The way gay people spend their money is changing as they become parents and enter civil partnerships
Nick Baron, The Observer, Sunday 25 April 2010; Guardian UK
Could the pink pound be destined to go out of circulation? Although research suggests gay people, particularly men, still have plenty of disposable income, the introduction of civil partnerships and the increasing number of gay couples becoming parents seem to be changing the way many think about money.
According to research by gay market research company Out Now Consulting, homosexual men and women earned upwards of £81bn in 2007, while a separate survey by OMD Insight found that monthly spending by gay men on cosmetics was almost double that of straight men. It also found that 40% of gay people surveyed invested heavily in new technology, compared with 25% of heterosexuals and that gay consumers took an average of four flights a year compared to the straight person's three.
But society is changing, and assumptions about dependent-free gays are being challenged. In the three years to December 2008, nearly 34,000 same-sex unions were registered in the UK, while according to the Office for National Statistics, 170 children were adopted by same-sex couples in 2007 and 2008. In that same period 560 children were adopted by single people and, although the statistics don't reflect the sexuality of these adoptive parents, it is likely that at least some were gay or lesbian.
Out Now Consulting is about undertake the largest ever gay market research study across 14 countries, but it has already found signs that becoming a parent has a big impact on gay men's attitudes to spending. "The introduction of children into gay men's lives does impact on their lifestyle and expenditure habits," says the company's founder and CEO, Ian Johnson. "This is likely to become part of the lifestyle impacts affecting gay men."
Of those surveyed by Out Now for a 2008 study, those with children were less likely to splash out than their childless peers on international holidays and more than £100-worth of cosmetics a month.
But do gay people prepare sufficiently for children? Francis and Rob (who prefer to remain anonymous) found the expense of family life came as a shock. The civil partners last year adopted two children, a boy aged six and a girl aged five. Their lives have changed remarkably, not least financially. "Before, we were not careful with our money," says Rob. "We avoided being in debt, but in general spent a lot and saved little. We did a lot of travelling – our last holiday was in Bora Bora. Our biggest splurge was designer furniture by Ligne Roset and Hulsta." It didn't stop there, says Francis: "All my wardrobe was designer: McQueen, Dior, D&G …"
And now? "Raising children is more expensive than we expected," says Rob. "We need to economise a lot. Gay couples probably have higher standards on the items they buy for their children in terms of quality and design. Our savings are gone and we have no investments left. We have a reasonable pension, but it looks like we will have to work until we are old."
Even so, the couple were reluctant to let their financial situation affect their desire for a family, having always felt they could afford children if they changed their spending habits. "We shop at Zara now, instead of Selfridges."
Harry Housen, 34 and gay, has also learned the meaning of compromise when it comes to finances. He has agreed to father a child for a female friend, and the pair are ready to make their first insemination attempt. Previously, Housen used credit cards to support his expensive tastes.
Last year, however, when he considered buying a two-seater sports car, he realised that it wouldn't work with a young child. Harry has no choice but to save, and with a mortgage on a new three-bedroom house to pay, on top of a potential new arrival, his financial priorities have been reassessed.
"I will set up a fund for the child that he or she can get when they're 18 or 21 and that will hopefully pay for their studies, or a wedding. I've become really good at budgeting."
The IFA's advice
Stuart MacDonald, Managing Director of Balmoral Asset Management, believes there are certain steps that every adult, including gay men and women, who may have dependents in their future, should take to ensure those dependents are protected.Rule number is to protect income against long term illness. He says: "The solution is often an Income Protection (PHI) policy which would provide a regular monthly income until you are either fit to return to work or reach retirement age."
His second step would be a life insurance policy which, after repaying outstanding mortgages and any other debts, would also leave any dependents with reasonable provision for the future.
And then? "Having a will that is up to date should also be a given and it is a good idea to maintain an emergency savings account holding three to six months' net salary."
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