Lindsey Young is an investment adviser representative and founder of Quiet Wealth LLC, a financial planning and investment management firm serving successful LGBTQ professionals. Opinions in this article are solely those of Ms. Young and do not reflect the views of Quiet Wealth LLC. This article is for informational purposes only and does not constitute investment, legal or tax advice.
As noted in the previous blog post, the LGBTQ community faces many barriers to achieving financial success, including:
- Discrimination in the workplace
- Higher-than-average medical and mental health expenses
- A financial services industry that often feels unwelcoming, especially for those in the transgender and gender-nonconforming community
Many pro-LGBTQ organizations are working to bring down these barriers, and I am optimistic that over time many of these barriers will come down.
But today, individuals need to take matters into their own hands to find their financial success. The system may be bad, but that doesn’t mean that we in the LGBTQ community are powerless. In fact, there are many things that we have the power to do that can help us achieve financial success.
“Financial Success” Doesn’t Happen Without a Financial Plan
“Financial success” means different things for different people. It depends on the stage of life, existing obligations to family, significant others, and friends, current financial assets and debts, and how much income a person earns. It also depends on what someone wants to accomplish in the future. We all have different dreams.
Whatever financial success means to you, achieving that success is unlikely to happen unless you have a longer-term plan. If you’re simply living day-to-day without having a clear vision of the future you want to achieve or how to get there, it will be difficult to understand whether you’re making progress towards achieving what you want.
A financial plan has three components:
- A set of goals and the timeframe in which to accomplish those goals
- An honest assessment of the current financial situation
- A set of actions to achieve those goals
A Financial Plan Is Meaningless Without Goals!
Many new clients come to me asking how they can save more, pay down their debt and manage their money better. But these aren’t the most important issues.
The most important issues relate to the “why” of your financial life. Why will saving money help you achieve something? Why is it more important to pay down debt instead of spending more on yourself today? Why will you live better because you manage your money better? Knowing your “why” provides purpose in creating a financial plan and sticking with it over time…
In addition, it’s important to create a goal for “when.” Notice the difference between these two goal statements:
“I want to buy a house someday.”
“I want to buy a house in four years.”
The “in four years” part of the goal focuses actions. Now it may turn out that when you run the numbers given your situation, you can’t actually buy a house in four years. But you may be able to do so in six years. While that insight can be disappointing, it also provides a level of realism about what is and is not possible. And having this mindset is undoubtedly better than simply having a life goal with an indefinite period of time in which to achieve the goal.
Know Your Cash Flow / Budgeting
Once you know your goals, then you need to assess your personal financial situation:
- How much income are you earning every month?
- How much are you spending?
- What is your total savings and debt?
Many of my clients don’t know this information when they start to work with me, so if you don’t know this, you are definitely not alone. But you need to have this data to help you adjust your behavior.
It is relatively easy to start tracking your spending, but it does require some work. There are many budget tracking apps available, but you can also simply use pencil and paper. Each month, gather all your bank and credit card statements as well as a record of activity in other accounts you use (e.g., Paypal, Venmo, etc.). Then, simply write down the amount of each individual into one of several categories:
Housing, home furnishings & utilities
- Daily transportation (automobile and transit expenses)
- Grocery and pharmacy
- Takeout and restaurants
- Healthcare and Insurance
- All other spending (most of this is generally travel, entertainment or recreational spending)
Here is an example of what your spending diary should look like:
Then total up your expenditures in each category – it’s as simple as that. Now you know how you are spending your money. And this is mu
You can create your own categories but try to limit the number of categories to 6-8 in total.
Do this for three months, and you’ll be surprised at what you will learn! And having this knowledge can be the basis for action.
Create a Plan
Once you know how much you earn and how much you spend, you can then create a plan for how much you can and want to save. There is no right answer for how much to save. It all depends on the tradeoff between how fast you want to achieve your goals, how much you able to earn, and how much you are able and willing to cut spending.
The key component of the plan is the necessary set of actions which enable you to achieve your goal. While there can be many action steps, the most important ones are:
- My goal is to earn $X,XXX per month in gross salary which will result in me receiving $x,xxx per month in net salary after payroll deductions
- My goal is to spend $X,XXX per month
- That results in savings of $X,XXX per month
- This savings enables me to achieve my goals in XX years
There is one goal that is especially important to keep in mind: retirement. Everybody wants to retire at a reasonable age. If possible, try to always save at least a little bit for retirement even when finances are tight. This is especially true if you receive a retirement savings match through your employer. If the employer is giving you free money if you save for retirement, you should try your hardest to take that money.
Should More Income Be Part of the Plan?
Sometimes, having a goal of increasing income over time is an important part of the plan. There are only a few ways to improve your income:
- Work more hours in your current job
- Do a side gig / second job
- Get promoted
- Change jobs to get more pay / better work conditions
- Invest in education to move into a better-paying career and / or a career with better work conditions
If you are considering additional education, you really need to be able to increase your annual salary by at least $25,000 following graduation (and potentially more than that) for the education to make financial sense. If you’re considering investing in education, I would recommend consulting a financial coach and / or student loan counselor before pursuing a program so that you understand the financial ramifications of paying for that education.
Some LGBTQ-Specific Factors
LGBTQ marriages / partnerships.
Given recent legal developments, there is now very little difference between the financial planning issues facing straight and queer married couples – with the exception of family planning (see below). However, many long-time LGBTQ couples have chosen not to marry. It is important that such couples consult an attorney to document their relationship, especially if there are children. Stay tuned for more information on legally documenting your relationship(s) in next week’s blog.
When LGBTQ households don’t have the ability to procreate and give birth on their own, other options must be explored. In general, there are three main classes of options: adoption, in-vitro fertilization / intrauterine insemination, or surrogacy. It is important to consult a family planning specialist to understand all options available to you and the costs of each option. If having children is an important goal, the costs of having children need to be incorporated into your financial plan.
The financial and legal systems currently don’t work well for polyamorous households. To the extent that a poly household has moved beyond a “roommate” situation to a more permanent household with joint ownership of assets like a house, it is important that members of the household create contracts to formally document their financial relationships – such contracts enable the household members to understand their contributions and obligations to the household as well as to document what happens if one of the members were to pass away or become disabled. There are a growing number of attorneys who have expertise in working with such households.
Should I move?
A common question for LGBTQ folks living in less LGBTQ-friendly places is whether to move to a more friendly place. Unfortunately, the divide between welcoming and unwelcoming areas appears to be growing, and therefore the value of moving to a more friendly area is growing as well. The benefits of moving are especially great for people in the transgender and gender-nonconforming community (TGNC) because more liberal states tend to provide greater legal protections and mandate much better health insurance benefits for those in the TGNC community.
Obviously, the ability and decision to move depends on many factors, some of which have nothing to do with personal finance. But quite often, it can make sense for those living in unfriendly areas to move to more friendly areas both for financial and mental health reasons. And speaking of mental health…
Can’t have financial health without mental health
Finally, mental health is a significant issue for many people, especially those in the LGBTQ community. There is a strong correlation between mental health and financial health, and it works both ways: if you have a rewarding, consistent work environment, you have better mental health AND if you have better mental health, you’re more likely to find yourself in a rewarding, consistent work environment.
One important way to improve your mental and financial health is to try to find an LGBTQ-friendly work environment where you can be out and be yourself. This can be easy or hard depending on your profession and where you live, so a change may not be possible in the short term. But if you do work in a less friendly environment, consider your long-term job goals as part of your overall financial plan. And keep in mind that in many fields there are lots of remote work positions these days with LGBTQ-friendly employers.
It can be challenging for those who are working through mental health issues to maintain consistent employment. So, priority #1 for those managing mental health issues is to stay on top of these issues and prioritize addressing these issues in your life. Maintain consistent contact with your mental healthcare professionals. And most importantly, do not sacrifice spending on mental healthcare and medications to try to achieve other financial goals.
Consider getting help
If you are struggling to create a plan for yourself, you may want to consider engaging someone to help you. There are many different types of “financial advisers,” and the one best for you depends on your personal situation. Most financial advisers fall into one of three categories:
Credit counselors generally work with people who are struggling with debt and work with clients to come up with a plan to reduce their debt over time by helping clients put together a budget and working with the client’s creditors to reduce the debt load. If you need a credit counselor, it’s best to work with a credit counseling organization in your local area. There are two major associations of credit counseling organizations, the Financial Counseling Association of America (https://fcaa.org) and the National Foundation for Credit Counseling (https://nfcc.org). You can usually find an organization in your area by going to these organizations’ websites. Credit counseling services are relatively inexpensive or free for those with unsustainable levels of debt.
Financial coaches / financial counselors are best for people who have manageable debt but little wealth and want to find ways to improve saving for life goals or retirement. Financial coaches specialize in helping people create budgets and life plans to help them improve savings over time, but they are not licensed to advise on investments. While there are many financial coaches, I recommend that people first consider coaches who have been accredited by the Association of Financial Counseling & Planning Education (https://www.afcpe.org); you can find accredited counselors on the AFCPE website. In addition, many credit counseling agencies and credit unions also offer high-quality financial counseling services.
Financial planners / investment advisers are for people are consistently saving money and have at least a few hundred thousand dollars of savings either in retirement accounts, mutual funds or brokerage accounts. There are many types of pricing models and engagement models that financial planners use, so it’s important to find an adviser who structures their engagements in a manner that is consistent with your needs. In addition, there are many people who advertise themselves as financial planners who in fact don’t do comprehensive financial planning. If a financial planner won’t help you work through your budget or do significant work helping you think about aspects of your financial life besides investments, you should find another planner.
Making a financial plan is hard, because it takes a lot of consistent effort to do well and forces you to make tough choices that you may not want to be forced to make.
But financial planning can also be rewarding because it can vastly improve your confidence that you will achieve some life goals. As a financial planner myself, I would never argue that a financial plan is panacea, but it is often a key component to improving one’s financial and mental well-being.
About Lindsey Young
Lindsey (she/her) started Quiet Wealth to provide the comprehensive set of financial advisory services that successful LGBTQ professionals and their families need.
Prior to founding Quiet Wealth, Lindsey spent fifteen years in Silicon Valley finance, primarily as an investment banker working on mergers and acquisitions, IPOs, leveraged finance and other transactions for technology companies. She leverages her deep background in finance to help Quiet Wealth clients achieve their goals. She also has extensive experience providing strategic and financial advice to businesses of all sizes in multiple industries.
Lindsey received an MBA from Harvard Business School, where she concentrated her studies on finance and entrepreneurial management. She earned her BA from Williams College, where she majored in economics and psychology.
Lindsey is an Investment Adviser Representative and is licensed as an insurance Adviser in the State of Maryland. She is a Certified Exit Planning Adviser and a member of the Baltimore Estate Planning Council
Lindsey has a long history of advising non-profits. Currently, she serves as a board member for Freestate Justice, the leading LGBTQ legal advocacy organization in Maryland. She is also a returned Peace Corps volunteer, having served two years in Armenia as a small business advisor.
Lindsey is a native of Baltimore, and after a globetrotting career, she is happy to be back home in Maryland. In her free time, she enjoys playing tennis, baking, producing a music podcast and rooting for the Orioles.
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