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Study: LGBTQ Gen Zers are ditching the ‘boomer approach’ to money and finance

A new survey from digital finance company Daylight found that younger members of the LGBTQ+ community tend to be more careful with how and where they spend.

Study: LGBTQ Gen Zers are ditching the ‘boomer approach’ to money and finance
[Source Image: cottonbro/Pexels]

Many people may not think twice about how their gender identity or sexual orientation affects their finances. But for the roughly 7% of Americans who identify as members of the LGBTQ+ community, identity can create significant barriers to meeting their financial goals.

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That may be changing, according to a new study from Daylight, a digital financial services company focused on serving the LGBTQ+ community. The study finds that younger members of the community—Gen Z—are taking a head-first approach to getting their finances in order.

For one thing, they tend to be more careful with where and how they are spending, according to the study. “More than any other generation, LGBTQ+ Gen Zers are pulling away from the ‘boomer approach’ to money, looking for satisfaction in resources designed to help them save for retirement, manage debt, and learn how to budget,” the study finds.

Daylight surveyed 1,500 Gen Z Americans who identify as LGBTQ+, and found that, despite members of the community traditionally experiencing higher levels of unemployment and underpayment compared with their counterparts, the younger cohort is better educated and more motivated to make their financial health a priority. Even so, the survey also finds that 26% of respondents feel that their identities negatively impact their finances. And financial experts say that is largely true, and that the negative impact is delivered in a couple of key ways.

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“There’s a lot of discrimination, particularly among the transgender community [in the workplace],” says Robert Castillo, a California-based financial advisor at Gerber Kawasaki, who often works with members of the LGBTQ+ community.

“There’s a long history of being marginalized in the job market,” he adds, which has stymied potential earnings. The good news is, he says that things are changing, although for many members of the community, particularly people of color, that change is happening “very slowly.”

But for Gen Z—of whom nearly 16% identify as LGBT, the highest among any generation—the rate of change may see a boost in the near future.

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Federal protections are lacking

In addition to the job market, LGBTQ+ Americans may also face discrimination at financial institutions, and there is no federal law to protect them from, say, being denied a loan due to their sexual orientation or gender identity.

“There’s no federal law in place that forces equal access to loans,” Castillo says, adding that congressional lawmakers have been trying to “end the possibility of being discriminated against at a bank” with the Equality Act, which passed the House in 2019 and 2021.

However, it has yet to pass the Senate, where it would need 60 votes, and faces almost unanimous opposition from Republicans, who worry that it would stifle religious liberties.

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While the prospects of the Equality Act passing the Senate are currently dim, Gen Z members of the LGBTQ+ community are forging ahead and, as the survey also finds, preparing for further economic downturns by “future-proofing” their finances. Castillo says that entails more or less the same maneuvers that anyone should employ when trying to prepare for some financial belt-tightening: Make a budget, track your spending, and pad your savings.

And despite historical discrimination in the financial space for gay, queer, and trans communities, Castillo says that the tide is turning and that Americans of all stripes can do their part by doing things like supporting the passage of the Equality Act, or putting their money where their mouth is, and investing in LGBTQ-friendly companies.

“It’s a great way to broadly support the LGBTQIA+ community,” he says.

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