Does the LGBTQ community have a spending problem? Results of the LGBTQ Finances Survey by Experian suggest it does, as a high number of the LGBTQ demographic say they have overspending habits that need to be addressed.
"Despite being self-reported savers, over a third (significantly more than the general U.S. adult population) say that they have bad spending habits they'd like to change," the report states.
Data-wise, 34% of the LGBTQ community say they have bad spending habits, compared to 28% of the general population. Meanwhile, 44% of the LGBTQ demographic say it's a "struggle" for them to maintain an adequate amount of savings, compared to 38% of the rest of the U.S. adult population.
Keeping Up Appearances?
What's the core of the overspending problem for the LGBTQ population? Experts say that it's more than just a "keeping up with appearances" mentality. (Read one story about keeping up appearances here.)
"There is a pervading myth of gay affluence," notes David Rae, a West Hollywood, Ca. financial planner specializing in the needs of the LGBTQ community. "Many in the LGBTQ community get pulled into trying to keep up with the stereotypical gay Joneses. We live in expensive parts of town. We value dining out and travel."
"But keeping up with your LGBTQ friends can leave you beyond broke," he adds.
Other experts agree, but note the problem goes even deeper.
"Many of my clients build an identity around the media, entertainment, and alcohol," says Bernard Charles, a lifestyle coach for the LGBTQ community, and author of the book, Rainbow Revolution. "Sometimes, LGBTQ individuals seek refuge in these outlets to compensate for the lack of belongingness they feel in the heteronormative world."
Overspending can also occur if they feel their family not loving them deeply and completely, Charles explains. "My clients' parents used money or shopping as a means to deflect their child's ‘gayness,'" he notes. "Homophobic and narcissistic parents believe they can buy their way out of dealing with their child's natural ability to love whoever they choose to love."
"However, during our coaching sessions, once we bring light to their prosperity shadows, it's up to them to get educated and take responsibility for bringing balance back to their bank account," he says.
Getting Ahead of the Overspending Issue
There is a way out of one's overspending problem, but it takes a healthy dose of discipline.
"Don't be afraid to say ‘no' on spending," Rae says. "If you can't afford an expensive dinner out, meet up with friends later in the evening. Or, host people at your place and dine in. The amount you save on alcohol alone can be huge."
Adding other sources of income to the household budget can also swing the financial pendulum to the savings side.
"Being from low-income roots where I was first in my family to go to college, I learned that it's vital in this era of economic empowerment to have multiple income streams," says Charles. "I encourage my clients and friends to generate money from their passions whether it's making jewelry or running their own doggie daycare. Having a side hustle teaches you so many things about self-worth, customer service, and impacting this world with your own special gift."
Another good step is using a tool like Mint.com to track your spending. "See which spending categories can be trimmed down," Charles says. "I noticed personally, that I would spend a lot of money on ordering food through those mobile food delivery apps weekly. Instead of getting take out every week, I've allocated take out to once a month, and the rest of the time I'm [doing] portion controlling and meal prepping. I've saved $450 doing so."
Taking the Long View
Longer term, the goal is to develop and solidify a new financial mindset — one that takes a big picture approach to personal finances.
"For many in the community the desire to never grow up or get old means skipping adult financial decisions," Rae adds. "That means focusing on key issues like saving for retirement or even spending less than you make."
"Yes, you look around and everyone else seems to be spending money like it's going out of fashion and it's easy to develop bad financial habits," Rae states. "But don't put your head in the sand. Even if you have to start small do it. Put a little extra towards your debt. Start and emergency fund and sign up for your 401k and contribute enough to get your full employer match."
"Have one less drink on ‘Sunday Funday', and build your savings habits from there." Rae advises.
Meet with a Financial Expert
Societal changes make it even more imperative for LGBTQ individuals to get a grip on spending, experts say.
Broadly speaking, "the LGBTQ community has developed bad spending habits as a result of the environment and struggles they have been overcoming throughout the years," says Hiram Arnaud, a financial representative for Strategies for Wealth and Guardian, based in New York City.
For example, until recently LGBTQ Americans were unable to get married or be recognized as domestic partners, Arnaud notes. "Therefore, for many in the LGBTQ community, cultural identity may have been based on the struggle to be recognized and freely being themselves," he says. "Therefore, having a family and the concept of growing old together was not necessarily the main focus."
"Now, being able to get married, to have a family and the idea of growing old together with someone you love is a legally recognized option. Thus, it puts savings for tomorrow and the future on the radar."
To make that financial path easier, Arnaud advises getting educated about money and meeting with a financial professional to get that process started.
"Malcolm Gladwell in his book, Outlier, explains that it takes 10,000 hours to become an expert at something," Arnaud states. "Meet with a financial advisor who's already an expert. Look for a financial professional who comes to you referred by someone you trust."
Above all else, live within your means, and have a budget.
"A budget doesn't mean you have to give up the great things life has to offer, but it means that you are aware that you should pay yourself first before you spend all your money," Arnaud says. "It also creates a financial balance which will allow everyone to live a life of wealth for their entire lives and not just for a specific, short-term period of time."
Getting on the Fast Track
With $1 trillion in estimated purchasing power, according to Bloomberg, the LGBTQ community is a robust financial demographic. All the more reason for members of the community to curb overspending and get on the fast track to financial stability.