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7 Tips To Curb Overspending When You're LGBTQIA+

By Lindsey Danis

  • PUBLISHED June 11
  • |
  • 5 MINUTE READ

While overspending is a common financial problem, LGBTQIA+ Americans tend to overspend for reasons that intersect with their identities. According to Experian, 65% of LGBTQIA+ Americans believe they have bad spending habits that need to be improved.1 This Pride month, discover the connection between being LGBTQIA+ and overspending—and consider these seven tips to curb spending and build a stronger financial foundation.

LGBTQIA+ Spending and Saving Habits: A Snapshot

LGBTQIA+ Americans spend and save differently than the general population. For one thing, LGBTQIA+ Americans tend to earn less money than their peers, according to Experian's survey of more than 1,300 Americans.1 Having less money to begin with means it's easier to overspend—there's less wiggle room in a budget, for example—and harder to accomplish financial goals, such as saving money.

While many LGBTQIA+ Americans blame themselves for overspending,1 the topic of spending versus savings is more complex when their positionality is considered:

  • • LGBTQIA+ workers earn about 90 cents for every dollar the typical worker earns. LGBTQIA+ people of color, transgender women and men, and nonbinary individuals earn even less when compared to the typical worker.2
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  • • 25% of LGBTQIA+ Americans say they've been passed over for a promotion at work, and 11% report a lower salary or reduced chance of promotion due to their identity.1
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  • • Many LGBTQIA+ adults carry high levels of student loan debt. Given that LGBTQIA+ youth continue to experience family rejection, LGBTQIA+ students often have to take out more loans to pay for their education.3
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  • • Many LGBTQIA+ adults settle in big cities, which often come with a higher cost of living.3

Despite these hurdles, LGBTQIA+ people are managing to save money. According to Experian, 30% of LGBTQIA+ Americans feel satisfied with their savings rate.1 The following seven tips can help LGBTQIA+ Americans spend less money, pay down debt and build a financial cushion.

1. Understand LGBTQIA+ Spending Habits

Stereotypes surrounding gay affluence encourage LGBTQIA+ people to socialize and overspend. There's a prevailing myth that same-sex "dual income, no kids" couples have higher levels of discretionary income compared with opposite-sex couples raising children.4

Cultural myths like these don't just ignore the income disparities many LGBTQIA+ people experience; they can encourage LGBTQIA+ people to spend money they don't have.3

Experian revealed that the top categories for LGBTQIA+ overspending are dining out, clothes and hobbies.1 These fall into entertainment or lifestyle categories, suggesting that social pressure to live a lavish lifestyle and keep up with the Joneses plays a factor in the community's overspending.

There's nothing inherently wrong with dining out and socializing—if you're spending within your means. If you're spending beyond your means, review your discretionary spending to find the specific categories where you tend to overindulge.

2. Define Financial Priorities

Given the extra expenses many LGBTQIA+ people must plan for, it's important to identify financial priorities before building a budget.

A financial priority is anything highly important to you, such as paying down high-interest debt or creating an emergency savings account.

When you identify financial priorities ahead of time, you may be less likely to impulse spend because you know the money is needed elsewhere.5

3. Create a Budget That Balances Needs and Wants

A budget helps you manage your money. It balances your financial needs (e.g., rent, debt repayments, utilities) with wants (e.g., dining out, vacation spending). When you understand your financial priorities, you can create a budget that suits you.

If you're LGBTQIA+, your budget might look a bit different. For example, it might have a category for family planning because it often costs more to establish a family if you're LGBTQIA+.3

READ MORE: Personal Finance 101: Budgeting Basics

4. Implement Strategies To Avoid Overspending

The first three steps can help you better understand your finances and spending habits. Now it's time to use that information to make informed choices about spending money.

There are many ways to cut down your spending. You can try several different approaches until you discover what works for you. Practical strategies to curb overspending include the following:

  • • Take the no-spend challenge. Currently popular on TikTok, the no-spend challenge urges participants to spend as little money as possible in a specific period, such as a week or a month.6
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  • • Institute a 24-hour rule. Wait at least 24 hours before making a nonessential purchase. When the 24-hour period goes by, you may not want the item any longer.5
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  • • Plan out shopping trips. When it comes to shopping, write a list and stick to it. Buy items you've identified ahead of time so as not to overspend. Avoid impromptu trips to malls and shops where the temptation to buy might arise.5
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  • • Create a vision board that represents your financial priorities. The next time you're tempted to buy something you don't need, look at your vision board. This simple exercise can redirect your attention to your financial goals and help you avoid mindless spending.

5. Pay Down Debt

Debt ranks in the top three financial concerns of all Americans. However, LGBTQIA+ Americans are less confident in their ability to make good decisions around debt repayment.7

When LGBTQIA+ people spend more—on their needs and wants—it becomes harder to pay off debt. By curbing overspending, you free up money to put toward your debt. Two common debt repayment strategies to consider are the snowball and avalanche methods:8

  • • Snowball method: Pay off your smallest debts first while making minimum payments on larger ones. This gives you quick wins and motivation by clearing debts faster.
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  • • Avalanche method: Pay off debts with the highest interest rates first while making minimum payments on the others. This saves you more money on interest over time.

6. Save for an Emergency

According to the LGBTQ+ Money Study, building an emergency fund is the second highest financial priority for LGBTQIA+ Americans.9 Granted, less than half of all Americans could handle an unanticipated $1,000 emergency expense, so establishing an emergency fund is something everyone should consider.10

Financial experts recommend saving three to six months of living expenses in an emergency fund.10 You might consider keeping this fund in a high yield savings account. These accounts typically offer a higher interest rate than a basic savings account, meaning every dollar you deposit earns more interest. As a bonus, a high yield savings account is separate from your checking account, so you may be less tempted to dip into it on a whim.

WATCH NOW: Know It to Grow It- Emergency Fund

7. Save for Retirement

One legacy of the AIDS epidemic is that many LGBTQIA+ people believed they would not live to see retirement, so they didn't make saving for retirement a priority.11

It can be difficult to prioritize retirement savings when you earn less than the general population and carry greater debt from student loans and family planning.3 However, putting aside savings for the future provides peace of mind and more options as you age.

If you're behind on your retirement savings, there are ways to catch up. These retirement planning tips for the LGBTQIA+ community can help you plan for your retirement while acknowledging the unique challenges of your identity.

Use a Strategy To Start Saving More

It can feel overwhelming when you first think about spending less and saving more. The good news is that there are many strategies to reduce spending and save money on all kinds of expenses. Get inspired by easy ways to save money, and then start saving. Like building any habit, it becomes easier the more you practice.

Looking for more advice on getting out of debt? Check out this five-step strategy.

 

Lindsey Danis is a freelance writer with more than 12 years of experience covering personal finance, travel and LGBTQIA+ topics. When not writing, Lindsey is often found hiking or kayaking near her Hudson Valley home.

 

 

Sources/references

1. White, A. LGBTQ+ Money Survey: Attitudes, Challenges and Opportunities. Experian. June 15, 2023.

2. The Wage Gap Among LGBTQ+ Workers in the United States. Human Rights Campaign. Accessed May 21, 2024.

3. Netter, S. Why Saving and Debt are Big Problems for LGBTQ+ People. Stash Learn. June 3, 2022.

4. Verhoeven, A. The Myth of Gay Affluence. Marketing the Rainbow. October 12, 2020.

5. The Financial Pitfall: Impulse Spending and How to Dodge It. Education First Federal Credit Union. October 26, 2023.

6. Knueven, L. Does TikTok's 'no-spend' challenge work? Here's what you need to know. CNBC Select. March 29, 2024.

7. The LGBT Financial Experience. Prudential. 2016-2017.