Finances and the LGBTQ community

It’s been long-known and proven over and over that, in general, people who identify as LGBTQ are worse off, financially.  Discrimination at work and within housing, along with being kicked out, disowned, or cut off from family ties, are big factors as to why this might be.  Mental health also plays a huge role.  There have been times when I was so deep into depression that I was not able to function at my job (or, in the past, at school).  Fortunately for me, I was able to take multiple medical leaves, when I needed them, with full pay and full job security.  That’s not always the story, though…

I was contacted a couple of months ago by Linda Manatt, who works for OverdraftApps.com, a company “created to increase awareness of the annual $35 billion overdraft problem in the U.S., which primarily affects the most vulnerable populations of our society. By creating content and developing tools to inform the public, [they] hope to make a positive change and shape tomorrow’s consumer finance policies for the better.”

In July of 2018, they commissioned a research organization to conduct a survey about financial attitudes and realities.  1,009 people from 46 states, aged 18- 71 participated, and 11% of them identified as LGBTQ.  A couple of other factors were isolated, including renters vs. owners and income levels, but not age, race, education level, or any other demographic.

Some of the big take-aways, as it applies to the LGBTQ community were:

1. While only 14% of people surveyed make less than $25,000 per year, 25% of LGBTQ people fall in this bracket.
2. 51% of the general respondents reported feeling “that the system is trying to take advantage of them when it comes to financial products.”  When isolating for LGBTQ people, that percentage jumped to 61%.
3. LGBTQ people are 50% more likely to overdraft between three and nine times in the past year compared to the general population (18% compared to 12% of the general population.)

It is surprising how many people overall have over-drafted at least once within the past year (46%), how few people were even aware that they can opt out of over-drafting all together (39%), and how frequently over-drafting happens without their knowledge (42%).  No wonder people feel taken advantage of, purposefully!  As I was reading through the data, the overarching human emotion running throughout is the avoidance of embarrassment.  And sure enough, there’s a quote within the article to suggest this:

Paul Golden, from Nefe [National Endowment for Financial Education], provides an … interpretation on the reasons people don’t opt out more often of overdraft protection. In his opinion, “bankers [don’t] say that overdraft protection is mandatory” but they do sell it as an insurance to one’s reputation.  In his experience, this is how they are sold to consumers: “You go out to dinner with your friends or work colleagues and the bill comes up. You don’t have enough to cover it – can you imagine the embarrassment you would suffer if your card was declined?” People react: “Oh yeah, I should have overdraft protection.”

It’s like, pay $35 later for the convenience now of not having to put groceries back, in front of other people, when there is not enough in the checking account.  I’d even take this a step further and go so far as to say that people who are more likely to be singled out, to be devalued, humiliated, harassed, abused, and assaulted, are exponentially more compelled to do certain things to get out of embarrassing situations, including (but not limited to, by a long shot!) financial embarrassment.

I’d be curious what types of trends would emerge if the data had been isolated even further, to account for transgender and gender-nonconforming identities, within the LGBTQ community.  I can tell you right now that the picture would become much more bleak, very quickly.  I’d love to hear your own stories if you’d like to share, in the comments section!

If you’d like to see the full study, it is here:
Overdrafting in the United States:  Distrust and Confusion in the American Financial System

And thanks to Linda Manatt for prompting me to get out of my comfort zone and attempt to cover such a big issue, in my own, semi-personalized, way…