The high cost of being gay

It gets better — and you have to be able to afford it. That’s a key lesson from John Schneider and David Auten, Denver-based financial planners who focus on serving LGBT clients and also happen to be married. After a year and a half of dating, they opened up financially to one another and admitted they were each carrying loads of credit card debt — to the tune of $51,000 combined. Despite being financial professionals who had plenty of knowledge about money, they realized their “financial troubles had roots in being LGBT,” Schneider says.

The LGBT acronym means lesbian, gay, bisexual and transgender and may be lengthened to include queer, intersex and asexual identities to the mix. Overall, the letters stand for anyone who identifies beyond the current mainstream definitions of sexuality and gender. And unfortunately, they can often spell trouble when it comes to finances.

“We both came from a time and place where it wasn’t OK to be gay,” Schneider says. “We lived some of our formative years in the closet, and there were times when we were both bullied and picked on. So when we were finally adults and out on our own, we kind of reveled in that independence.”

In other words, they dove, credit cards first, into overspending on the fancy clothes, drinks and nights out that all their peers were also indulging in. And they weren’t alone. According to a 2016-2017 report from financial services firm Prudential, 48 percent of LGBT survey respondents consider themselves spenders, compared with just 32 percent of the general population. Also, 4 in 5 LGBT households report that high debt levels make managing household finances difficult, according to a 2017 survey from MassMutual.

[Read: Boycotts, Petitions and Campaigns: How Consumers Can Flex Their Financial Power.]

Of course, higher LGBT living costs aren’t all due to frivolity. Many parts of the country are not welcoming to the LGBT community, and areas that are tend to come with higher price tags. For example, Manhattan and San Francisco are well known for being both LGBT-friendly and budget-unfriendly. Living costs in the respective areas are 195 percent and 118 percent above the national average, according to research firm Sperling’s Best Places. On the other hand, the states with the lowest living costs — West Virginia and Arkansas at 17 percent below the national average and Oklahoma at 16 percent below average — are also among the 20 states that do not have hate crime laws specifically protecting LGBT people.

“In the states that don’t have protections, our brothers and sisters don’t tell people who they are, they don’t tell people who they love, they don’t find people who they love because they can’t,” Auten says.

Schneider adds that, on top of the emotional stress of having to hide in that way, such a life can also be financially stressful because of job insecurity and the inability to pursue higher incomes. He notes that transgender people are more likely to have household incomes of $12,000 or less. In fact, according to the most recent U.S. Transgender survey, 29 percent of respondents are living in poverty, compared with just 12 percent of the general population. “They don’t want to put themselves in positions of risk or seek out situations that might turn out to be threatening,” Schneider says. “They almost live behind closed doors.”

[See: 10 Easy Ways to Pay Off Debt.]

Lesbians, too, face different financial hurdles. In general, women tend to get paid less than men, with women of color receiving the lowest pay on average. So households headed by two women of color, especially, can struggle to make ends meet.

For these reasons, saving money and having control over your finances is even more crucial if you are LGBT. For Auten and Schneider, wrangling their debt started with identifying what was truly important to them, which helped them clear away their $51,000 of credit card debt in just two-and-a-half years. “We realized that clubbing and going to fancy dinners wasn’t what we really wanted,” Schneider says. “What we wanted was to travel, be together and retire independently. Once we could focus on our main goals, it gave us the motivation to pay off our debt, and that’s kept us out of debt since.”

Remember to think about the long term and save as much as you can for the future, too. For many in the LGBT community, doing so may never have felt necessary. After all, if you’ve struggled with your identity, you’ve likely had to focus on surviving the present. But while longevity risk plagues much of America’s aging population, whether gay or straight, cis- or transgender, LGBT people often need to save even more to afford their longer lives.

“As a community, we face discrimination in retirement,” says David Rae, a financial planner based in Los Angeles. “Your dream retirement will likely be in a more costly location with a higher cost of living. You also will be left to pay for more care than others in similar positions.”

Estate planning can also be extra tricky for the LGBT community, particularly if you remain unmarried. “Even though same-sex couples may feel fully supported by their families with respect to their relationship, funny things happen when there are assets at stake,” says Natalie Colley, an analyst at financial planning firm Francis Financial in New York.

To protect beneficiaries and ensure your wishes are carried out once you pass, Colley recommends consulting with an estate planning attorney experienced with same-sex couples. And consider placing your assets in a trust to be passed onto your partner or other beneficiary of choice. “The assets placed in trust are private,” Colley says. “So it reduces the risk of family members seeing what is at stake and feeling that they deserve a share.”

[Read: Estate Planning Is Important for People Without Children.]

Of course, working with a financial professional can be daunting — not only trusting him or her to take care your money, but also to respect your identity and lifestyle. “I’ve spoken to numerous people over the years who were too scared to come out to their financial advisor,” Rae says. “By being out and visible, I hope to help other financial professionals be out and visible. The more of us there are helping the LGBT community, the easier it will be for people to know that gay financial advice is available.”

Whether you decide to work with a pro or not, recognize that taking control of your finances is empowering, no matter your gender identity or sexual orientation. “Celebrate your financial well-being,” Auten says. “Throughout the year — not just in June — take pride in your finances as well as who you are.”

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