Survey Reveals 4 Key Financial Wellness Takeaways for the LGBTQ+ Community

According to research from the 2022 Q+ Report gathered by The Pride Co-op, a nonprofit council aiming to increase representation of LGBTQ+ people in media, the purchasing power of the LGBTQ+ community in the U.S. is estimated to be $1.4 trillion. If the queer community in the U.S. were a state, our GDP would be the largest in the country, equal to Australia and Spain and bigger than the Netherlands and Argentina. And if the queer community invested just 10% of our purchasing power, we’d drastically improve our financial situations.

For eight years, The Debt Free Guys have been helping LGBTQ+ Americans’ finances with our Queer Money® podcast and our debtfreeguys.com website, but before we started, we had $51,000 in credit card debt. What’s always struck us as curious are the similar experiences of the LGBTQ+ community when it comes to financial security. Do most LGBTQ+ Americans struggle with debt like we did, we’d wonder? Do most of us have negative money stories swirling in our heads that cause us to make questionable financial decisions? The dearth of data on these subjects made knowing for sure impossible.

With that in mind, we wanted to gauge the current pulse on the financial wellness of the LGBTQ+ community and then see how we can improve it in the future. The Motley Fool/Debt Free Guys LGBTQ+ Money Study, which surveyed 2,005 self-identified LGBTQ+ Americans (including 702 transgender respondents), can help us do just that.

1. LGBTQ+ Americans have a lot of financial anxiety.

Most Americans today are financially stretched and stressed, and everyone’s feeling the pain at the grocery store and the pump. But LGBTQ+ Americans are uniquely stressed, according to our study, with two-thirds of respondents reporting a high amount of financial stress. Twenty-eight percent of respondents said their financial stress on an average day is very high. Nearly one-third of queer Americans stress about money every single day, while nearly 60% stress about it weekly.

So what are the common causes of financial stress for queer people? Sixty-seven percent of respondents reported being concerned about keeping up with the cost of living, exacerbated by the recent rise in inflation. Other financial concerns include withstanding an unplanned financial emergency and being uncomfortable with making the right investment decisions.

As we’d predicted, LGBTQ+ Americans are struggling with debt. Relative to the general population, we’re almost twice as likely to have student loan debt and 25% more likely to have credit card debt. However, we’re a third less likely to report having mortgage debt – the “good” debt that can build wealth – and we’re, thus, more susceptible to current rent increases.

Couple the burden of risky debt with less good debt, the sexual orientation/gender identity pay gap, and tenuous housing and services protections currently only provided through executive order, it’s no wonder that members of the queer community are stressed. Much of our financial problems could be solved by using the proper resources for our situations. Yet we’re not doing that, and it seems we don’t know what tools to use or how to use them.

2. LGBTQ+ Americans aren’t using financial products and tools.

It’s long been our mission to connect our community to the people, products, and services that will help them reach financial security. Contrary to the general population, though, LGBTQ+ Americans report either not using or not having access to the products and services that make it easier or possible to that reach financial security.

Most concerning to us is that only 37% of LGBTQ+ Americans report having a retirement savings account, such as a 401(k), 403(b), or individual retirement account (IRA). These are the tools that can help build wealth and insulate consumers in the long term from the effects of inflation. Meanwhile, 50% of the general population report using these accounts.

The second greatest wealth builder in the U.S. for most Americans is home ownership, but the general U.S. population is one-and-a-half times more likely to have a mortgage than LGTBQ+ Americans (40% and 26%, respectively). Many LGBTQ+ Americans are missing out on the second-best wealth builder in America, and this could be partially attributed to discrimination within the banking industry.

Considering these findings from the study, it’s no surprise that many LGBTQ+ Americans are uncertain about what retirement will look like for them.

3. A majority of LGBTQ+ Americans are uncertain about retirement.

We’re often asked about how we paid off so much credit card debt so fast. Our very non-finance response is that we figured out what we most wanted in life. What helped get us into financial trouble was not spending according to our values because we didn’t know what we valued. Through much reflection and discussion, we figured out that we most wanted to:

1. travel the world on cash (rather than credit);
2. give back to the LGBTQ+ community;
3. and save for a comfortable retirement.

When we got clear on these goals, our spending aligned accordingly, after many tweaks, and helped us pay off our debt faster than we otherwise would have.

That’s why it crushes us to learn that 61% of LGBTQ+ Americans either don’t know if they’re on track for retirement or don’t know if they’ll be able to retire when they’d like. Survey respondents reported feeling less comfortable making decisions on simple retirement planning and investing in stocks, mutual funds, and exchange-traded funds. In both cases, nearly three-quarters of respondents don’t feel comfortable with at least one of these strategies.

This leads to the most disappointing data from our study and highlights a problem we’ve suspected for a while: The lack of retirement security within the queer community strongly correlates with many in the community feeling an inauthentic connection with traditional financial services.

4. Organizations have an opportunity to be more welcoming to LGBTQ+ Americans.

Despite the prevalence of organizations' attendance at Pride parades, and the ubiquity of rainbow-colored logos on social media every June, and the sponsorships of some of the leading LGBTQ+ nonprofits, 48% of LGBTQ+ Americans report being discriminated against by someone in the financial services industry. Forty-four percent of LGBTQ+ respondents attribute this discrimination to their lack of financial security.

This discrimination is in part why LGBTQ+ Americans are more likely to live on credit cards, not apply for a mortgage, not use tools that make it easier to reach financial security, and simply don’t know if retirement will be an option for them. The lesson for service providers, organizations, and businesses is that discrimination is regularly felt by members of the LGBTQ+ community, and taking the right steps to dismantling discrimination in all its forms is not just the right thing to do, but the right thing to do for your business. 

It’s our mission to uniquely bridge the gap between financial services and the queer community, and it’s our hope that this is a model that can be replicated for Latin and indigenous people, people of color, disabled people, and everyone else who doesn’t see themselves represented in financial services marketing and advertising.

For more information on The Motley Fool and the Debt Free Guys LGBTQ+ Money Study, click here.

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