How to Manage “Black Tax”

“Black tax” is financial assistance we (especially Africans and other people of colour) are expected to give our family. It can be in the form of actual cash (such as an amount of money you send monthly to your mother) or in form of implied responsibilities (such as older siblings being expected to take care of their younger siblings or elderly relatives).

It is a cultural obligation.

Marriage can further complicate black tax because, as much as you and your spouse are now a unit, each of your respective families still has expectations of you as individuals.

Black tax can be harmful in several ways including:

·         It may cause strain in your marriage and family relations.

·         It can hold you back from progressing financially and achieving your goals by stretching your money too thin.

·         The responsibility of carrying the full weight of the welfare of so many others may harm your mental health.

So, how can you manage black tax without offending others or severing family ties? Here are some ways.

steps to managing black tax:

1.       Communicate. Have open conversations with your family about money. Firstly, talk with your spouse and then with the family members you feel obliged to support. Discuss what you can contribute without negatively impacting your financial future, and let all involved parties understand your goals and financial constraints.

2.       Set boundaries. Within the dialogue, ensure to set boundaries such as monthly maximum amounts you can contribute, the things you are not willing to contribute to, how long you are willing to contribute for, etc.

3.       Budget for the black tax. Once you have set your limits and boundaries for your contribution, budget for it. Also, begin to build a separate emergency fund to cater for family emergencies so that you do not end up setting yourself back when an unexpected event, such as an illness in the family, occurs. At all costs, avoid borrowing for black tax.

4.       Empower your family. As the saying goes, “If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him a lifetime.” Where you can, enable your people to stand on their own two feet. Impart knowledge and where necessary assist them to acquire skills that will enable them to earn enough to take care of their own needs.

5.       Do not be an enabler. When you begin to empower those whom you are contributing to, you will notice that a few individuals will not want to improve themselves and work for their living – they would much rather continue receiving money directly from you. After all, receiving money is much easier than working for it. Do not enable them to be lazy and to live in a state of dependency.

6.       Teach your kids about money. Black tax is often an inherited cultural belief. Break the cycle by first ensuring you have your finances in order and have a plan for your retirement and secondly educating your children on how to handle and manage money. Let them not have to put their futures on hold to take care of you.

As much as we know we ought to honor our parents and families, it is important to take care of yourself first. Remember that on airplanes we are instructed that, in case of an emergency, “Put on your own mask first before assisting others”. You can't help others for very long if you don't take care of yourself first.

If you would like to discuss your financial health, you may book a no-obligation, free Zoom session HERE.