11 Min Read | Last updated: August 9, 2024

Guide to Personal Finance for LGBTQ+ Americans

Discrimination and political hurdles can make managing personal finance harder for LGBTQ+ folks. Creating a financial strategy and seeking expert advice can help.

2 persons of LGBTQ + American community discussing about financial planning and personal finance tips.

This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

At-A-Glance

Discrimination and a patchwork of legal protections across the country have left large portions of the LGBTQ+ community feeling financially vulnerable.

To mitigate those factors, experts advise LGBTQ+ people to follow a personal finance strategy that includes budgeting, setting goals, and saving.

For individuals in a relationship, it’s important to understand the legal status of that relationship where they live.

Expert help aimed specifically at the LGBTQ+ community can make it easier to implement a personal finance strategy.


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, 35% of LGBTQ+ respondents reported that discrimination they experienced affected their financial well-being. The same study found that more than one in three LGBTQ+ adults had avoided or postponed medical care due to cost.1

 

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.

Define Your Personal Finance Goals

Everyone has financial goals, which might range from paying for a college degree or traveling the world, to buying a home and having a family. To meet those goals, everyone must first formulate a plan. But LGBTQ+ people often face formidable obstacles in reaching those personal finance goals. Here are a few relevant personal finance goals to consider: 

 

Home ownership. Although the White House issued an executive order in January 20212 to help protect against housing discrimination on the federal level, it’s unlikely to end discrimination: a UCLA study found that housing discrimination still occurrs.3

 

One way to help to avoid such discrimination is to do some research and choose a real estate agent and lender with a reputation for being fair and open with all clients. 

 

Family planning. Though federal law does not prohibit same-sex couples from being adoptive parents, some states still prevent LGBTQ+ individuals or same-sex couples from becoming adoptive or foster parents, according to the Human Rights Campaign’s State Equality Index 2023.4

 

Even in a world without legal barriers to adoption, the process can be expensive: Costs can range from $20,000 to $70,000 depending on whether the adoption is within the U.S. or international. The adoption tax credit can help alleviate these costs of qualified adoption expenses.5 Other family-planning options can also be expensive. In vitro fertilization (IVF), for example, can cost more than $12,000 for one cycle – an expense not covered by many health insurance companies – and it’s not guaranteed to be successful.6 Another option, surrogacy, can cost as much as $200,000 or more.7

 

The reality is that LGBTQ+ people – or anyone else looking to adopt or use assisted reproductive technology to start a family – must plan to save in order to do so. 

 

Gender-affirmation surgery. Transgender people who seek gender-affirmation surgery, for example, might expect to pay tens of thousands of dollars or more, depending on the procedures.8 While some insurance plans will help cover these costs, some state governments limit access to gender-affirming health care.9 In addition to shopping around for the right insurance plan, it’s recommended to find a doctor willing to advocate on your behalf.

Talk About Personal Finances with Your Partner

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 define your roles and responsibilities in managing your finances. Be prepared to share some information that many people consider private, like your credit score, as such info can help you understand each other’s financial wellbeing and how it can affect your financial future.

Understand the Legal Status of Your Relationship

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. 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.10

 

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.11

 

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.12 Such couples may find this affects their estate planning, as assets usually flow directly to the surviving spouse when the other spouse dies.

Create – and Follow – a Budget

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 metropolitan areas,13 where costs of living are higher.14

 

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

Create a Plan to Save Money

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.10,11 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 the 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. 

 

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.15

Protect Yourself and Your Financial Future

Taking steps to protect your assets over time can help safeguard your finances now and in the future. For example, living wills and health care proxies are documents that grant someone the right to make health care or spiritual decisions for you if you’re incapacitated16 – a critical factor to consider given that the wishes of same-sex spouses can sometimes still be challenged when medical decisions are necessary.17

 

Financial planners also advise establishing a trust or writing a detailed will that specifies your wishes.16 Whichever path you choose, it’s a good idea to seek professional advice from someone with expertise in estate planning for LGBTQ+ people.


The Takeaway

Numerous economic and legal realities can make managing personal finances more complicated for LGBTQ+ people than for their straight counterparts. But there are some core strategies that apply to everyone, such as setting personal finance goals, having frank conversations about money, budgeting, saving money, and even understanding the legal status of your relationship. To help you do that, consider turning to financial experts focused on the LGBTQ+ community.


Headshot of Allan Halcrow

Allan Halcrow is a freelance writer concentrating in business, human resources, and diversity and inclusion. He is also the author of four books on management.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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