Why Saving and Debt are Big Problems for LGBTQ+ People

John Schneider and David Auten were living lavishly, with designer jeans, expensive parties, and frequent dinners out where they would pick up the tab for a round of drinks or pricey bottle service. 

The couple, who are based in Las Vegas, soon realized they were facing more than $50,000 in debt, living in a basement apartment and unable to afford what they truly wanted out of life. 

“We do have a lot of outside pressures telling us what we should want, what a successful gay looks like,” Schneider says. “Our spending was not at all aligned with what really mattered to us. We wanted to save for a comfortable retirement, travel much more than we had at that point, but to do it on cash and not come back with a credit card hangover, and to give back to their community.”

The couple, together for more than 17 years and married since 2017, are now the authors of “4: The Four Principles of a Debt Free Life” and the Debt Free Guys website, geared toward helping LGBT people climb out of debt and live smarter financial lives.

They confirm what the numbers show—that LGBT Americans are less financially stable than the general population and face unique challenges that affect their bank accounts.

Nearly half of the 500 LGBT respondents in a wide-reaching 2018 Experian survey said they struggle to maintain adequate savings, compared to 38 percent of the non-LGBT population surveyed, and more than a third said they have “bad spending habits” that they’d like to improve or change, compared to about one-fourth of their non-LGBT counterparts. 

Bias and discrimination has caused financial challenges for 62 percent of LGBT respondents, who also reported being passed over for jobs or promotions, being harassed at work and higher housing costs due to discrmination.

The LGBT population is also more inclined to spend money than save it, according to the Experian survey, and have more challenges when it comes to retirement planning.

Schneider and Auten focused their attention on LGBT finances after attending FinCon, the world’s largest financial content conference, in 2015, a year after they launched Debt Free Guys. They found groups dedicated to black finances, mommy bloggers, Christian bloggers, but not LGBT finances.

“That kind of put a little bit of a weight on our shoulders that said if no one else is going to do this we have to do it,” Auten says.  “We have the responsibility and the privilege to do that.” 

They also recognize that, as cis, white men, they have a privilege that can translate into helping other LGBT people who may be marginalized because they are people of color, transgender or living in poverty.

“I think that we need to be very encouraging to each other in the community that there are as many options and opportunities available to us as there is everyone else,” Auten says. “It may not feel like it at times, but it is.”

We’ve broken down the most pressing financial challenges for the LGBT community along with tips for financial stability.

Savings and Student Loans

Successfully entering adulthood often depends on strong family support and education — two things LGBT youth often don’t have. 

Though LGBT youth comprises just 5 percent to 10 percent of the population, they account for 40 percent of homeless youth. LGBT young adults are 120 times more at risk of being homeless than heterosexual, cisgender young adults.

That sets up the LGBT population for years, if not a lifetime, of struggling, financial stress and low paying jobs.

“You’re worried about where you are going to sleep at night or whether you’re going to be able to get through the day without getting beaten up, or every day you’re dealing with microaggressions because of who you are,” Schneider says. “It’s a little hard to then say, despite all this, I’m going to focus on saving enough for retirement.”

Saving and planning for a stable financial future is a privilege that many LBGT people don’t have the luxury to consider.

“Oftentimes when we think about finances in our community, it’s more from a position of desperation and not as much from a position of opportunity,” he added.

The lack of familial support also means much higher student loan debt for LGBTQ+ youth that make it to college. 

About 4 in 10 respondents in a Student Loan Hero survey of LGBTQ+ borrowers in 2019 said they’ve been denied financial help due to their sexual orientation. Nearly 30 percent say their student loans are unmanageable and a whopping 87 percent said their student loans have prevented them from reaching important milestones.

Still, college is a lifeline for many. Nearly 60 percent said they felt welcomed and accepted on their college campus.

Budgeting Differences

Once you do get to a point of budgeting and saving, it may look different than your hetero, cisgender counterparts.

“A lot of our budgeting needs will be different. A lot of our budgeting goals will be different,” David Rae, a Los Angeles-based certified financial planner whose firm caters to LGBTQ+ and LGBTQ+-friendly clients, says.

Fewer gay and lesbian couples have children than heterosexual couples. While exact numbers are hard to trace because some parents may feel scared to accurately report their status on the U.S. census, there are an estimated 2 million to 3.7 million children living with a parent that identifies as LGBTQ+, according to the most recent data.

Those families that do choose to parent children will spend more to bring those children into their families, through surrogacy, sperm donation, reproductive medicine and adoption fees.

LGBTQ+ Americans also face unique medical costs that can put a major strain on their budgets. This can include anything from higher HIV/AIDS treatment and medication, hormone therapy, and delayed or less effective medical treatment due to the stigma of being LGBTQ+.

For some transgender people who choose gender reassignment surgery, the medical costs can be crippling — almost six figures in some cases. That can be financially devastating for those who are uninsured or whose policies don’t cover the costs.

The Cost of Living (and Keeping Up with the Joneses)

Just a generation or two ago, rampant, dangerous homophobia and laws against gays and lesbians, Rae says, forced people into the safe havens of major cities like San Francisco, New York City or Los Angeles.  

“We don’t have to live in the ‘gayborhood’ necessarily anymore,” Rae says. ““But I do think for the most part, we are ending up in cities… which drives up the average cost. And some of that is to feel safe.”

There is also the very prevalent stereotype of the lavish gay lifestyle, especially among, gay men, according to Rae and the Debt Free Guys, and that plays a major part in spending beyond their means on things they may not even want.

“We want to prove that [LGBTQ+ people] are worthy, that we are just as good as our straight neighbors,” Auten says. “I think it’s a lot of [keeping up with] Mr. and Mr. Jones, Mrs and Mrs Jones.” 

The Atlantic even published a report about the myth of gay affluence, that pointed to a disparity between popular culture, such as Will & Grace and Modern Family and the reality that LGBTQ+ Americans live with a disproportionate amount of poverty and debt. Auten and Schneider says they have friends in New York City, a gay couple, who both earn six figures each, but who are drowning under six figures of credit card debt. 

The Experian study showed that nearly 50 percent of respondents ages 25-34 reported feeling financially out of control along with more than 40 percent of respondents ages 35-44.

“I think the media and the consumerism side of corporate America do a really, really good job, of showing us this is what really fabuous gay men look like,” Auten says. “If you want to be a good gay, you need to look like this.” 

Money Matters at Work

LGBTQ+ Americans continue to face financially devastating discrmination at work, from being denied jobs or promotions to making less money than their straight co-workers. Only 22 states and the District of Columbia have laws to prohibit discrimination on the basis of sexual orientation or gender identity, according to the Human Rights Campaign.

Lesbians reported making $45,606 to straight women’s $51,461, a difference of nearly 13 percent, according to a report from insurance company Prudential  about finanical experiences of the LGBTQ+ community. Meanwhile gay men reported making an average of $56,936 to heterosexual men earning $83,469, a difference of 46 percent. And the unemployment rate for transgender Americans is three times higher than the national average, according to a report from Out & Equal, a workplace advocacy group. (Note: The Prudential report, from 2016-2017 is the company’s most recent on the subject. The 2019 report from Out & Equal is also that organization’s most recent.)

“The best way you can bridge that gap is to build your skill set,” Rae says, “and be as marketable and as valuable an employee as possible.” 

LGBTQ+ Americans, especially those who are younger, don’t have to consign themselves to service jobs or low-paying gigs that don’t come with benefits simply because they are gay or may present outside of the binary, Auten says. 

“There are as many options and opportunities available to us as there are to everyone else,” he adds. “We should be supporting and encouraging each other to reach for those higher paying jobs.” 

Tips for Financial Success and Supporting the LGBT Community

LGBT Americans may face more of an uphill battle in erasing debt and building wealth, but the advice is the same no matter how you identify.

“Create your own opportunity. And a big piece of having that opportunity is having your finances in shape, ” Rae says. “If you’re drowning in credit card debt, you are dependent on that job. You need that paycheck. You don’t have the opportunity leave.” 

Support LGBT and ally businesses. Not only are they a potential source of employment, but they understand, accept and support other LGBT Americans. 

“We as a communty can benefit from supporting gay businsses, supporting gay-friendly businsess,” Rae says, adding that he keeps a constant eye on social justice investments for his clients. “Some of that is our spending and some of that is our investing.”

Save for retirement, even a little at a time. This should be a goal for all Americans, but LGBT Americans as a group are behind the savings curve. Saving for retirement was the top financial concern for LGBTQ+ respondents of the Experian survey. 

But it’s not easy. For one, Rae and the Debt Free Guys pointed out, the HIV/AIDS crisis killed almost an entire generation of LGBTQ+ Americans who would now be nearing or at retirement age and could have set the standard.

Also, retirement planning imagery often involves a “straight, white couple and their golden retriever walking down the beach,” Auten says. “If you don’t see yourself in any of the imagery then you don’t think it’s necessarily for you. As an LGBTQ+ person, you may not even engage with this.” 

Looking for an LGBTQ+ retirement advisor or certified financial professional (CFP) can go a long way toward helping you secure the future you want.