Queer folks are more likely than cishet peers to have a lower salary (even after college), more likely to face discrimination when applying for loans and can have higher medical costs that aren’t covered by health insurance.
That makes making and sticking to a budget especially important — and challenging — for LGBTQ folks.
The obstacles facing queer people
You might think these claims are an exaggeration, but statistics back them up. For example, a study by Student Loan Hero found that 40% of LGBTQ borrowers were denied financial assistance for college because of their sexual identity. The 2019 Workplace Equality Factsheet by Out & Equal showed almost 10% of queer people had left jobs after experiencing discrimination, and a whopping 50% experience discrimination in the workplace on a regular basis.
On top of that, trans folks face extra medical costs if they choose to medically transition, and can have trouble finding supportive medical professionals. In some states, including Ohio, bills have been passed that could allow medical professionals to deny care and services to people “on the basis of moral, ethical, or religious exemption,” according to the Human Rights Campaign.
It doesn’t take a genius to figure out that a religious health care provider could legally deny care to a queer person because they object to their “lifestyle,” causing LGBTQ people to have to search harder for medical care or even go out of state.
When you put all this together, it’s no surprise that queer people can have a hard time making ends meet. A budget can’t fix the underlying systemic issues that keep queer people down, but it can help you ensure you have enough money to pay for the necessities each month, while still having some left over to spend on entertainment, clothes or whatever brings you joy.
How to create a budget as a beginner
A budget takes your total after-tax income and determines where you should spend it. It’s a good tool for anyone, whether you are scraping by on minimum wage or making six figures.
Calculate your after-tax income
Before you can start a budget, you need to know your after-tax income. If you work for a company and get a regular paycheck, that’ll be the amount you bring home each month.
If you’re a contractor or a freelancer, you’ll need to deduct your expected taxes and business expenses from your income. The IRS provides some resources on what taxes look like if you’re self-employed.
If you earn a regular paycheck, add back in any pre-tax paycheck deductions like health insurance or 401(k). This will give you a more realistic picture of how much you’re spending on necessities and savings.
Use the 50/30/20 method
One of the easiest ways to determine a budget is to use the 50/30/20 method. The concept is simple:
- 50% of your income goes toward necessities.
- 30% of your income goes toward wants.
- 20% of your income goes toward savings.
Of course, some expenses can be difficult to categorize — for example, a gym membership might be viewed as a necessity by some and as a want by others. Think critically about all your regular expenses to determine which category they fall into for you.
Necessities can include things like mortgage or rent, groceries, insurance, basic utilities like electric and water, child care, and minimum loan and credit card payments.
Wants can include things like entertainment, travel, expensive clothing and streaming services. There are some things that could fall in both the necessities and wants categories — for example, you need a winter coat if you live in a cold climate, but if you own several winter coats, a new one might be a want.
Savings include your emergency fund and retirement savings, but you should also include debt repayment in this category. It’s important to pay down debt (especially high-interest debt) if you want a successful financial future.
Choose a budgeting system
Now that you understand how to separate your expenses using the 50/30/20 method, it’s time to put your budget together. The first step is choosing a budgeting method that works for you.
Pick a method that’s easy for you to manage. If you choose a method that’s too complicated or takes a lot of time to maintain, you’re less likely to stick with it.
There are a few budgeting methods out there, including the envelope system and zero-based budgeting. Here’s a little on each of these methods to help determine which is right for you.
The envelope system
The envelope system is exactly what it sounds like. Using this method traditionally, you’ll create envelopes for each category and put the cash budgeted for that category in the envelope. Over the month, you’ll take money from the envelope to pay for items within this category, and once the money runs out, you’ll have to stop spending in that category until the next month.
For example, you might have an envelope for your entertainment budget. Every time you go out for dinner, go to a movie or go to a club, you’ll use money from that envelope. Once the money has gone, you’ll have to skip meals out or parties for the rest of the month.
It’s not common anymore to pay for things with cash, but that doesn’t mean you can’t use the envelope system.
Rather than putting physical cash in an envelope, you can use a spreadsheet to track your expenses. Create a tab or a column for each category and assign an amount you should spend in that category. When you spend money, add the expense to the appropriate category. This helps you track your spending and tells you when you’ve reached your limit for each category.
Or you can use a budgeting app that links to your bank account and automatically tracks and categorizes your spending. Automating your expenses this way is easy, but there’s always the chance that the app will miscategorize some expenses. Check in every week to correct anything that’s labeled incorrectly.
Zero-based budgeting allocates every single penny of your income to a category so your ending balance each month is $0. You’ll input your monthly income into a spreadsheet or app and then list out every single expense each month. That includes all of your necessities, wants and savings.
This budgeting method requires some prep work. Before you can start, you’ll need to track your spending for a few months to see where your money is going. Once you know that, you can determine whether you’re spending too much on wants that could go to savings or whether your needs are costing more than 50% of your income, so you can make cuts where you can.
Once you get going with zero-based budgeting, it can be a great way to know where every penny you earn is going. But it does require a lot of time and effort to keep up. You’ll need to be diligent about tracking expenses through the month and watch what you spend like a hawk.
A zero-based budget can also be hard to maintain if you encounter unexpected expenses, such as a car repair, but having an emergency fund can help with that.
If you don’t have a predictable income (for example, if you’re a freelancer or service worker), the zero-based budget isn’t a good option. This budget method works best when you know exactly what your after-tax income will be each month.
Still have questions? Here are the answers to some of the most-asked questions about budgeting.
How do you make a budget and stick to it?
The key to making a budget and sticking to it is consistency. Choose your method and make sure you check it frequently and track all your expenses. Be honest with yourself and always ask whether you need or want to make a purchase and how that fits into your budget. If it’s the latter, that’s OK; but if you’ve exceeded your allowance for “wants” that month, it’s best to hold off on making the purchase until the following month.
Make sure the method you choose isn’t too complicated, which will make it easier for you to stick to. For that reason, a budgeting app or a bank account with spend tracking is a good choice for many people, because it can automate your tracking and alert you if you go over in a certain category.
What is the 30-day rule?
Impulse spending can be a real barrier to successful budgeting. You can curb your impulse buys and stick to your budget more easily by implementing the 30-day.
The 30-day rule says you should wait 30 days before buying something you want. If, after 30 days, you still want the item, you can purchase it. But often, 30 days will go by and you’ll realize you’re not thinking about the item anymore and can do without it. That’s money saved!
Why do budgets fail?
Your budget may fail for many reasons. For example, you might choose a budgeting method that’s too complicated and takes too much time to keep up, and you’ll abandon it. That’s why it’s a good idea to consider which method will be easiest for you to stick with.
Your budget might also fail if you’re not honest or clear about where you’re spending money. Failing to track certain purchases can make it seem like you’re sticking to your budget while you’re racking up credit card debt or dipping into your emergency savings for non-emergency items.
Creating and sticking to a budget can help make sure you’re on track to reach your financial goals. If you have specific questions about your personal financial situation, reach out to a financial advisor to make a plan that makes sense for you.
Catherine Hiles (she/her) is a writer, editor, mother, friend and ally. She lives in Ohio with her husband, two kids, and sweet but wild pit bull mix.
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