The Hard Truth About the LGBT Community and Bad Spending: It’s Never Too Late to Plan!

By: Robert Castillo, ADPA®

In working with the LGBT community, I’ve noticed that we are all guilty of trying to keep up with each other especially in a metropolitan city like Los Angeles. It’s no surprise that LGBT couples have more discretionary income than their heterosexual counterparts. It should also be no surprise that the LGBT community spends more on going out than saving and investing their money. The unfortunate surprising fact is that the LGBT community is saving less for long-term goals like retirement than ever before. It’s time we stop feeling that we need to have the latest phone or newest car right now and start thinking about tomorrow.

In a recent Experian study on saving habits, LGBT people revealed that they are devoting 16% of their income to discretionary spending but only 11% to saving and investing. I always recommend to my clients to save 20% of their income before they can feel free to spend freely on miscellaneous expenses. The easiest way to make this happen is through automated deductions from your paycheck or your bank account. I’ve found that many people save minimal amounts in their company 401k plans and save close to nothing outside of that. People who have no retirement plans at work are even worse at saving. It’s important to allocate 10% of your income for long-term goals like retirement and another 10% towards mid-term goals like buying real estate. The best way to make this happen is by saving in accounts that are not so easily accessible with the swipe of a debit card.

In another study by Prudential Financial, one third of the LGBT participants admitted to having bad spending habits. This statistic gets even worse when dealing with younger members of the LGBT community between the ages of 25 and 34; a whopping 49% of this group claimed they are terrible spenders. It’s never too early to think about investing for the future. In fact, the earlier you start, the easier it will be to retire one day. This seems very boring when all your friends are buying VIP passes to Coachella, but you’ll be thankful one day when you don’t have to live off a fixed Social Security income, if it’s even around in 30 years.

The LGBT community needs to stop trying to keep up with the gay Jones’ at brunch and start thinking about how to maintain a healthy savings account. It can be a daunting task but writing all your expenses down is the first step to taking control of your finances. A financial advisor can help you get started by going through a budget analysis and seeing where you can make cuts to be able to get ahead. Too many young people think they need to wait to have a lot of money before they can invest, but that will never happen if you’re overspending—everyone needs a financial plan regardless of how much you have or earn. Call a local advisor today so that you can make it to brunch in the future.

Robert Castillo, ADPA® is a Financial Advisor at Santa Monica, CA based Gerber Kawasaki Wealth and Investment Management, an independent investment advisory and wealth management firm with $656 million in assets under advisement. Robert is also an accredited domestic partnership advisor and has been specializing in financial planning for LGBT same-sex and unmarried couples since 2009. To contact Robert, please email him at Twitter: @RCastilloLA
Disclaimer: This article contains general information and is not intended as legal or tax advice. Every case must be reviewed independently with an attorney or tax advisor.
Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor.

Securities offered through LPL Financial, Member FINRA/SIPC.

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

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