LGBT Americans have made great strides in recent years, overcoming added hardships and prejudices. A new study shows that members of the LGBT community are also significantly better at managing their money than average Americans. This is a tremendous accomplishment and something that should be celebrated.
Lesbians, gays, bisexuals, and transgender people are more likely to have higher-paying jobs, lower unemployment rates, and more savings. Despite these findings, LGBT members still believe they are less prepared than the general public to make good financial decisions, mainly due to unique legal challenges.
Within this one community, there are significant demographic differences. Generally, transgender people face more economic discrimination than LGBT people, and lesbian couples are more likely to become parents than gay male couples.
According to the LGBT community, however, a few key points seem to be widely agreed upon. As a result, they place a high value on financial security and a greater emphasis on saving for the future.
An August 2012 study found that members of the LGBT community have a higher median income than the general population. In the survey of 1,401 respondents, the median household income was $61,500, nearly a quarter more elevated than the average household income of $50,000 for the general population.
According to researchers, this is due to two factors: LGBT individuals tend to be more educated, with more than half holding bachelor’s degrees, and LGBT individuals tend to live in more gay-friendly states.
In addition to saving money and paying down debt, LGBT households are also good at paying down debt. The median savings among LGBT households is $28,000, approximately $6,000 more than the average American household. The average American has $14,000 in debt, not including home loans, which is about $4,000 less than the average American.
In addition, only 7 percent of the LGBT community is unemployed and actively seeking employment. As evidenced by their unemployment rate of 12 percent, transgender people have the most difficulty finding work.
Spending Habits & Financial Responsibilities
LGBT individuals indeed have similar financial responsibilities to the general population, but they handle them differently. Among their many financial obligations, respondents reported caring for children and parents and saving for retirement.
Approximately 10 percent of respondents to the survey were financially responsible for a parent or other elder. Although this number remained relatively constant across generations, it varied greatly based on ethnicity. Twenty-one percent of Asian-American respondents, 18 percent of Hispanic respondents, and fifteen percent of African-American respondents reported caring financially for an elder.
There are additional expenses associated with caring for children for LGBT parents. The survey shows 23 percent of lesbians and 7 percent of gay men have children, for a community total of approximately 15 percent. Among Gen Y, currently aged 25 to 32, 11 percent have children and 49 percent intend to have children shortly. With a median household income of $71,100, those with children are well prepared financially.
As gay couples are usually prepared for financial obligations and maintain a relatively stable financial situation, they have more discretionary spending room in their budgets. The study found that 25 percent of lesbians and 40 percent of gay men spend more than $500 per month on discretionary purchases such as dining out and entertainment.
Having financial concerns
One of the biggest financial concerns for LGBT individuals is retiring comfortably. Just like everyone else, members of the LGBT community want to make sure they have enough money saved up so they can maintain their current lifestyle after they stop working. This can be a difficult task, but there are ways to make it more manageable.
When it comes to retirement, gay individuals have a unique concern. Because same-sex couples are often not recognized legally, these couples do not have access to Social Security and pension survivor benefits. As a result, they may be more inclined to save money due to this concern.
Despite all the worrying, there is one positive outcome. With 78 percent of gay individuals have already started saving for retirement due to high concerns, they are planning for retirement ahead of time.
The following are other areas of financial concern:
- Taxes and accounts can be affected by the legal equality of LGBT Americans
- Understanding and responding to the needs of LGBT individuals in the financial industry
- Economic activity in the country
Taking the next step
The LGBT community has faced many challenges throughout history and will continue to do so in the future. One of the community’s most significant issues is financial security, especially as more and more members of the “gay baby boomer” generation reach retirement age. With this issue becoming increasingly important, it is clear that the fight for equality is far from over.
Due to the increasing number of gay individuals planning to have children, supporting a family will also take precedence.
Despite this, LGBT individuals are optimistic about the future. Generally, respondents were confident about LGBT rights, personal finances, and the economy over the next two years.
Even though 61 percent of respondents indicated the equality of LGBT Americans is currently in poor condition, approximately 65 percent expressed neutral or positive views regarding the issue’s progression over the next two years. As well as this, 31 percent of respondents indicated that their household finances are in poor condition. However, only 19 percent felt pessimistic about their finances in the next two years.
Members of the LGBT community should expect their legal and financial circumstances to improve as legislation becomes more inclusive and less detrimental to them.