The LGBTQ Generational Wealth Gap
It’s no secret that LGBTQ people face a range of financial challenges that heterosexual people simply don’t need to contend with. Less discussed are the effects of financial discrimination on building LGBTQ+ generational wealth. The stereotypical view of a wealthy gay couple with no children and a sizable disposable income is just that — a stereotype.
In reality, the “American Dream”— buying a home, getting married, having kids, finding a good job and investing in a 401(k) — is out of reach for many LGBTQ people, according to a survey by TD Ameritrade. 35 percent of LGBTQ millennials say they are unlikely to achieve these goals by age 40, compared to about half of straight millennials. The same survey found that while the average annual income for a straight household is $79,400, the average LGBTQ household earns just $66,200 a year.
LGBTQ people are being left out of generational wealth for many reasons, including family rejection, systematic barriers, and a lack of financial education. With almost half of LGBTQ adults saying they have been excluded by a family member or close friend as a result of their sexual orientation or gender identity (according to a study by the Pew Research Center), a lack of familial financial support is a common problem for many in the community.
Legacy financial exclusion
At every stage of life, it’s common for LGBTQ people to encounter financial challenges that their heterosexual counterparts won’t face. From being kicked out of their homes as teens due to unaccepting parents or not receiving financial support from family for college to being removed from an inheritance, the financial cost of being LGBTQ can be substantial.
With the average inheritance reaching close to $177,000, according to a HSBC survey, and Cerulli Associates forecasting that up to $68 trillion will trickle down to younger generations within 25 years, LGBTQ heirs could collectively lose trillions through inheritance exclusion.
“Even much smaller amounts could help folks pay off debt, pay off a home, send their own kids to college and help them with their own retirement. Many LGBTQ kids aren’t getting these benefits,” said John Auten-Schneider, the co-owner of The Debt Free Guys blog and host of the Queer Money podcast, a leading gay money blog and podcast for the LGBTQ community run by him and his husband, David.
Raising a deposit for a house or apartment can be a difficult task for all people, but without financial support from family, many would not be able to fund a deposit. When David’s parents pass away, David’s sister will likely be inheriting upwards of $1,000,000. Yet he won’t receive any of this money, solely because he’s gay. “His parents have every right to do with their money what they want, but it’s a particular disappointment that they’ll do this only because he’s gay,” Auten-Schneider explained. “This, of course, means we need to plan differently for our retirement than his sister does.”
Knowledge is power
At the start of 2020, Michigan-based Lexa VanDamme was at her financial rock bottom. Stuck at work after a 70-plus hour work week with no money in her bank account, bills due the next day and a broken-down car, she decided to make a change. “I realized that I needed to face my financial situation,” she said. “I dove deep into the online world of personal finance to learn about budgeting, debt payoff methods, saving and investing.”
After her crash course in finance, VanDamme refinanced her credit card debt into a lowerrate personal loan, created a workable budget and started a side hustle to make extra income. She managed to pay off her debt by following the financial rules she had set for herself.
While trying to learn about personal finance on her own, VanDamme realized there was a need for accessible and relatable content that appealed to a wide range of people. She decided to create the Avocado Toast Budget