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The ultimate financial planning guide for LGBTQIA couples

Navigating your financial landscape is crucial and the financial services industry hasn't always catered for everyone. At Unividual, we’re committed to offering a supportive environment where everyone can access bespoke financial advice. This guide is tailored to address the unique financial challenges and opportunities faced by LGBTQIA people, backed by real-life data and expert insights.

Create a joint financial strategy

Joining finances is a significant commitment and it is full of emotional and practical considerations. This process can be even more complex for LGBTQIA couples due to unique socio-economic factors. A 2023 Experian study found that nearly 65% of LGBTQ+ individuals admitted to having “bad spending habits”, underscoring the need for tailored budgeting strategies.  This was  most prevalent among younger community members ages 18 to 24 (69%) and 25 to 34 (67%). The top three things those age groups said they overspend on are dining out, clothing and hobbies. So the best place to start is budgeting! Creating a joint budget is the first step in aligning your financial lives. You could use the “50/30/20” budgeting rule as a starting point:

Allow 50% of your income for needs: Essential expenses like housing, groceries, and utilities.

Put aside 30% of income for wants: Discretionary spending on dining out, travel, and entertainment.

Put away 20% for savings: Important for future goals and unexpected needs.

This approach helps manage finances efficiently, proactively and builds a foundation for discussing and respecting individual spending habits.

Setting shared financial goals

Aligning financial goals is a critical step towards a harmonious relationship and effective money management. A goal setting exercise will ensure you move in the same direction and it also fosters a sense of partnership. It is important you only do this when you are ready to share, but here are a few pointers to get you started:

1. Open communication about finances: Establish open and honest communication about your current financial situations. This includes discussing income, debts, savings, investments, and financial habits. It’s important to approach these conversations without judgment, understanding everyone has different financial backgrounds and experiences.

2. Identify common goals: Once you have a clear understanding of this you can identify and define your shared goals. Start off with short-term goals like saving for a vacation, purchasing a new car, covering upcoming major expenses or saving for medical treatments. Move on to medium-term goals like saving for a home or starting a business together. Then you can move on to longer-term goals around retirement, perhaps you are saving for a family and want to establish a fund for potential IVF, adoption or surrogacy costs. There may be some give and take with goals when you want to align them, it can be helpful to have a professional coach you through this process to ensure all voices are equally heard. This is a service that a money coach or financial adviser could provide.  Be mindful that some people struggle to imagine their future, perhaps living as each day comes. Take time to understand this rather than forcing on your ideas and ensure there is a safe space for you both to share.

3. Create a financial plan: With both of your shared goals identified, the next step is creating a basic financial plan to achieve them. This plan should include savings strategies, understanding what investment vehicles to use, all the while fitting in with your risk tolerance. Most couples will find that their appetite for risk may differ from their partner’s which is why financial planning should still be tailored to each person as a unique individual. Regularly review your financial plan to ensure it aligns with your goals as life changes. Adjust your plan to account for any changes in income, lifestyle, or objectives. This is often the hard part, people don’t get round to it and if you are hit with a crisis it can be quite costly to your finances because you didn’t keep on top of things on a regular basis.

4. Leverage financial advising: If you want a much more detailed plan you can contact a financial adviser. If you are not sure if Unividual is the right business for you, a good place to start is finding an adviser local to you on government backed MoneyHelper.  It is really important you check out a company’s reviews on Google or comparison websites like VouchedFor. For many couples, consulting with a financial adviser who understands and respects their unique needs can be incredibly beneficial so they can tailor advice to your specific situation so ensure the firm has experience of working with clients just like you.

5. Plan for contingencies: Part of effective financial planning is anticipating and preparing for the unexpected. This includes setting up an emergency fund, ensuring adequate insurance coverage, and having open discussions about financial management in the event of one partner’s illness or death. These preparations help secure your financial future and provide peace of mind – we cover more of this in the rest of this guide.

6. Celebrate milestones: As you reach your financial goals, big or small, take time to celebrate these achievements together. Recognising these milestones can provide motivation and reinforce the benefits of your financial partnership.

By setting shared financial goals, couples can create a strong financial foundation that supports their life plans together.

Homeownership challenges for LGBTQIA couples

Homeownership is a cornerstone of financial security and a common aspiration for many of us in the UK, however achieving this goal can be particularly challenging because of the discrimination, indirect or direct, LGBTQIA individuals face in the housing market. Despite legal protections, issues still surface in subtle and overt ways during the home-buying process, perhaps from sellers, estate agents or even future neighbours. These challenges may compel LGBTQIA couples to seek out specific neighbourhoods that are not only accepting but also champion LGBTQIA rights. Unfortunately, these neighbourhoods are often more expensive due to their inclusivity and popularity, which can further complicate the home-buying process. It also means you will need to save more for a deposit than if you were able to purchase a property in a more affordable area. Search for estate agents and lenders who understand what you need and engage with local LGBTQIA groups who might be able to provide first-hand insights into different neighbourhoods and share their own home-buying experiences.

TOP SAVINGS TIP FOR HOMEBUYERS: It’s also important for couples to plan for ongoing costs such as property taxes, home insurance, and maintenance. Don’t forget these hidden costs, they mount up, and you don’t want to take on further debt on top of your mortgage because you didn’t know to plan for this. 

Crucial financial protection strategies for LGBTQIA Couples

Financial planning is not just about growing your pot of money, it’s also about protecting your wealth. This means having a plan that covers all eventualities, from separation to the untimely death of a partner along with comprehensive insurance cover. Important areas to consider are:

Life insurance: Ensures that the surviving partner can maintain their lifestyle and meet obligations like a mortgage if one partner passes away unexpectedly. Both level term and decreasing term life insurance should be considered depending on your needs.

Critical illness cover: Provides a lump sum payment if one partner suffers from a specified critical illness, helping cover mortgage payments and other living expenses during difficult times. This can also be used to upgrade a property, car or facilities to help you adapt to changes in health and lifestyle.

Income protection: This type of insurance offers a safety net by replacing a portion of your income if you are unable to work due to illness or injury, ensuring that financial commitments like monthly rent or mortgage payments can still be met. This way you both don’t have to rely on the other partner’s income.

Mortgage protection: Consider mortgage protection insurance that can cover mortgage payments temporarily during life transitions.

Navigating separation: Ending a relationship can have significant financial implications, especially if the couple has joint financial products or co-owns property. Consider establishing legal agreements like a cohabitation agreement, pre-registration or pre-nuptial agreement and even a civil partnership or marriage. This will outline what happens to each partner’s assets and how shared financial responsibilities are handled in the event of separation.

Things are often structured for heterosexual couples so it is important LGBTQIA couples effectively plan because it involves more than just managing money, it’s about ensuring a secure future for both partners, no matter what life brings. By addressing these key aspects, you can safeguard your assets and protect each other’s financial interests through all of life’s ups and downs.

Essential estate planning to protect your partner

The landscape of legal rights is complex and ever-changing so protecting your interests, can ensure your rights and relationships are recognised and respected. Here are 6 essential considerations for estate planning:

Wills: They give you control over the distribution of your assets after death, particularly important if you have a non-traditional family structure. Without a will intestacy laws apply, which do not favour unmarried partners or non-biological family members.

Powers of Attorney:  You can appoint someone to make decisions on your behalf should you become incapacitated. This gives your partner the ability to make critical decisions during health emergencies, essential if your relationship is not recognised by others or you are not legally partnered.

Trusts: These can offer control over asset distribution and can provide financial benefits to the beneficiary, such as avoiding a lengthy, costly probate.

Tax Considerations: Understand how your estate will be taxed upon death and plan to minimise the tax burden on beneficiaries. There are financial planning products designed just for this. We do have a hub for tax planning with a Guide to the 2024/25 Tax Year if you want to read up on tax efficient financial planning and how to pay less tax.

Prioritising retirement savings

Retirement planning is a critical aspect of financial security. You might not be able to rely on substantial support from family in your later years. Over half (55 per cent) of individuals who identify as LGBTQIA are on track for a retirement lifestyle below the Pensions and Lifetime Savings Association’s (PLSA) minimum standard, compared to 35 per cent of the general population, research from Scottish Widows has revealed. This suggests that 44 per cent of LGBTQIA people will struggle to afford basics such as food and heating in retirement, versus the national average of 35 per cent. Whilst the report acknowledged this is partly the result of a persistent earnings gap, additionally the LGBTQIA community have higher medical and family planning costs which can detract from their ability to save for retirement. Given these challenges, it is vital for LGBTQIA couples to adopt robust strategies for retirement planning:

  • Start early: The power of compounding interest means that money saved earlier grows significantly over time. Starting early can help mitigate periods of lower savings due to unforeseen circumstances.
  • Maximise retirement contributions: Take full advantage of retirement vehicles like pensions and individual savings accounts (ISAs). If your are employed, contribute enough to gain any employer match offered, as this is essentially free money towards your retirement.
  • Diversify investments: Diversification can help manage risk and increase potential returns over the long term. Consider a mix of investment options tailored to your risk tolerance and retirement timeline.
  • Consider a Lifetime ISA: For those under 40, opening a Lifetime ISA can be beneficial. Contributions are supplemented by a 25% bonus from the government, up to £1,000 per year, which can be used towards retirement.
  • Plan for healthcare costs: Given the potential for higher healthcare costs, planning for these expenses should be an integral part of retirement planning. Consider health insurance policies that offer extensive coverage and look into long-term care insurance.
  • Regular review and adjustment: Retirement planning is not a one-time task but a dynamic process that should evolve as your life circumstances change. Regularly review your retirement plan to adjust contributions, investment allocations, and strategies to ensure alignment with current financial situations and future goals.
  • Educate yourself on retirement living options: Understand what retirement living options are available that are LGBTQIA friendly and plan financially to afford these options. Communities that cater specifically to LGBTQIA seniors can offer not just a safe and supportive environment but also a communal network that can replace traditional family structures.

Prioritising retirement savings is more than just a financial necessity, it’s about ensuring a secure and dignified retirement. If you lack that expected familial support, it imperative to build a robust financial buffer that can support a comfortable lifestyle in later years. With thoughtful planning and strategic actions you can face retirement with confidence and security.

Understand, in real life terms, how you could create a financial plan

Not many people wake up thinking, “I need a financial plan.” In these case studies can show you how people, no matter their demographic, can get real value from creating a financial plan. Building your financial literacy and understanding your finances is key to a balanced healthy life, so feel free to explore these case studies. The people behind them put a lot of effort and time in to helping others understand the value of managing their money.

Eloise and Maria, Bristol

Maria and Eloise decided to seek financial advise just before starting their own family. They were at a cross roads and wanted to find an approachable adviser. Discover how Maria and Eloise found financial clarity and security and how they put a plan together centred around long-term investments and pension consolidation.

Xiantai, Glasgow

Meet Xiantai, a talented chef from Glasgow. After purchasing a new home, Xiantai recognised the need to reassess their financial situation. Despite an initial focus on investments, Xiantai soon realised the broader scope of financial planning was crucial. This prompted them to seek advice on so many different areas from budgeting, risk management, through to having an emergency fund.

Charles, Bristol

Charles had not used a financial adviser for a long time because his previous experience had been “less than favourable”.  He had some cash saved in an ISA and wanted to invest it. With Animal welfare high on the agenda for Charles, him and his partner built a financial plan around socially responsible funds with an eye on targeted returns in excess of inflation over the long term.

Amy, Glasgow

After several years of managing her growing savings independently, Amy found herself at a financial crossroads. Past experiences with finance professionals had left her cautious. Find out how she transformed money saves in her bank account, that she didn’t know what to do with, and how she overcame her fears of using a financial adviser again after meeting Unividual’s Andy Lei.

Investing with values in mind: ESG Strategies

As awareness and concern for social, environmental, and governance issues continue to rise, more investors are choosing to put their money where their values are. ESG investing, which stands for Environmental, Social, and Governance allows individuals to support companies that prioritise sustainability, ethical practices, and social responsibility, aligning investment portfolios with personal values and societal impact.

Understanding ESG Investing Criteria

  • Environmental: This is how a company performs as a steward of nature, including how it manages risks and opportunities associated with environmental challenges such as climate change, resource depletion, waste management, and pollution.
  • Social: How a company manages relationships with employees, suppliers, customers, and communities as a whole. This could mean investing in companies that support diversity, inclusion, and equality, support LGBTQIA rights, and contribute to social causes.
  • Governance: Focus on a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Investors might look for companies with transparent practices that promote fairness, accountability, and avoid conflicts of interest.

Benefits of ESG investing

  • Alignment with values: ESG investing allows individuals to support companies that are economically viable and contribute positively to societal and environmental outcomes.
  • Risk mitigation: Companies proactively manage environmental, social, and governance issues are often better positioned to mitigate risks and adapt to changing regulatory landscapes, which can lead to more stable returns. Sustainable practices can lead to better resource efficiency, improved innovation, and enhanced company reputation.

Challenges of ESG investing

  • Varying standards: The lack of standardised ESG criteria can make it difficult to compare investments directly. This underscores the importance of thorough research and not relying on reputable ESG rating agencies.
  • Impact measurement: Measuring the true social and environmental impact of investments can be challenging. Investors need to critically assess whether their investments are delivering on their intended ESG outcomes.

To find out more about investing you can check out our Ultimate Guide to Tax Efficient Investing

How to get started with investing

There are two ways you can go about this, you can either outsource to a wealth manager or financial adviser or do your own investment planning. If you choose the latter just make sure you do the following:

Research: Start by researching funds and companies that score high on ESG criteria. Many investment platforms and advisers offer tools to filter investments based on ESG ratings.

Diversification: As with any investment strategy, diversification is key. Consider funds that cover different sectors, geographies, and types of investments to spread risk.

Continuous learning: Stay informed about your investments and the impact they are achieving. This can involve regular reviews of ESG performance reports and staying updated with company practices and policies.

ESG investing offers a powerful tool to ensure that investments reflect your values, support ethical practices and contribute to a more equitable and sustainable world. By integrating ESG criteria into investment decisions, you can influence corporate behaviours, drive social change, and achieve financial returns without compromising your principles.

Financial planning for children in LGBTQIA+ families

The decision to have children is not only a personal milestone but also a significant financial commitment. From the costs of conception to legal considerations and long-term planning, here are five unique aspects that LGBTQIA+ couples need to consider when it comes to financial planning for children.

1. Understanding the Costs

  • Conception expenses: Many couples may require assistance through fertility treatments like IVF, or services such as sperm donation, egg donation, or surrogacy. These processes can be costly and often require multiple attempts before success, which can significantly impact a couple’s finances.
  • Adoption costs: Adoption is another route but this can also be expensive, involving agency fees, legal costs, and possibly travel expenses if the adoption is international.
  • Legal expenses: There are often additional legal costs involved to ensure both partners have parental rights, especially for couples who are not both biologically related to the child. This might involve second-parent adoption or other legal procedures.

2. Saving for children

  • Start early: Begin saving for children as soon as possible to spread the financial burden over a longer period. This can reduce the impact on your monthly budget and allow more flexibility in choosing the best options. If you want to create a plan for saving for children the sooner you get this set in stone the more the money will benefit from compound interest and the bigger the pot will be for their future.
  • Specialised savings accounts: Consider setting up dedicated savings accounts for child-related expenses. This could be a regular savings account or an account that offers tax advantages where applicable.
  • Budget adjustments: Review and adjust your budget to accommodate for new expenses such as childcare, healthcare, education, and daily living costs associated with raising a child.

3. Long-term financial planning for children

  • Education funds: Setting up an education fund, like a Junior ISA in the UK, can be a wise strategy. These funds allow you to contribute money annually, which can grow tax-free until the child accesses it, generally for educational purposes.
  • Insurance needs: With the addition of children, re-evaluating your insurance coverage, including health, life, and disability insurance, becomes crucial. Ensure that your cover meets your new family’s needs and provides sufficient support in case of unforeseen circumstances.
  • Estate planning: We’ve already covered this but update your will and any estate plans to include your children. This ensures that provisions are made for their guardianship and financial security in case something happens to you or your partner.

4. Government benefits and support

  • Child benefit: In the UK, most families are entitled to child benefit payments, which can provide regular income support for each child until they reach a certain age. Understanding how to apply and what you’re entitled to can provide some financial relief.
  • Tax credits and deductions: Be aware of any available tax credits and deductions for parents or guardians, which can help reduce the overall financial strain.

For LGBTQIA parents, financial planning for children requires careful consideration of additional costs and legal complexities. By starting early, adjusting budgets, and seeking appropriate legal and financial advice, you can ensure a stable and secure environment to welcome and raise your children. This planning manages the financial impact of having children and strengthens how prepared you are for the joys and challenges of parenthood.

Envision a future steered by expert financial guidance

Navigating the financial landscape can seem daunting, especially for those who feel they may not fit the traditional mould often associated with financial advice. At Unividual, we have spent over 24 years getting to know our clients and we understand that everyone’s financial journey is unique, so we not only celebrate this diversity but we relish it, live and breath it.  As an LGBTQIA owned business, we not only provide a safe and understanding environment but also bring first hand insight into the specific financial needs and challenges faced by our community. Remember, financial advice isn’t just for the wealthy, it’s for anyone who wants to make informed decisions about their financial future, so don’t let misconceptions hold you back because Financial advice is a lot more affordable than people realise.

Imagine a future where every financial decision you make is backed by expert advice and where your wealth grows confidently under professional guidance. That future could actually begin today? Don’t let uncertainty or unanswered questions hold you back. Dive into our case studies to discover real-life transformations achieved through tailored financial advice.

And when you are ready to take the first step towards financial empowerment, let’s start with a conversation. Join us for a complimentary, no-obligation consultation where your dreams and goals take centre stage. We’re here to listen, to understand your unique journey, and to help you create a path to better financial wellbeing.

Author & Editor: Cherie-Anne Baxter

Date updated: 14th May 2024

Date of publication: 14th May 2024

Approver: Quilter Financial Limited TBC

Risk Warnings

The Financial Conduct Authority do not regulate tax planning or estate planning.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Any figures or %s in this article are for the 2024/25 tax year and are correct on the day the article was published.

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