A Queer (Mis)understanding of Personal Finance
Note: This is the first of a two-part series. Next month, Edge Editor-in-Chief Steve Weinstein will examine some of the lessons imparted by the authors of the new book "Same Sex Legal Kit for Dummies, by Carrie Stone and John Culhane."
You know someone like this. You probably know several people like this. In fact, it’s entirely likely that you are someone like this: the gay man or lesbian who drinks only in bars and insists on top-shelf booze, would never let artificial fibers touch skin, vacations in exotic destinations or on party cruises, never cooks at home (and wouldn’t know how anyway), just has to see the latest hit musical or buy the complete DVD set of a favorite TV show. Yet, every month, this person scrambles to pay bills, and come April goes into absolute panic about how to pay taxes.
Many LGBT Americans follow the old Greek maxim, "Eat, drink and be merry, for tomorrow we die." There are plenty of reasons for this. Until the mid-90s, gay men felt they faced a death sentence if they contracted HIV. Though many of us have become parents, many more of us have no dependents to put through college. Without families of our own, we may be cavalier about what happens to our assets when we die. Our urban gayborhoods may be fun places to live, but they can also be expensive, competitive and judgmental. We pride ourselves on our taste for the finer things in life -and disdain for those who lack our good taste. We may be estranged from our families or not particularly enamored of them.
Through discussions with financial planners and other research, I have come up with the 10 ways we mismanage money.
We don’t save for a rainy day.
Remember the grasshopper in the Aesop fable, who fiddled all summer while the industrious ant put away bits of food? Like sunny days, rainy days will happen. Anyone not prepared will find that rain wreaks havoc on credit cards, credit ratings, and family members and anyone else who can be hit up for an emergency "loan."
We don’t buy life insurance.
Parents have to think about what will happen to their children. But just because we may be parentless doesn’t mean that there aren’t people in our lives who don’t depend on us in some way. It could be an ailing parent or other relative, or a friend. All of us have our pet charity or other nonprofit organization that could receive needed funds as the beneficiaries of life insurance. And HIV is no longer an excuse: Thanks to improved meds, some companies offer policies to people infected with HIV.
We don’t do estate planning.
In the absence of normal protections, it’s vital that gay couples give special attention to detailed estate planning. Don’t think that a notarized will necessarily keeps hostile relatives from coming after what you have bequeathed to your partner or spouse. Thanks to the Defense of Marriage Act and in tons of other ways, we are heavily penalized compared with straight couples, which means more attention must be paid.
We don’t do pre-nups.
Too many of us have pie-in-the-sky romantic notions that this one is forever. Gee, I hope so. But some of the first gay nuptials have already ended in divorce. Half of all marriages end in divorce, and there’s no reason to believe that - even though we as a community are fighting so hard for the right to get hitched - we’re any different. One sticking point is a disparity of income: Sometimes it’s hard for gay couples to acknowledge that one partner makes significantly more than the other. If you buy property or any other big-ticket item together, it’s especially important to detail exactly who gets it in case of a breakup, and how much the other must pay to keep it.
We don’t buy enough health or disability insurance.
The obvious response is, who does these days? But that doesn’t mean you can risk not being covered in case of a serious illness or accident. That many of us can now get coverage through our spouse certainly has changed the landscape (while keeping in mind that that coverage is taxed). Many gay people tend to be self-employed, which means difficulty finding coverage at a reasonable rate - or any rate - and finding the money to pay for it.