January 1, 2019 at 12:20 am EST | by Alex Graham
Make 2019 your year to get your finances in order
financial goals, gay news, Washington Blade

It’s never too early to begin thinking about your long-term financial goals.

As we begin the new year, now, more than ever, is a good time to make a resolution to improve your financial situation. As I write this from 38,000 feet in the sky, my husband and I are doing something the LGBT community loves to do: travel and, subsequently, spend. 

Before we begin this mimosa-sobering discussion, it’s pertinent to recognize the challenges our community faces, as opposed to our straight peers. According to studies by Prudential and Experian, LGBT adults tend to spend more than we save and that many of us tend to be underpaid compared to our counterparts, due in part to the lack of workplace protections and indirect discrimination. Unfortunately, it means that it’s easier to control your costs than increase your salary. 

It’s easy to want to spend less, but spending less in our experience-focused (e.g. traveling, social events, etc) community is difficult. The first, true and tried way to do it, is set a budget. Unlike our federal budget, when setting a personal budget, one should start with how much money is brought in. From there, subtract fixed or required expenses, like rent, and the balance is what you get to play with. 

Before we start dividing up that balance, we need to make sure we’re maximizing other “free money” that we may be ignoring. A sobering statistic is that many LGBT community members do not take advantage of employer 401k matching programs. While 401k plans are notoriously poor retirement vehicles, they still offer pre-tax deferrals and most employers offer an employer match. It’s important to always max out that match before putting a discretionary budget together. Don’t walk away from free money that you can rely on decades from now.

As you develop your budget, use an app like Mint to better understand how you spend. If you prefer to retain some level of privacy, many banks offer their own version of “spending trends” that you can use to put together a more simple budget. This is where the challenge comes into play — you’ll most likely have to alter something in your life. It could mean less happy hours, dropping a sports league, travel more economically, etc. I’ll be upfront — it not easy or fun to choose, but every dollar you can save today will make choices easier down the road.

What to do with your savings is always dependent on your circumstances, but the general rule is to pay “bad debt” first, especially credit cards. I recommend making weekly payments to your cards to more accurately reflect your financial status. It can take months to really get good at managing your money, so don’t get discouraged if you miss your goal. 

Once your budget is set and you’ve successfully begun to save money, you should start looking at moving this money into an IRA or other investment vehicle for the long run. Many firms have roboadvisors that offer lower fees and are largely self-service, but do not hesitate meeting with a human. It’s the mission of most financial firms to serve as many people as possible. Just do your research and confirm that you are the right match with your advisor. There is no harm in meeting with multiple advisors.

Finally, while the Obergefell v. Hodges decision dramatically equalized and simplified many LGBT couples’ financial situation, there still remains a need to discuss legal concerns, such as wills and power of attorney. I normally recommend that when you begin your mid- to late-30s you should start discussing with your significant others, especially if you’re not married. 

It’s important to decide who gets what when you die, but it is equally important to have a well-rounded set of trust documents, including various powers of attorney (medical, financial) that help reinforce your right to have someone you trust make decisions on your behalf. This may be more pertinent depending on where you live and subsequent state laws. Your financial advisor should be able to refer you to a local attorney that can help make sure your documents are appropriate for your state of residence.

Alex Graham is a principal at Graham Capital Wealth Management, a registered investment advisor located on K Street. He can be reached at 202-780-7726 or alex.graham@grahamcapitalwealth.comInformation contained herein is for informational purposes only and should not be considered investment advice or recommendations. Advice may only be provided after entering into an advisory agreement with an advisor.

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