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Did you hear about the LGBTQ Money Study? 

What’s the state of financial wellbeing in the LGBTQ community post-COVID? Find out what we learned from The Motley Fool/Debt Free Guys LGBTQ Money Study, which you can find more about here.

The Motley Fool/Debt Free Guys LGBTQ+ Money Study

Personal finance is a lot like the Pareto Principle, also known as the 80/20 rule. That is, 20% of your efforts produce 80% of your results. As such, 80% of money works the same for everyone; a dollar for you works the same as a dollar for me.

It’s transactional. It’s the “finance” in personal finance.

The other 20% that affects our experiences with money is based on who we are, our background, history, race, creed, sexual orientation, gender identity, heritage and more. These variables create our money stories that are often passed down from previous generations. These variables determine our poverty/abundance ratio and dictate our risk tolerance and behaviors around finance.

It’s the “personal” in personal finance. Thus, how each community thinks about, uses and interacts with money is different.

The new Motley Fool/Debt Free Guys LGBTQ+ Money Study shows that LGBTQ+ Americans with its $1.4 trillion in U.S. purchasing power could use a fresh engagement with its money, and the financial services industry should play a big role in facilitating that. This would benefit LGBTQ+ people by way of increased financial security, financial services by way of new accounts and new assets under management and strengthen the US Gross Domestic Product (GDP) to say nothing of how it could bolster the stock market.

The Motley Fool and Debt Free Guys surveyed 2,005 self-identifying LGBTQ+ people. Most respondents chose gay, lesbian, transgender, bisexual, some queer members identify as straight in their sexuality orientation though not necessarily their gender identity. Likewise, several folks don’t feel that they fall into L, G, B, T or straight but rather as something else from aromantic to non-binary to demisexual and pansexual and many in between. Here’s the breakdown:

• Transgender = 702
• Gay Men = 148
• Lesbian women = 249
• Bisexuals = 560
• Straight, termed “straight members of the queer community” = 373
• Those who exist outside of LGBT and straight identities, termed “non-LGBT queer people” = 73

The racial breakdown of the study mostly aligns with U.S. Census data with:

• 0.4% Arab
• 3.4% Asian
• 12.6% Black people
• 7.8% Hispanic
• 1.5% Latino
• 2.7% multiracial
• 0.7% other
• 68.8% white people
• 1.9% who preferred not to say

This breakdown should account for how race and racial histories affect the responses to the study.

The sexual orientations and gender identities of the study

We surveyed 2,005 self-identified LGBTQ

Here are some key findings from this groundbreaking study and key takeaways for LGBTQ+ people and the financial services industry.

Listen to  insights on financial self-advocacy:

The state of queer money

1. Which of the following accounts or products do you have?

While Prudential’s ‘The Cut’ found in 2019 that LGBTQ+ folks were less banked, meaning fewer of us have checking or savings accounts, than the general population, our study found that the LGBTQ+ Americans are on par with the general population for these basic products.

However, we’re almost as likely to have a crypto wallet as we are a company-sponsored or individual retirement account. This is concerning as 80% of millionaires report that their company-sponsored retirement plan (401(k), 403(b), 457) is the tool that helped them reach the millionaire milestone. Plus, much like the dot com bubble of the late 90s, the crypto market is still working itself out.

Interestingly, while transgender respondents are more likely to report having a crypto wallet, at 44%, they’re also more likely than any other demo of the study to have a company-sponsored retirement plan, 41%.

We’re even less likely than Americans overall to use products that offer advanced protections, such as wills and estates, disability and critical illness insurance and life insurance. We’re also less likely to have a mortgage and more likely to have credit card, auto or personal loan debt.

Again, transgender respondents were more likely than every other group to report having both a will or estate plan and a mortgage. Dear LGBTQ+ people, it’s time to follow our trans leaders.

In summary, the queer community is less likely to use the products and tools that make it easier and possible to reach financial security. This is a critical first step for us to take to improve our financial security – start using these products and tools.

2. How do you share/split finances with your partner?

A common question we get is, “how should my partner and I split our finances?” There isn’t a rule that everyone should follow (as much as a community that breaks the rules would really like one here). Couples should do what’s best for them. That said, most respondents reported not being married or partnered, 44% of lesbian women, 40% of gay men and 35% of bisexuals.

When partnered, gay men, bisexuals and lesbian women were more likely to report sharing most accounts. Transgender and straight respondents were likely to report that they pay most of their family’s expenses. Likewise, bisexual and lesbian women respondents were more likely than every other demographic to report splitting expenses while maintaining separate accounts.

3. On an average day, what is your financial stress level?

The queer community is facing a lot of pressures today. Ideally, our money wouldn’t be one of them. Unfortunately, every group in the queer community in the study was more likely to report stress levels of “somewhat high” and “very high” versus “somewhat low” and “very low.”

In fact, only 8% of transgender, straight and non-LGBT queer respondents and 6% of bisexual respondents reported “very low” financial stress levels. Forty-five percent of non-LGBT queer people were most likely to report “somewhat high” financial stress levels and straight members of the queer community were most likely to report “somewhat high” and “very high” financial stress levels.

Financial stress is an added layer of stress that LGBTQ+ people must deal with and likely exacerbates other stressors that we face.

4. How often do you stress about your finances?

Our financial stress is affecting our everyday lives, too. Each group within the study was more likely, or as likely in the case with gay men and non-LGBT queer members, to report stressing about their finances daily as any other frequency. Non-LGBT queer members were most likely to report stressing about money “less than monthly,” yet 36% of non-LGBT queer folks reported stressing about their finances “daily” and “weekly.”

So, what’s stressing us out?

“Transgender Americans are really outperforming their peers in a number of categories. They tend to have higher credit scores than other folks in the LGBTQ+ community, more savings, etc.” - Jack CaropalClick To Tweet

6. What are your top financial priorities?

Flipping the script, we asked LGBTQ+ respondents to share their top three financial priorities.

Staying consistent with our leading financial worries, all groups listed “keeping up with the cost of living” as their top priority and “saving for a financial emergency” as their second most important priority. Gay men, bisexuals and non-LGBT members marked “getting out of debt” as their third most important priority, while lesbian women, transgender and straight respondents of the queer community marked “saving for retirement” as their third most important priority.

The lowest priority is “investing for reasons other than retirement” followed by “saving or paying for a child’s education.” Damn kids!

7. Have you experienced discrimination as an LGBTQ person by someone in the financial services?

Financial services industry is visible at annual Pride events, sponsoring initiatives such as the Human Rights Campaign, Out & Equal and The Trevor Project. Most brokerage and investing firms, bank and insurance companies have LGBTQ+ employee or business resource groups, yet there’s a disconnect between these attempts to connect with the queer community and authentically connecting with the community in such a way that improves our financial security.

Forty-eight percent of LGBTQ+ Americans report being discriminated against by someone in the financial services industry with transgender American reporting experiencing the most discrimination at 67%. The group least likely to report discrimination was non-LGBT queer people with gay men, lesbian women and straight members of the queer community reporting statistically equivalent numbers of discrimination versus non-discrimination.

8. Is your lack of financial security as an LGBTQ person attributed to this discrimination that you’ve experienced?

Forty-four percent of LGBTQ+ respondents attribute this discrimination to some lack of financial security. Transgender respondents, at 59%, were most likely to attribute this discrimination, at least in part, to their financial insecurity, while non-LGBT members were least likely to do so.

LGBTQ+ Americans desperately need to connect with the people, products and tools that can help us reach financial security. If the financial services, banking and insurance industries can authentically connect with this underserved, underbanked and underinvested community, it would improve the bottom line for these industries, strengthen GDP and improve the lives of nearly 20 million Americans and growing.

When it comes to LGBTQ+ folks reporting experiencing discrimination by someone in the financial services industry, respondents were not more likely based on race to say they experienced more discrimination. The only exception were Asian respondents who were 26% more likely to report experiencing discrimination.

That said, the queer community can’t wait until the financial services industry decides to meet us where we are. We don’t have time for that. Improving our financial security, i.e., reducing our financial anxiety and stress, are not only important for our physical and mental health and our retirements but imperative as we face increasing resistance to equality. The queer community need only look to Black women for inspiration in taking the reins of their personal financial security.

9. What is your individual salary / annual income?

Our question asking LGBTQ+ folks to report their annual income was the question most likely to elicit a non-response. In its own way, this is telling. Over 16% of respondents chose not to report their annual income ranges. These non-respondents likely fall into one of three categories:

• those who are embarrassed by how little money they make,
• those who are embarrassed by how much money they make and
• those who think how much they make is no one’s business.

Whichever reason folks chose not to respond gives a glimpse into their thinking about finance.

As we’ve shared, Prudential’s 2012 and 2016 LGBT Financial Experience Surveys highlighted a sexual orientation/gender identity pay gap. However, over the last few years, studies have shown that gay men who are coupled and lesbian women who are coupled are closing that gap.

As we talked with M.V. Lee Badgett on the yet-to-be-released Queer Money® episode 323, this is less likely to do with gay men and lesbian women earning more than our straight peers, rather that both gay men in a relationship tend to work, which is not as prevalent with straight couples, and lesbian women in relationships tending to work more hours more consistently as fewer lesbian couples have children than straight women who are partnered.

A majority, 19%, of LGBTQ+ folks who answered this question report earning between $50,000 to $75,000, just below the “happiness minimum” of $75,000 a year, including gay men, lesbian women and bisexuals. This may be, in part, due to the average age of respondents to this study being 35 years old and not quite at their peak earning years. A majority of straight members of the queer community report earning between $25,001 and $50,000 and most non-LGBT members reporting earning $25,000 or less.

Surprisingly, 38% of transgender Americans report earning over $100,000 a year compared to 31% of all Americans. The study shows that the earning power of transgender people correlates with racial expectations in that a majority of those who report earning over $125,000 a year, 83%, are white.

Likewise, except for the generic “other” option, a plurality of transgender respondents report being in the financial services industry. This may mean that they have access to more financial products, services and education and are using them. This strengthens the case we made years ago in Forbes that more transgender folks should be in financial planning.

Further research is needed to understand why transgender respondents to this study report doing better in several areas relative to the queer community and, in some cases, better than the general population. Race and access may both play a role, but initial analysis also suggests that transgender Americans in their peak earning years are more comfortable with coming out as transgender and, thus, do so.

10. What types of debt do you have currently, student loan, credit card, mortgage, auto loan and personal loan debt?

America has a debt problem, and the queer community is no different.

The most ubiquitous form of debt in the queer community, at 56%, is credit card debt. This makes sense when you couple it with the top financial concern in the LGBTQ+ community being “keeping up with the cost of inflation” and the sexual orientation/gender identity pay gap and the top financial priority. Fortunately, there’s a solution.

Queer folks are leaning on credit cards to cover expenses as expenses rise, and this creates the “wealth illusion” that Paul Donovan shared on the Queer Money® podcast.

The least common form of debt in the queer community and specifically for bisexual, transgender and non-LGBT members, at 29%, is mortgage debt. This aligns with the results when respondents were asked if a mortgage is a type of financial product they have.

The least common form of debt for lesbian women and gay men is auto loan debt. The least common form of debt for straight members of the queer community is student loan debt.

While credit card debt is the most ubiquitous form of debt within the queer community, the median average credit card balance held by LGBTQ+ Americans is $3,000 and $300 more than Americans overall. While student loan debt is only the third most common form of debt within the community, the median average balance LGBTQ+ Americans carry is $12,000 and $10,000 less than the general population.

11. How much do you have in your non-retirement savings account?

The numbers look promising for the queer community when it comes to non-retirement savings balances. The least common balance, at 8%, is $0 and the most common is between $1 and $1,000. In future studies, we’ll break that $1 to $1,000 balance into more options. But with 68% of Americans struggling to pay a $400 emergency with cash, we’re hopeful that the queer community is beating that average.

Transgender and straight members of the queer community each average between $15,001 and $20,000 in non-retirement savings at 18% and 19% respectively.

According to The Motley Fool, the average monthly expenses per household in America is $5,111. That means to have the standard recommendation of three to six months’ worth of living expenses saved, most households should save between $15,333 and $30,666. More than a quarter, 27%, of LGBTQ+ respondents report having between $15,001 and over $20,000. With fewer of us being partnered or married and having children, this suggests there’s some financial security in the community and should alleviate some of the stress many in the community have regarding surviving a financial emergency.

12. What keeps you from saving more?

Despite that good news, 47% of the queer community has less than $5,000 saved and nearly half of lesbian women and bisexuals having less than $1,000. So, what keeps LGBTQ+ folks from saving more money?

The most common response, at 42%, was “I don’t make enough money” and the least common response, at 8%, was “I don’t know how much to save.” Not making enough money most adversely affects lesbian women and non-LGBT members of the community regarding saving more money.

The outliers on either ends of the spectrum are transgender respondents who, at 32%, said that they’re happy with their savings account balance and non-LGBT members who, at 7%, said that they’re not disciplined enough to save money.

13. What percentage of your paycheck do you contribute to a company-sponsored retirement plan?

When asked how much money LGBTQ+ folks are contributing to a company-sponsored retirement plan, the majority (28%) said that they “don’t have access to a company-sponsored retirement plan.” This affects gay men, lesbian women, bisexual and non-LGBT members of the queer community.

Transgender and straight members of the queer community were more likely to report having access to a company-sponsored retirement plan and contributing between 4% to 6% of their annual salary. Likewise, more transgender and straight members of the queer community were likely, at 18%, to contribute 7% or more of their annual salary to a company-sponsored retirement plan.

Finally, when LGBTQ+ people have access to company-sponsored retirement plans, they’re most likely to contribute between 4% to 6%.

It’s important here to remember that company-sponsored retirement plans are the vehicle today for creating the most millionaires in America, the recent stock market performance notwithstanding. This may be partially due to the percentage of LGBTQ+ folks who pursue careers or jobs that don’t typically have benefits, such as jobs in the service and retail sectors.

Regardless, it’s important to get access to these plans to more LGBTQ+ people either through the choice of an employer or through encouraging their current employer to adopt one.

14. Are you on track to retire by the age you’d like?

When it comes to retiring when we’d like, whether it’s tomorrow or long after the full retirement age of 67 years old, LGBTQ+ Americans as a community aren’t entirely sure. Of all the responses to all the questions in this study, the answers to this question suggest that many in the queer community aren’t focused on retirement when it comes to their future financial security or lack thereof.

Most respondents, 39%, say that they are on track to retire when they’d like, 33% said they aren’t on track and 28% said they weren’t sure if they are on track. The demographic to most likely know if they’re on track to retire when they’d like, at 53%, is transgender folks. The group least likely to be on track and least likely to know if they’re on track are non-LGBT members.

Again, while there are several factors playing into the stress levels of LGBTQ+ Americans, including financial stress, not knowing if you’ll outlive your money or if your money will outlive you is a heavy burden with a solvable problem.

15. Do you have a non-retirement investing account with a brokerage?

When asked if they invest outside of a retirement account, a majority or 44% of LGBTQ+ respondents lead by transgender respondents, 56%, said they did. The most common reason for LGBTQ+ folks to not be investing outside of a retirement account, at 17%, is that they “don’t know how to invest” followed by folks who said they “don’t know what to invest in” – 14%.

The least common response given for not investing outside of a retirement account is that LGBTQ+ folks “can’t afford to invest” with non-LGBT members being the cohort most likely to give this answer. Finally, only about 2% of LGBTQ+ respondents said they don’t invest outside of a retirement account because they “think it’s ethically wrong.” This may suggest that although they may claim to be anti-capitalists, they still choose to invest because of the financial security it provides.

16. How often do you add funds to this account?

When it comes to a successful savings and investing strategy, slow and steady wins the race. Consistency is key. These aren’t sexy guidelines, but they’re successful.

So, how exactly are LGBTQ+ folks saving money? Our survey shows that a majority of LGBTQ+ people, 56%, are not actively saving money. The majority of those who are saving money, 16%, are saving monthly.

17. Do you have health insurance?

Healthcare in America is a special issue and, unfortunately, too many people are collateral damage to the politics of it. Many LGBTQ+ people have been some of the biggest victims in that battle.

The good news is that at 49% most respondents and a majority in each group have employer-sponsored health insurance. Another 38% have health insurance through the open market, which includes the second-largest category for each group. Likewise, in both categories, each group is statistically even.

Fourteen percent of LGBTQ+ respondents report not having health insurance either through an employer or through the open market. Non-LGBT members of the queer community are the group most likely, at 22%, to report having neither type of coverage. The group least likely to report having neither coverage, at 10%, is transgender respondents.

18. If you have health coverage through an employer or the open market, does it cover your partner?

We dove deeper into the number of ways the community is covered with health insurance. Therefore, respondents were also asked if their health insurance covers their partner. This gives us insight into if there are companies still not providing partner or same-sex spouse benefits.

A majority, 34%, responded that “yes, we’re both on my employer’s plan.” Gay men, bisexual, transgender and straight members of the queer community were most likely to give this positive response. The answer that elicited the second most positive response, 16%, was “no, but my partner’s still on their employer’s plan.”

The least common response was a tie at 7% between “no, but I’m on my partner’s employer’s plan” and “no, because my employer doesn’t provide same-sex partner coverage.” “No, because my employer doesn’t provide partner coverage” generated 14% of the responses and “no because my employer only covers married couples” got 9% of the responses.

The good news is that the responses to the last two questions suggest that most LGBTQ+ Americans have some form of health insurance.

19. What is your credit score?

Maintaining a good credit score throughout your life can save you tens of thousands of dollars over your lifetime. That’s money better spent on more important things than high-interest rates, especially in this high-inflation environment. The good news is that, for the most part, the LGBTQ+ respondents to our survey – and hopefully the community overall – reports having decent credit scores.

Most respondents, 61%, report having good, very good and excellent credit scores, 24%, 22% and 15% respectively. Gay man, at 21%, were most likely to report having excellent credit scores. Lesbian women, at 23%, were most likely to report having fair credit scores. At 24% each, bisexual respondents were mostly likely to report having either fair or good credit scores. At 25% each, transgender folks were most likely to responds with either good or very good credit scores. Straight members of the queer community, at 28%, were most likely to report having very good credit scores.

Non-LGBT members of the queer community, at 26%, were most likely to report not knowing their credit scores. Likewise, 8% of all respondents reported not knowing their credit scores.

It’s never been any easier than it is today to get your credit score, here are two great options: CreditWise and Experian Boost. To build or improve your credit score, get the guide that we created in partnership with Experian. It’s totally free, too.

20. In which areas do you feel prepared to make financial decisions?

What areas are LGBTQ+ folks comfortable making financial decisions and, inversely, which areas are we less comfortable? Curiously (maybe even shockingly), a majority of LGBTQ+ respondents, 40%, said they were most comfortable doing their own taxes followed by “paying off credit card debt” and “paying off personal debt.”

The community, at 26%, is least confident with “starting and running a business or side hustle” and are only slightly more comfortable (but not terribly confident) doing “simple retirement planning” and “investing in stock, mutual funds and exchange-traded funds.”

It’s long been our belief that in today’s economy and with wages barely keeping up with inflation, that everyone, including and especially LGBTQ+ folks, needs multiple streams of income. Two income streams, with the latter being critical in today’s economy, are entrepreneurial and investment incomes. These are two income streams that the community isn’t confident in building and might do well to learn more about adopting.

We wanted to conduct this survey because over the years of working with the LGBTQ+ community, we had a lot of questions about how the community was doing financially. We got a lot of questions answered, but this survey has also elicited additional questions. Hopefully, with future studies, we’ll get those questions answered and track trends within the community.

Overall, we’re both concerned and inspired with the study results. It’s our hope that as you review this data you see areas that are important to you and opportunities that we all can take advantage of as members of the queer community. Additionally, it’s our sincere hope that folks in the financial services industry see where it is they can help the LGBTQ+ community become more financially secure to both ours and their industry’s benefit.

We’d love to hear in the comments or via email what data surprised, excited and impressed you.

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Resources on the LGBTQ money study

• The Motley Fool-Debt Free Guys LGBTQ+ Money Study
• ‘The Financial Health of Same-Sex Couples and LGBTQ Americans’ in The Motley Fool
• The Importance of Diverse Investing Role Models 
• The Motley Fool Investors Like Me Series
• Forbes Article Promoting Transgender Financial Planners
• The Economic Case for LGBT Equality: Why Fair and Equal Treatment Benefits Us All by M.V. Lee Badgett Williams Institute Study on LGBT Inclusion and Economic Development
• CreditWise

Get more on  LGBTQ money concerns:

• 5 Unique LGBTQ Money Challenges
• 6 Ways to Better Manage Your Money
• Overcoming Transgender Issues with Money