LGBTQ+ purchasing power is about to explode. Brands that understand how to connect authentically with younger generations will rise to the top in coming years.

Nearly 18 percent of Generation Z, the group of people born between 1997 and 2012, identify as not heterosexual, according to survey data from research firm Ipsos that surveyed 19,000 respondents from 27 countries. Gen Z’s purchasing power is small now, but their earnings will balloon to $33 trillion by 2030, accounting for a quarter of all global income.

The market is called pink money, and it’s no longer a fringe market. In fact, LGBTQ people are the fastest-growing minority segment in America with regard to purchasing power.

Here’s an explainer on what pink money is, how it connects to the active gay rights movement, and how to attract it both ethically and effectively.

What Is Pink Money?

Pink money refers to the estimated purchasing power of the LGBTQ community.

World LGBTQ annual spending power currently stands at $3.9 trillion and continues to grow, according to research from LGBT Capital. Gay and lesbian couples have long been targeted by specific advertising campaigns for their higher likelihood to be Double Income, No Kids (DINK) households, and many traditional businesses will need to broaden their efforts to attract the pink dollar.

In an interview with Bloomberg, financial services company Credit Suisse noted that their stock basket of LGBTQ-inclusive companies consistently outperformed the overall market. The queer community is a loyal and lucrative market when properly engaged; pink money is a powerful economic force, and pink money donations will increasingly influence political campaigns in coming years.

The pink money market will expand further as Gen Z enters the workforce and begins generating income. This is a generation that can easily see past hollow advertising campaigns; refocusing on transgender, non-binary, gay and lesbian marketing engagement efforts will take you far.

How Pink Money Is Psychographically Different

The LGBTQ market is expanding in size, but to understand the psychology and behavior of pink money, we need to know about the nuances of LGBTQ personal finance overall.

LGBTQ+ People Are More Likely to Be Child-Free

And it ain’t for lack of trying! Potential legal restrictions, lengthy adoption processes, and social stigma are just three of the many reasons why LGBTQ people are less likely to have kids.

As a result, queer people are less likely to experience career gaps from taking maternity or paternity leave (which shouldn’t impact careers for women, but it still does), and are less likely to incur the costs associated with raising children.

LGBTQ+ People Are More Likely to Live in Cities

I moved to a metropolis after college, and have lived in one ever since because I wanted to be around other LGBTQ people. Queer people move to urban environments for feelings of both belonging and safety (and having great restaurants, bars, and nightclubs doesn’t hurt, either). This shapes the careers we pursue, how we spend our time, and where we prioritize discretionary spending. Cities also tend to have more higher-paying jobs and career ascension paths than rural areas.

LGBTQ+ People Are Less Fiscally Savvy

We’re working on this! But, yes, queer people’s focus on survival, acceptance, and identity in many parts of the world may stunt their interest in personal finance hygiene. The LGBTQ+ Money Study, a survey of 2,005 Americans commissioned by The Motley Fool in partnership with Debt Free Guys, found the following:

• Queer Americans are less likely to use financial planning tools like retirement savings, life insurance plans, and estate planning.
• 2 out of 3 LGBTQ Americans say they have “a high amount of financial stress”. The top two financial concerns are keeping up with living expenses and saving for an emergency.
• Nearly half of LGBTQ Americans say they have experienced discrimination by someone in the financial services industry.
• LGBTQ Americans are more likely to have debt for non-appreciating assets, such as student loan debt, credit card debt, and personal loan debt.
• LGBTQ people are less likely to have a mortgage.
  

Additionally, LGBTQ people are only half as likely as straight people to have a will, and 50% of them say they struggle to save, compared to 38% of heterosexual people, according to a survey from Experian. LGBTQ people are more likely to explore speculative assets, such as cryptocurrency, and they’re also more likely to dabble in side hustles or other forms of entrepreneurship in order to make ends meet.

Do LGBTQ People Earn More Than Straight People?

It's an interesting money question to consider, but the data we have on this topic is contradictory.

• This article in the Harvard Business Review notes that gay men passed straight men in average income in 2017, after earning less than them for many years.
• A 2020 report from the United States Census found that same-sex couples had higher household income than heterosexual couples.
• Many of the published studies we have focus on the gay and lesbian community, which doesn’t give a complete enough picture of LGBTQ versus non-LGBTQ earning power.

One note to make here is that the perception of whether queer people make more money is one that is often pushed or exaggerated in the media. The typical “fabulous gay best friend” trope in television and movies, along with the advent of shows like the original Queer Eye for the Straight Guy, paint a picture of hypersuccess. Brands should be aware that this framing doesn’t accurately reflect the gay community as a whole.

A Note on LGBTQ Ambition

One note to mention here is that many queer people do end up having lucrative careers, but achieve this status using self-flagellation or overcompensation triggers.

In the book The Velvet Rage, psychologist Alan Downs, who has worked primarily with cisgender gay men in his career, talks about the three phases of acceptance he observed in his clients.

• Phase one: Not yet being out of the closet.
• Phase two: Being out, but still feeling “broken” or “wrong”, leading to overcompensation triggers related to body image, career, or other areas of performance.
• Phase three: Learning to fully love oneself and achieve unconditional self-acceptance.

Many queer people fester in phase two. We are out, we have our social circles and communities, and yet we still feel lost. We reclaimed the pink triangle as a symbol of LGBTQ solidarity, have been through so much, and yet we continue to feel like we are not enough.

We feel the need to be the best, or outperform as a way to prove we are enough. Many of us have rocky or strained relationships with our families. These observations apply to a small niche within the LGBTQ community, but represent a larger theme in how the conditioning we have around what being gay does and does not mean can influence our career decisions or self-investment priorities, which shapes purchasing behavior.

Pink Money, Pinkwashing, Rainbow Washing

Pink money is different from rainbow washing, also known as pinkwashing.

Rainbow washing and pinkwashing refer more to a company’s attempts to win over the queer community and increase revenues or profits using superficial, shallow advertising campaigns. Many of these companies do this while secretly funding causes or politicians who are anti-LGBTQ rights.

Corporate giving practices have become less secret in recent years, and their visibility quickly becomes gasoline for activists and special interest groups to raise consumer awareness about how these companies actually behave, says Dr. Erica Ciszek, an associate professor of communications at the University of Texas at Austin.

“Increasingly, as consumers, we have no tolerance for that,” they said to me in an interview for an article with FORTUNE magazine, “because we know we can get our products, services, and needs met by other brands that are doing things differently.”

Frequently Asked Questions About Pink Money

Is Pink Money the Same as Pinkwashing?

The two are different. A better parallel would be to compare pinkwashing and rainbow washing; both refer to a company signaling that it supports the LGBTQ community to hide its contribution to anti-LGBTQ initiatives.

Pink money isn’t campaign-specific; it refers to the overall economic power of the LGBTQ community and how those consumers choose to spend their money.

How Can my Organization Better Reach the LGBTQ Market?

Normalize year-round awareness. There are many LGBTQ awareness days throughout the year; choose any or all of them to build campaigns from and your competition will have practically evaporated, giving you tons of runway to capture market share.

Get specific. Companies often blunder in pride marketing efforts because they make a superficial, blanket statement about all LGBTQ people. The queer experience is deeply varied; what I encounter as a white cisgender gay man is hugely different than the experiences of bisexual people or the TGNB (transgender non-binary) community. Speak to one experience and let others listen.

Pass the mic. If the different subsets of the LGBTQ community and rising cancel culture have you feeling uncertain, empower queer voices who can reach and engage this market on your company’s behalf. This is where influencer marketing shines: you’ll financially empower the voice of someone in a marginalized community while simultaneously making a brand statement that resonates with consumers – especially Generation Z.

The Pink Money Monsoon Is Coming

And the brands that figure out how to cater to queer demand will be ready to reclaim market share. Lean in to what LGBTQ people are experiencing and you’ll win over an audience of fans who follow you for years to come. ◆

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