How’s your financial health? Why do we ask? Because it’s affecting your physical and mental health, your stress levels, your state of mind, your relationships and even your performance at work! For a community that disproportionately struggles with financial insecurity, physical and mental challenges, Prudential’s new Financial Wellness Campaign offers an opportunity to remedy the cause of our adverse consequences.
Here’s The Opportunity You Need To Achieve Financial WellnessGetty
In late 2017, Prudential conducted a comprehensive survey on the financial wellness of the U.S. The results were disappointing but not surprising to those who’ve been paying attention. One-third of Americans were unclear with where they stand relative to their financial goals. More than 50% of Americans are falling behind financially.
If Prudential’s recent survey is correct and you’re LGBTQ, unfortunately, there’s a 52% chance that you’re “very worried about the future.” Fortunately, Prudential’s findings highlight opportunities for queer people to remedy our financial risks with simple solutions of which a larger percentage of the general population is seizing.
Where does the queer community stand financially?
One in ten of Prudential survey respondents identified as LGBTQ, which is admittedly high compared to other surveys. Prudential attributed this to many causes, including the growing awareness and acceptance of the queer community and the fact that theirs was an online survey, allowing for safety in honesty.
The queer community still struggles with an income gap
As we’ve reported before, the queer community still struggles with an income gap. Consistent with other surveys, Prudential’s LGBTQ respondents reported having lower incomes than the general population. with LGBTQ women reporting average household incomes at $30,000. On the other hand, median household incomes for non-LGBTQ respondents was near $70,000.E
It’s true that higher incomes provide an increased opportunity to achieve financial wellness. It’s also true that most Americans have a spending problem and not an income problem. That being said, queer people could make better financial decisions, such as assuming less debt and paying off debt as fast as possible to the extent possible, to make the most of our lower incomes.
Exacerbating LGBTQ women’s financial state was their willingness to finance major purchases, such as buying a home and paying for college. Supporting our lifestyles on credit, especially credit cards creates challenges for achieving financial wellness as everything we buy on credit costs more than the asking price, and consumers aren’t inclined to include interest costs in our expenses. This makes it all the more important for queer people to find solutions for paying off debt, especially credit card debt.
LGBTQ men, however, were less concerned than LGBTQ women and the general population with achieving financial goals of any kind, a sort of financial apathy. Maybe, for this reason, LGBTQ women reported being more confident than LGBTQ men in achieving financial goals. It’s also noteworthy that LGBTQ women reported having more confidence in achieving their financial goals than non-LGBTQ women.
Not surprising and mirroring our own experience in working with the LGBTQ community about money, Prudential found that LGBTQ women reported being more open to asking for and receiving financial advice.
More than 30% of LGBTQ women said they aren’t sure how to evaluate their financial options, versus 25% of non-LGBTQ women and LGBTQ men, and less than 20% of non-LGBTQ men. Meanwhile, more than 40% of LGBTQ women said they lack a trusted financial advisor, compared with less than 30% of the other three groups. LGBTQ women and LGBTQ men both were more likely than the general population to say they like getting advice from others who know more about investing than they do.
Queer people are less connected
Consistent with what we’ve reported before, , being less connected to the tools that help reach financial wellness. It’s nearly impossible to achieve financial wellness without a minimum of banking, investing and insurance products.
Despite this challenge, only 27% of LGBTQ respondents said they had a company-sponsored retirement plan, such as a 401(k) or 403(b), relative to 41% of the general population. Prudential dug deeper than other studies and found that, surprisingly, only half of its LGBTQ respondents claimed to have even the most basic banking products, such as checking or savings accounts.
Owning fewer financial products could be due to the general distrust the queer community has for the financial services industry. That said, it’s a distrust our community must overcome in order to keep up with the general population and provide ourselves resources throughout our lives.
Queer people are sacrificing our retirement
Surprising on its own, but not surprising when considering the above, is the lack of retirement savings in the queer community. Despite having equal access to company-sponsored retirement plans, “a stunning 62% of LGBTQ respondents [who do not have access to a company-sponsored retirement plan] said they are not currently saving for retirement in any way,” relative to 49% of non-LGBTQ respondents. In total, 55% of queer respondents reported saving nothing for retirement, “compared with 42% of non-LGBTQ respondents.”
With the unique risks and concerns of the LGBTQ community, such as the fact that older LGBTQ people are more likely to be single, live alone and be childless and that without certain legal protections many LGBTQ people must go back into the closet when they need assisted living or nursing home care, inadequate retirement savings worsens our financial health.
What may underscore the growing wealth-gap in the queer community, with cis, gay white men at one end of the spectrum and transgender women of color at the other end, Prudential found that those who have saved for retirement reported being only nominally behind the general population with an average LGBTQ retirement savings balance of $126,000 compared to an average retirement savings balance of the general population of $158,000.
The fact of the matter is that fewer LGBTQ people have familial support to aid in our financial success, whether through financial education passed down from generations or inheritances passed down the same way.
We also have an uphill battle that our straight peers don’t have in up to 30 states where it’s legal to discriminate against us. Those facts might not go away for a long time if ever. It’s for these reasons that it’s incumbent upon our community to take personal responsibility for our finances wellness and use the resources and support we do have.
In order to make real progress, the LGBTQ community needs to take charge of our finances ourselves. It’s clear we can take charge of our futures, as we’ve been doing since before the Stonewall Riots in 1969. Here are five things you can do to get on your way to financial wellness:
- Start using basic financial products, such as checking, savings and emergency savings accounts
- Become a regular consumer of financial information, whether here on Forbes.com or on blogs and websites that speak directly to the financial needs of the LGBTQ community
- Sign up and contribute at least the minimum to your 401(k) or 403(b) to get your employer match and stop giving away free money
- Start investing as little as $5 a month, even if this means using a robo advisor
- Commit to paying off consumer debt, such as credit cards and personal loans, and redirect those payments into investments when your loans are paid off
Finally, no one gets rich by spending more than they make. So, at the very least, increase your income and reduce expenses to stop living paycheck to paycheck and get yourself on the path to financial wellness.