Financial literacy is critical to achieving economic empowerment and financial well-being. Unfortunately, many Americans, including many LGBTQ+ Americans, lack an understanding of basic financial concepts.1 This makes it difficult to build a solid foundation that allows you to prosper.
A recent survey2 of LGBTQ+ individuals by the National Endowment for Financial Education found that:
- 30% of respondents experienced discrimination at banks and other financial services institutions;
- 61% live paycheck to paycheck;
- 39% feel the quality of their financial life is worse than they expected; and
- 81% say they wish they were required to complete a semester- or year-long course focused on personal finance education during high school.
Basic financial literacy aside, LGBTQ+ people—especially LGBTQ+ people of color, who experience the intersectional impact of racial and financial bias face unique obstacles that complicate managing personal finances. Understanding the financial challenges specific to the community is critical to your financial well-being as an LGBTQ+ person at every age and stage of life.
Here are 4 critical points you should know, plus key steps you can take to improve your financial well-being.
1. A lack of federal consumer finance protections for the LGBTQ+ community leaves community members vulnerable.
What to Know
- Though the Equality Act3 would expand federal LGBTQ+ protections in a number of important areas, including consumer credit, there are currently no federal laws to prevent financial discrimination4 on the basis of sexual orientation or gender identity (SOGI).
- In 2021, under the Biden administration, the Consumer Financial Protection Bureau (CFPB) issued temporary guidance5 that put the financial services industry on notice that SOGI discrimination will not be tolerated.
- Until the Equality Act is passed, the CFPB rule and the protections it provides can be revoked by a change in administration.
What to Do
- Inform yourself about consumer credit; the Equal Credit Opportunity Act (ECOA), specifically Regulation B, which is intended to protect applicants from discrimination in any aspect of a credit transaction; and the 2021 interim CFPB rule that expands Regulation B to prohibit SOGI discrimination.
- If you feel a financial institution has violated the ECOA or otherwise discriminated against you, you can submit a complaint to the CFPB online or by calling (855) 729-2372. Watch this video to learn more about how the CFPB complaint process works.
- Alternatively—or additionally—you can submit a complaint to your state’s consumer protection office.
2. Most financial planning tools and advice do not account for the nuances of LGBTQ+ life experiences.
What to Know
- The financial services industry has gotten wise to the fact that the American LGBTQ+ community has enormous spending power—almost $1.4 trillion6—and wants to tap the market.
- While financial education and resources abound, there’s a widespread lack of resources targeted to the unique needs7 and life events8 of LGBTQ+ people, such as the cost of gender-affirming care and the financial9 and legal10 intricacies of nontraditional family structures.
- Some financial service providers have LGBTQ+ financial planning expertise11 and have developed meaningful LGBTQ+ products and services. Look for these tailored resources and give feedback to your current or prospective financial institution if, for example, they have services and content developed for a general audience in a superficially repackaged format for an LGBTQ+ audience. Use the power of your own decision-making and input to effect change and move on from any companies that do not meet your needs.
What to Do
- Be discerning in your information consumption. Look to respected sources that specifically address known LGBTQ+ issues of concern like this article on financial considerations for LGBTQ+ people.
- Keep in mind that you don’t need to be rich to benefit from a financial advisor—and it could actually pay to figure out if working with one makes sense for you. According to the National Financial Educators Council, financial illiteracy cost Americans more than $388 billion in 202316. If you do decide to work with a financial advisor, make sure you understand why it’s important to work with an LGBTQ+ knowledgeable financial planner.
- Intentionally seek out LGBTQ+ supportive financial institutions and financial advisors. For instance, CFP’s Let’s Make a Plan site includes a searchable directory where you can filter specifically for LGBTQ+ or allied advisors by zip code.
3. The current anti-LGBTQ+ legislative landscape makes estate planning more important than ever.
What to Know
- Since 2015, anti-LGBTQ+ legislation has been on the rise. 2023 set an all-time record, which 2024 is well on pace to surpass, with more than 480 pieces of anti-LGBTQ+ legislation17 already introduced in US state legislatures as of the time of publication. Out & Equal’s 2024 report, Talent on the Move—Where Do We Go From Here? found that 45% of survey respondents feel less safe in their state of residence due to changes in LGBTQ+ rights. The report also revealed that nearly 4 out of 5 (79%) respondents believe that anti-LGBTQ+ laws affect whether they would relocate for a new job, and nearly 3 in 4 (72%) feel that their companies did not respond sufficiently to such legislation, indicating an emergence of distrust and a gap between corporate policy and the expectations or needs of LGBTQ+ and allied employees.18
- Due to inconsistent federal-level protections,19 LGBTQ+ people are increasingly vulnerable to the vagaries of state-level legislation20 in the state where they reside.
- Regardless of your socioeconomic situation and whether you’re single, married, or in a domestic partnership, in the absence of uniform federal LGBTQ+ rights, it is essential that LGBTQ+ people formalize their final wishes, protect their families’ financial well-being, and ensure critical things like custody21 of any shared minor children by completing estate planning documents.22
What to Do
- Learn about the basic estate planning documents, what they do, and why you need them. It’s as much or more about ensuring your wishes are carried out and protecting your loved ones from potentially life-altering legal complications as it is about transferring wealth.
- Find an LGBTQ+ or allied lawyer to work with. Online services that promise fast, inexpensive estate planning services and templates and the free advance directive forms offered by every state do not take concerns specific to LGBTQ+ people and families into consideration. Don’t go it alone.
- If you have or plan to have children, take special care to educate yourself on the issues around LGBTQ+ parentage security, and be sure to work with an LGBTQ+ family lawyer to avoid custody challenges.
4. For LGBTQ+ individuals, achieving personal financial well-being also requires achieving financial well-being for the LGBTQ+ community as a whole.
What to Know
- LGBTQ+ employees are paid less than their non-LGBTQ+ coworkers,23 and the vast majority of respondents in a recent poll24 by Debt Free Guys said they worry about their finances.
- Nearly 30% of transgender people in the United States live in poverty.25
- Close to 50% of LGBTQ+ people lack protection from discrimination in employment, education, housing, public accommodations, and credit—depending on where they live.26
What to Do
- Enforce equal pay policies and anti-discrimination laws for LGBTQ+ individuals, offer tailored financial support programs, and promote inclusive workplace cultures through diversity training.
- Implement inclusive hiring practices and anti-discrimination policies, ensure salary equity and advancement opportunities, provide financial wellness programs, and partner with community organizations for additional support.
- Implement non-discrimination policies, provide diversity training, advocate for legal protections, partner with LGBTQ+ organizations, and create work environments where everyone is equally respected and protected.
Federal-level advocacy by individual members of the LGBTQ+ community is essential to getting the Equality Act passed. In addition to urging them to support the Equality Act, it’s crucial that LGBTQ+ individuals align with national and local advocacy organizations to amplify their voices and push for policy changes that protect their rights and promote equality. Through collective advocacy efforts, every member of the LGBTQ+ community can do their part to address systemic issues, combat discrimination, and work toward creating safer, more inclusive communities for themselves and for future generations.
Read more from our financial capability and empowerment series:
3 Things Employers Should Know and Do to Improve the Financial Well-Being of Their Company and LGBTQ+ Employees
From Knowledge to Action: How the Financial Services Sector Can Better Serve the LGBTQ+ Community
The Equality Act Fast Facts
What Is the Equality Act?
The Equality Act is a U.S. Congressional bill that aims to expand LGBTQ+ protection from discrimination on the basis of sexual orientation or gender identity by strengthening existing antidiscrimination laws in key areas, notably consumer lending, which the Equal Credit Opportunity Act (ECOA) does not currently provide.
Why Does the Equality Act Matter?
Today, for instance, if an LGBTQ+ couple applies for a mortgage or a transgender person applies for an auto loan, even if an applicant otherwise qualifies, a lender can deny the loan based solely on the applicants’ actual or perceived sexual orientation or gender identity. If passed, the Equality Act would make this illegal by adding sexual orientation and gender identity to the list of protected statuses (e.g., race, color, religion, national origin, marital status, age) included under the ECOA.
What’s the Status of the Equality Act Today?
The Equality Act, originally introduced to Congress in 2015, has been evolving in the years since, and different iterations have been introduced to subsequent Congresses for consideration. The most recent version, House Resolution 15 (H.R. 15), was introduced in June 2023. Most bills undergo debate in committee before being brought up for vote. As of this writing, H.R. 15 remains in committee. According to the nonpartisan Public Religion Research Institute (PRRI), more than 70% of Americans support the passage of a bill like the Equality Act. The Equality Act has also been endorsed by more than 550 major businesses through the Business Coalition for the Equality Act.
What Do I Do If I Feel I’ve Been Discriminated Against by a Financial Institution?
In 2021, the Federal Reserve’s Consumer Financial Protection Bureau (CFPB) issued temporary guidance to the financial services industry that it will not tolerate discrimination on the basis of sexual orientation or gender identity. Whether applying for a credit card or loan (e.g., home, auto, student) or trying to open a checking or savings account, LGBTQ+ people who feel a financial institution has discriminated against them can submit a complaint to the CFPB or their state’s consumer protection office.
For more information, see What You Need to Know About the Equality Act.
Sources
- “A Hand Up Or A Handout? Tackling America’s Financial Literacy Crisis,” Forbes, February 3, 2022. ↩︎
- Nearly 1 in 3 LGBTQIA+ Respondents Say They’ve Experienced Discrimination, Bias in Financial Services, National Endowment for Financial Education, June 24, 2022. ↩︎
- “The Equality Act: How we got here and how to get it passed,” GLAAD, September 30, 2020. ↩︎
- Same-Sex Couples and Mortgage Lending, National Community Reinvestment Coalition, June 22, 2020. ↩︎
- “CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation or Gender Identity Is Illegal” Consumer Finance Protection Bureau, March 9, 2021. ↩︎
- “An overview of the unique financial challenges LGBTQ+ people continue to face,” Investopedia, August 21, 2023. ↩︎
- “CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation or Gender Identity Is Illegal,” Consumer Finance Protection Bureau, March 9, 2021. ↩︎
- “Meet ‘The Trans Capitalist’ focused on bringing financial literacy to the LGBTQ+ community,” CNBC, April 13, 2022. ↩︎
- “What to Know Before Filing Your Gay Taxes,” Queer Money Podcast, March 13, 2024. ↩︎
- Top 10 Estate Planning Recommendations for LGBT Couples, Mass Mutual Financial Group, April 2017. ↩︎
- “Why We Need to Talk about Queer Money,” Queer Money Podcast, January 27, 2024. ↩︎
- “The Staggering Costs of Being Transgender in the US, Where Even Patients with Health Insurance Can
Face Six-figure Bills,” Business Insider, July 10, 2019. ↩︎ - “Average Adoption Costs in the United States,” Family Equality Council. ↩︎
- “Average Cost for the LGBTQ+ Community to Achieve Pregnancy in the United States,” Family Equality
Council. ↩︎ - “How Much Surrogacy Costs and How to Pay for It,” U.S. News & World Report, May 30, 2023. ↩︎
- “Financial Illiteracy Cost Americans $1,506 in 2023,” National Financial Educators Council, March 2024. ↩︎
- Mapping Attacks on LGBTQ Rights in U.S. State Legislatures in 2024, American Civil Liberties Union,
2024. ↩︎ - Talent on the Move: Where Do We Go From Here?, Out and Equal, March 2024. ↩︎
- Know Your LGBTQ Rights, American Civil Liberties Union, 2024. ↩︎
- State Equality Index 2023, Human Rights Campaign, January 2024. ↩︎
- Legal Recognition of LGBTQ Families, National Center for Lesbian Rights, June 3, 2020. ↩︎
- “6 Estate Planning Must Haves,” Investopedia, February 27, 2022. ↩︎
- The Wage Gap Among LGBTQ+ Workers in the United States, HRC Foundation. ↩︎
- “Debt Stress: What Are the Effects on Mental Health?” Debt Free Guys, January 23, 2020. ↩︎
- Understanding Poverty in the LGBTQ+ Community, HRC Foundation. ↩︎
- LGBTQ People in the US Not Protected by State Non-Discrimination Statutes ↩︎