Guide to Personal Finance for LGBTQ+ Americans

At first glance, the personal finance concerns facing LGBTQ+ folks are the same as those facing their straight, cisgender neighbors: setting financial goals, budgeting, family planning, tax planning, retirement planning, and so on. And, at their core, they are. Yet for the LGBTQ+ community, those matters are complicated by factors that make financial security harder to attain. Those factors include:

• Discrimination.
• The desire to live in safe, accepting places.
• The patchwork of legal protections (or lack thereof) across the country. 

These factors have left large portions of the LGBTQ+ community feeling financially vulnerable. In a 2022 survey of LGBTQ+ consumers, 48% of respondents said they have been discriminated against by someone in the financial services, banking, or investing industries.¹ The same survey found that fewer than 50% of respondents feel ready to make major financial decisions, such as paying off debt, building a rainy day fund, buying a home, planning for retirement, or investing. What’s more, compared to their straight counterparts, LGBTQ+ people are more likely to think they’ll need to work well beyond retirement age, according to SAGE, an LGBTQ+ advocacy organization for elders.² 

Fortunately, there are ways to mitigate, or even overcome, these factors. This personal finance guide aims to help LGBTQ+ people prioritize their finances by:

• Defining personal finance goals.
• Talking about finances.
• Understanding the legal status of your relationship.
• Creating a budget.
• Making a plan to save.
• Considering legal protections.

Straight couples may experience a sequence of events (marriage, having children) that prompt serious conversations about personal finances. Without that sequence, such conversations may not happen. But they should. It’s imperative for couples to understand each other’s financial philosophies, spending habits, and long-term goals. That doesn’t necessarily mean that both people have to be on the same page. Instead, it’s vital to understand each other’s point of view – and accommodate it where necessary. 

For example, set aside time to explore what each of you brings to the table and defining your roles and responsibilities in managing your finances. Be prepared to share some information that many people consider private, such as your credit score, as such info can help you understand each other’s financial wellbeing and how it can affect your financial future.

In the U.S., being legally married confers more than 1,000 rights and responsibilities that are generally unavailable any other way, such as access to a spouse’s employment benefits, inheritance, and the option to file joint tax returns.⁷ The Supreme Court’s landmark 2015 decision in Obergefell vs. Hodges ruled that the fundamental right to marry is also guaranteed to same sex couples, effectively making same-sex marriage legal in all 50 states.⁸ 

For many people – mostly straight, cisgender people – the decision seemed to settle the issue. But many LGBTQ+ people know only too well that it did not. As for relationships, prior to same-sex marriage legalization, many couples registered for domestic partnerships that granted some of the financial benefits of marriage, such as access to a partner’s employment benefits. But were such domestic partnerships still valid? The answer varied from state to state. Other couples who had been together for decades before the decision had invested in a variety of legal workarounds to protect themselves in similar ways. But were those workarounds still legal? There’s no single answer. 

For that reason, any discussion of finances must start with understanding how the law defines various relationships and deciding which of those definitions is best for you. Whatever decision you make should be an informed one. Consider meeting with an attorney to understand the implications for tax planning, family planning, inheritance, and other factors. 

And, as crazy as this may sound to straight people, be sure you know whether you are married. Because marriage and divorce laws varied across the states before 2015, and some states automatically converted domestic partnerships to marriages, same-sex couples may be legally married and not know it. Such couples may find this affects their estate planning, as assets usually flow directly to the surviving spouse when the other spouse dies.

No matter who you are, following a budget can help keep spending in check and debt under control. Budgeting starts with knowing exactly how much money you’re bringing in and what your basic expenses are. There are several budgeting methods that are widely used, such as zero-based budgeting and the 50/30/20 rules. It’s a good idea to explore different budgeting methods to find the one that best fits your personal finance needs. 

That said, it’s important to note that budgeting can be more challenging for the LGBTQ+ community, particularly due to location. LGBTQ+ people often choose to live where they feel accepted and safe. That can translate to large cities, such as San Francisco and New York, where costs of living are over 150% above the national average. In contrast, places with lower costs of living tend to offer fewer legal protections for the LGBTQ+ community. 

Still, more challenging is not the same as impossible, and certainly there are same-sex couples in Manhattan or West Hollywood living within budgets.

It’s hardly a surprise that personal finance experts emphasize how important it is to stop spending and start saving. Money in an emergency fund can go a long way toward easing stress if the water heater dies, a stumble leads to surprise surgery, or a job layoff occurs. 

But how much should you have in an emergency fund? It depends on what you’re saving for. Don’t be afraid to start small. Even saving $25 per paycheck is a good way to get started. To set a more specific savings goal, calculate your core monthly expenses, including housing payments, food, utilities, transportation, and health insurance. A common recommendation is to put three to six times your monthly expenses into an emergency fund. Then, leave it there for an emergency – avoid the temptation to dip into it for a vacation or new furniture. 

And then there’s retirement. Until marriage equality, LGBTQ+ people faced numerous obstacles to retirement planning. Social Security, pensions, and other retirement plans either couldn’t be transferred to a same-sex spouse or could only be transferred with difficulty and expense. That’s less of a problem now, but LGBTQ+ people may still face obstacles that their straight neighbors do not. 

For example, I married my husband in California in 2008, during a brief window after a court ruling permitted such marriages but before a state ballot initiative prohibited them again. Because the marriage was not then recognized by the federal government, we eventually had to advise the Social Security Administration that we were actually married since 2008 to claim the benefits of the seven years before 2015. And same-sex couples who were together long before they were allowed to marry do not qualify for benefits during those years. 

Social Security aside, there’s no single answer to how much to save for retirement. It depends on factors such as when you want to retire, how much you’ve been earning, where you want to live, and how much of your working-life lifestyle you wish to maintain. You can project what you’ll need by using an online retirement calculator, but a financial advisor can help you develop a detailed plan. 

It’s a good idea to seek out a financial advisor who will protect your interests, but it’s especially important if you lack confidence to navigate planning on your own. While genuine fiduciaries are legally obligated to do so, you can also seek out an advisor who is a member of the LGBTQ+ community or whose practices serve the community. If hiring an advisor isn’t in your budget, there are several free online resources available for the community, including The Debt Free Guys and Oh My Dollar. 

If investments are part of your retirement strategy, you may want to consider an LGBTQ+-friendly investment portfolio. For example, the Human Rights Campaign’s annual Corporate Equality Index (CEI) tracks companies’ LGBTQ+ policies and grades them on a 100-point scale.⁹