Talking about money is important for LGBTQ couples

The month of June is a time for the LGBTQ community to celebrate their many hard-won triumphs on the road to equality, most notably marriage equality in 2015. Although these feats are celebration worthy, there are still challenges that same-sex couples face (as if relationships weren’t hard enough already). Financial planning is one area that LGBTQ couples should be especially conscientious about.

We’ve compiled a list of the top 5 financial challenges LGBTQ couples should consider:

The financial pros and cons of getting married 🍰

This may be a question that every couple should ask themselves, but the option wasn’t available to all within the LGBTQ community until June 26, 2015, when the Supreme Court of the United States made same-sex marriage legal. Although marriage is a very personal decision, there are some factors to be discussed:

  • Pros: Besides finally having an emergency contact person (who isn’t your 63-year-old mother who lives across the country), there are other pros to getting married, like tax benefits. The standard deduction allowed on tax returns is highest for married couples filing a joint return, because married couples who file a joint tax return get to claim two personal exemptions. Additionally, if one spouse makes significantly less than the other or doesn’t work, this may pull the couple into a lower tax bracket, which could help them save big when tax season rolls around. Sounds like a good wedding gift from Uncle Sam.

  • Cons: Gone are the days of random online shopping sprees without having to explain yourself. Married couples are legally tied to each other and may be held responsible for each other’s financial behavior (this includes debt). The thought of this can be daunting and can cause many issues in a relationship. Couples should discuss the amount of debt they have prior to getting married and may choose to pay off that debt beforehand, so their spouse doesn’t feel the burden.

Discrimination concerns at work 💼

Discrimination still exists for the LGBTQ community. Only recently, as of February 2018, federal laws that ban workplace discrimination on the basis of gender identity and sexual orientation were put into place. Although federal laws have been put in place, not all states have followed suit. If a person were discriminated against and chose to prosecute, they wouldn't be able to do it on the state level. Instead, they would need to prosecute on the federal level, which can be much more costly and timely. This is one effort that groups like Human Rights Campaign fights for.

This is an important factor for LGBTQ couples, as it is vital to have measures in place to protect yourself financially. Most experts suggest having a few months of emergency savings set aside in case of unemployment. Couples should consider extending this figure, especially if they live in a state that doesn't prohibit against workplace discrimination on the basis of gender identity or sexual orientation. One benefit of marriage is combined incomes, which may make it easier for couples to build up an emergency savings fund. Many same-sex couples have also chosen to get married because some employers have ended domestic partnership benefits, and they must now be legally married in order to extend insurance and health coverage to their partners.

Planning for children 👶

Babies can both melt your heart and drain your wallet, and this is especially true for LGBTQ couples who often must use alternative methods of conception. Couples should discuss the method that best fits their needs, and research the costs. For example, a surrogate can cost upward of $90,000, and for many, this could take years of planning. Besides considering the costs of conceiving, couples should modify their budgets to account for their new bundle of joy. Parents spend on average $12,500 on child-related expenses in their first year alone, according to a study done by the United States Department of Agriculture (USDA).

What to do in case of a breakup 😭

Breakups are difficult in any relationship, but there are additional factors that unmarried same-sex couples should consider, like how assets will be split. You buy an apartment together, a designer dog, and a huge TV -- who gets what if you unexpectedly split up? Creating a cohabitation agreement, which lays out the division of domestic and financial responsibilities of a relationship while together, and what the plan will be in case of a separation, is how many couples decide to protect their assets. Not every state considers the contract enforceable, but it does help open the conversation for couples and lays out a guide for what each others intentions are.

Planning ahead for retirement ⏰

Prior to 2015, when same-sex marriage became legal in all states, there were many challenges for the LGBTQ community when it came to retirement savings. Now couples are able to establish retirement accounts and max out the yearly contribution of $11,000 for married couples filing jointly, even if only one spouse had income for that year. Using tax-advantaged vehicles, like 401(K)s and IRAs, and planning ahead helps couples to avoid financial concerns so they can fully enjoy their retirement. U.S. citizens who are legally married can also leave an unlimited amount of assets to each other without triggering federal estate taxes.

TIP: Couples should consider meeting with a financial planner to discuss some of these matters. Financial planners are able to receive the Accredited Domestic Partnership Advisor designation, which means they are trained on financial planning that caters to LGBTQ couples. Relationships come with challenges, planning ahead and putting measures in place will help ensure financial health.