Many people are unaware of these three challenges affecting financial planning for LGBT people
Pride month is over, the floats are being put away, and companies are retiring the rainbow-colored versions of their logos. But for millions of LGBT people and their families there is no going back to “business as usual”. Unique community challenges are present throughout the year.
Cultural and structural barriers make life financially more difficult for LGBT people, says John Schneider, who runs a queer-focused personal finance website, Debt Free Guys, with her husband David Auten.
“David and I like to say that 80 percent of personal finance is the same for everyone. A dollar to you equals a dollar to me. That’s the real finance side of personal finance,” she says. “But the other 20%, which is the personal side of personal finance, is based on our backgrounds, our histories, our socioeconomic status, race, creed, segmentation, all of that.”
That 20% can have a dramatic effect on the other 80%, says Schneider. “That means we are likely to have different outcomes despite many of the same variables. And for the LGBT community, there are some variables that are unique to us compared to other demographics.”
Here are three unique financial challenges faced by LGBT people and how community-focused financial planners say they can overcome them.
1. LGBT people earn less and pay more to live
Even if personal finances were just a matter of pennies, LGBT people are at a disadvantage compared to their non-LGBT peers. On average, LGBT workers earn 10% less than a non-LGBT worker, according to the Human Rights Campaign.
The gap widens for non-binary and genderqueer people, who earn 30% less. Transgender men and women earn up to 40% less.
But even if they earn less, many in the queer community prefer to live in areas where the cost of living is higher.
“LGBT people are afraid to live in certain cities and states. And because of that, we move to more expensive places to live,” says Schneider. “For our personal safety and the safety of our community, we are choosing a much more expensive lifestyle, even if we make less money.”
When you move to a new city, paying attention to how it affects your spending is key to keeping your financial plans on track, says Laura LaTourette, certified financial planner and founder of Family Wealth Management Group in Georgia.
To that end, he creates online dashboards for his clients, allowing them to see how their spending changes in real time. “You budget, then you move across the country and suddenly you start noticing a lot of differences,” she warns.
2. Hard to find financial planning resources
If you’ve been to any Pride parades in 2023, chances are you’ve seen the staff of a major bank or investment firm. Yet despite these initiatives, queer people remain largely “invisible” when it comes to major financial institutions, Schneider says.
“As members of the community, we don’t see ourselves in these places of wealth creation because we’ve traditionally been excluded from these institutions,” she says.
In fact, 55 percent of LGBT Americans, for example, say they’ve been discriminated against by someone in the financial services industry, according to a recent survey by Debt Free Guys and The Motley Fool. For transgender Americans, that number is as high as 74%.
3. Planning for non-traditional families
Many financial arrangements are built around the traditional family unit: a married couple and their biological children. For same-sex couples, the quota of biological children is often a significant financial obstacle.
According to a survey by Family Equality, approximately 63% of queer people plan to use assisted reproductive technology, adoption or foster care to become parents. Such measures can cost LGBT families hundreds of thousands of dollars.
However, one area where queer people have made progress is same-sex marriage. But given recent Supreme Court trends in the United States, many people in the LGBT community worry that this status may soon disappear.
“It feels like we’re under attack again,” says LaTourette. “My clients are nervous and want to make sure their inheritance plans are in place in the event that marriage equality is revoked.”
This could put legally married queer couples in the same situation as queer couples who choose not to marry or who live a polyamorous lifestyle: in a legal gray area with regards to their finances.
This means that any LGBT person must take additional steps to protect their financial and health decisions in the event of a death or disability.
“You need to have a standard set of estate planning documents, including a will, health care attorney, and power of attorney,” says Valega. “And you will want to work with an attorney who is friendly to the LGBT community.”
If you are in a non-traditional relationship, such as a polyamorous relationship, you may benefit from working with an accredited domestic partner counselor who specializes in working with unmarried people.
“There are a number of issues involved in terms of fees, donations and strategies that ensure funds can be transferred from one person to another,” says Summers, who holds the designation.
These strategies are especially important for people in queer love relationships who may not fit neatly into the traditional marriage box. “These relationships have different structures and can be considered long-term relationships,” she concludes.
Source: CNBC Do it
Source: Terra
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