How to overcome legacy financial exclusion
Why is the LGBTQ community struggling financially? We’re often victims of ‘legacy financial exclusion’. Here’s what you need to know and how to overcome it. Meanwhile, grab your free copy of the 5 Building Blocks of a Happy Gay Life here.
Everything you need on legacy financial exclusion:
Legacy exclusion from finances
So, what’s it mean to be excluded from finances, exactly? How does it hurt us? And most importantly, what can we do about it? On this episode of the Queer Money® podcast, we discuss legacy financial exclusion, sharing several examples of how the queer community may not get the same financial support or education as our straight peers. We go on to share 4 strategies for overcoming this financial form of bigotry, offering ideas for avoiding or eliminating student loan debt, and challenging you to talk about money with your peers in the LGBTQ community. Listen in for insight on saving for retirement and learn what YOU can do to channel Aretha and Annie—and help build legacy wealth within the queer community!
The effects of legacy financial exclusion
Being left out of generational wealth or, as we call it legacy financial exclusion, affects LGBTQ people at three stages in our lives – early, middle and late – seven different ways.
Early-life legacy financial exclusion
- Being forced into living double lives – Young queer kids may be using money to live a life with their friends or at school that allows them to be themselves, but not receiving the financial support for that through clothing, activities, etc. so they’re finding ways to use their own money. Their siblings, however, receive financial support for “conforming” styles or activities allowing them to save money in a way LGBTQ youth can’t.
- Becoming homeless – Per the William’s Institute, 40% of homeless youth identify as LGBTQ. Being homeless starts LGBTQ kids off without financial support from family and leaves them out of financial education. Some LGBTQ youth file for emancipation. This starts them off at an economic disadvantage, usually getting low skills, low pay jobs that can set the standard for their income throughout their lives.
- Not getting financial support for college – Student Loan Hero found that LGBTQ graduates have an extra $16,000 compared to their straight peers. This has been attributed, in part, to LGBTQ college students assuming more debt simply to leave hostile home lives. In some cases, parents may forgo helping their queer children in favor of helping their straight children.
Middle-life legacy financial exclusion
- Daily expenses not being covered – CNBC reported that 53% of Millennials have their parents paying for some aspect of their daily life. This isn’t happening for many queer folks who leave home early to establish themselves or were kicked out of the house after high school because of being queer.
- Help with getting a first apartment/down payment on a home – Without family support, some folks wouldn’t have the funding for a deposit on a first apartment or mortgage.LGBTQ children may not get the housewarming gifts that many of their non-LGBTQ peers get. Many parents, love providing some support with the purchase of a first home or may sell a family home or rent a family home to children at a lower than the market rate, and not extending these gifts to their LGBTQ children.
- Paying for a wedding – Many same-sex couples pay 100% of the costs of their wedding and often end up marrying later in life because of this. This has near-term and long-term consequences. A 35-year-old, same-sex couple that spends $25,000 of their own money on a wedding instead of investing that $25,000 for retirement are forgoing upwards of $375,000 to 450,000 in potential retirement assets if they retire at 70 and had a modest 7-8% return
Later-life legacy financial exclusion
Finally, not inheriting family assets such as homes, investments, and heirlooms – According to United Income Investment Firm, the average inheritance was $295,000 in 2016. Even much smaller amounts could help folks pay off debt, pay off a home, send their own kids to college and help them with their own retirement. Many LGBTQ kids aren’t getting these benefits.
David’s parents will likely be inheriting upwards of $1,000,000 to David’s sister after they pass away. David will see none of this and it’s solely because he’s gay. His parents have every right to do with their money what they want, but it’s a particular disappointment that they’ll do this only because he’s gay. This, of course, means we need to plan differently for our retirement than his sister does.
The importance of making personal finance education accessible to everyone, especially queer people
It’s absolutely critical that personal financial education becomes more accessible to everyone, especially the LGBTQ community. The primary goal of the Queer Money® podcast is to help more LGBTQ people become financially independent. The stronger we are as LGBTQ individuals and allies, including our financial strength, the stronger we are as a community. Thus, the stronger we are to continue to fund the politicians, people and organizations that are pushing for LGBTQ equality.
That said, LGBTQ people have never had access to financial education and financial services as we do today. There are tons of LGBTQ personal finance content creators, from bloggers to podcasters. More financial institutions are trying to authentically engage with the LGBTQ community, and in fact, there are now financial institutions being built by and for the LGBTQ community.
How LGBT people can build lasting generational wealth
We have four tips so the LGBTQ community can overcome these challenges or, rather, create our own generational wealth.
- With college, consider alternatives, especially because in many cases college is becoming cost-prohibitive even with familial support. From plumbing to glass blowing to web development and game design, there are many options for further education and high-earning careers that don’t require a six-figure college education.
Also, consider creative financing. It may make more sense than ever to first work a few years to gain experience in a field and save money for college. In fact, you may find an employer willing to pay for some or all your college education. For LGBTQ folks, there are college scholarships and grants. A good place to start this search is with the Human Rights Campaign’s (HRC) LGBTQ Student Scholarship Database.
All isn’t lost if you’re part-way through or you’ve already graduated college. There’s also the Employer Participation Repayment Act (EPRA). The EPRA is a newer law through the CARES Act that’s scheduled to last through 2026. EPRA lets employers use up to the $5,250 that they would normally use for tuition reimbursement when a student is going to school while employed but rather pay for previously earned education. This is done by paying on student loans either through payments to the employee like tuition reimbursement or directly to the loan servicers.
- Next, talk about money. The fact is that people who talk about money do better with their money. So, let’s talk about money as a community. We must stop pretending that money is a taboo topic because that myth keeps us in a helpless situation as a community
- Learn from those that are further along than you. Find out what your peers are doing. Share with them what you’ve learned and what you’re doing. Got to local money meet-ups and encourage other queer folks to do the same. This can be done virtually while we’re still dealing with COVID.
- Don’t forego retirement savings! A comfortable and secure retirement comes from planning and saving early and regularly but learn how to invest for retirement even if you’re in your 50s or 60s. Most millionaires today became so through company-sponsored retirement plans. Yet, even with access to those types of plans, many Americans don’t use them. Don’t let this be you.
- Finally, create legacy wealth within the LGBTQ community by setting up your estate plan to donate to LGBTQ causes that will help homeless youth and giving to local, younger LGBTQ folks you know personally. If you’re a small business owner create a succession plan to keep the business you’ve spent a lifetime building in the LGBTQ community when you want to sell your business, retire or pass away.
As we said previously, not having access to financial support or financial education from friends or family members in their youth, sets many LGBTQ kids up for challenges even before they become adults. We’re consequently less financially sophisticated and prepared to make serious financial decisions that have long-term consequences.
First and foremost, we need to talk much more about personal finance in the LGBTQ community. It all starts with sharing what’s working for us and not working for us, and we need to stop shaming people who are succeeding financially because we need more financially strong people in our community. Rather, let’s learn from the financially successful. Then, follow the tips above.
Topics covered about financial exclusion
- 7 examples of how the LGBTQ community is affected by monetary exclusion
- 3 examples of how queer youth in non-affirming families don’t get the same financial support or education as their straight peers/siblings
- How straight adult children get help with major expenses (i.e.: weddings, buying their first home, etc.) that LGBTQ adults may not
- The compounding impact of not inheriting valuable family assets
- 4 ways the LGBTQ community can overcome this exclusion
- 4 strategies for avoiding or eliminating student loan debt
- Why it’s crucial for the queer community to talk about money with their peers (and how to initiate the conversation)
- The importance of being strategic about saving for retirement
- What we can do to build legacy wealth within the LGBTQ community
Resources to overcome financial exclusion
- Student Loan Hero Survey on LGBTQ Debt on Queer Money® EP96
- Employer Participation in Repayment Act on Queer Money® EP262
- Capital One Money Coaching
- 5 Building Blocks of a Happy Gay Life
- Debt Free Guys on Facebook
- Debt Free Guys on Twitter
- Queer Money Facebook Group
- Queer Money on Instagram
- Subscribe on iTunes
- Email [email protected]