these steps might be wildly different. Here are some tips for building wealth within the LGBTQ+ community.
1. Talk about money
Breaking the silence and stigma around money is one of the most important steps toward not just individual wealth-building but also equity for the community.
“We need to be more vocal as a community about having this conversation,” said Schneider. He suggests that we tend to shy away from talking about money “because we’re uncomfortable with it or because we equate abundance with robber barons.”
A healthy relationship with money starts with overcoming stigmas around debt and low income and getting comfortable talking about money struggles in safe spaces, as well as learning to celebrate upward mobility and (equitable) wealth-building instead of demonizing them.
2. Get help with family planning and other unique costs
It can be expensive to be LGBTQ+.
“For many queer and trans people, there are additional costs they have to pay just to exist: gender-affirming surgeries, family-planning costs, attorney’s fees for marriages, and more,” Mattia noted.
Schneider and Auten added that many LGBTQ+ people lose family support and access to resources after they come out. They had to pay for their own 2018 wedding in full, a cost the parents of many cishet couples traditionally help with.
Being cut off from family could also mean losing access to help with daily bills like rent, utilities, and a family cell phone plan, and not getting help with a down payment to buy a home.
All those expenses, big or small, are money you can’t put into a savings or investment account to secure your future.
You don’t have to shoulder the costs alone. Look for organizations providing grants to support LGBTQ+ people, including:
3. Start saving as early as possible
Building wealth, especially if you’re starting from scratch, requires time. Don’t put off saving as something you’ll think about in the future. Time is your friend if your goal is to grow your money.
Any amount of money in a savings or investment account can benefit from compounding interest and returns — and that benefit grows with time.
“Especially for LGBT+ individuals, investment in your financial future sooner rather than later is essential,” said Mattia.
You can start small: Transfer $10 from each paycheck into a savings account at your bank, or invest your spare change in exchange-traded funds (ETFs) through a simple personal finance app like Acorns.
You can always increase your contributions if your financial situation improves in the future, but you can’t go backward and benefit from money you didn’t save.
4. Find a queer-friendly financial advisor
An investment advisor or financial planner can help you make a plan for your money based on your current and future goals. You need to work with someone who respects you and your family and understands your unique financial needs.
To find a financial advisor who’s right for you, search through databases like Let’s Make a Plan from the CFP Board and the National Association of Personal Financial Advisors. Search for fee-only, fiduciary advisors in your ZIP code, and filter for terms like “LGBTQ family.” You can also find LGBTQ+-identified financial planners through the Gay Lesbian Directory.
5. Make a plan to deal with debt
According to The Motley Fool/Debt Free Guys survey, LGBTQ+ Americans are more likely to have student loan debt, credit card debt, and personal loan debt than the general population. We also earn less money on average compared with cishet peers with the same level of education, making that debt harder to tackle.
You might need to prioritize day-to-day expenses or building back-up savings ahead of paying down debt, and that’s fine. But carrying debt may impede your ability to build wealth down the line, so don’t ignore it altogether.
Consider the impact of your debt on your overall financial circumstances. Are interest and fees ballooning the balance? Is a collection agency after you? Could your wages be garnished for overdue payments? Could you lose your home, car, or other collateral? Do you need a higher credit score to achieve your financial goals?
Based on the potential consequences of your debts, set priorities and repayment plans that keep you financially secure and help you make room to save and invest.
6. Decouple ‘wealth’ from ‘luxury’
Don’t conflate the security of wealth with the trappings of it: luxury cars, clothing, or vacations. Money can do much more than buy you things to prove to people that you’re rich.
When you decouple wealth with the trappings of luxury, you can use your money according to your values.
Companies are happy to encourage us to pour our $1.4 trillion purchasing power into the fabulous lifestyle they’d like us to believe is a requirement of being gay. But the financial stability and political power we can gain from redirecting those funds is worth so much more in the long run.
“Let’s skip the extra cocktail, let’s skip the bottomless mimosa for a weekend,” Auten said, “and let’s put that money towards what is really important for us, and that is keeping our rights.”
7. Work for yourself
Entrepreneurship is an important alternative for LGBTQ+ folks and others who face discrimination in the traditional workforce. Working for yourself doesn’t totally bypass discrimination — you still have to choose clients carefully and may face barriers to funding — but it’s a more secure path for many.
Building ownership in something is also a key way to build wealth. Put your effort into developing a business asset you own — and can sell in whole or in shares one day — instead of building profits for someone else.
8. Invest for stable growth
If you’re just getting started with investing, follow this one simple rule: Don’t buy individual stocks.
Microinvesting apps have become popular in recent years for “democratizing” investment — you can buy into the stock (or cryptocurrency) market with as little as $1 or $5 at a time. Bypassing gatekeepers and increasing access is great, but most of these apps are more like gambling or gaming than actually investing for your future.
That’s because you can’t predict what these assets will do in the future — even most professionals who pick stocks for a living can’t increase your chance of making money through managed investments.
Instead, put your money in index funds and index-based ETFs, which track the performance of a stock index like the S&P 500. Studies have repeatedly shown active trading doesn’t beat this strategy.