Black Tax: How to Help Others Without Hurting Your Financial Goal

One beautiful afternoon while returning from an event, my phone rang and it was my bestie’s call.

There is this excitement that comes with hearing her voice on the phone. She just has a way of bringing me up to speed on all the latest gists. But this time around, it was a different news entirely.

"Babe! Wassup? Why are you so dull today?"

"I'm just tired and fed up. I feel l should quit my job."

"Do you have any issues with your boss? Did you meet your monthly target?"

"No, it’s not even work-related.''

"So what is it?"

"My dad just said that I should send money for my brother’s school fees. This is the third time I will be assisting the family with one need or the other. Just last week, I paid my sister’s house rent and sent money to my mum for her medical checkup.?

"I hardly even have money to take care of myself, talk less of saving or investing. I'm still struggling to save for my house rent that will be due in a few months time. I think a good decision is to quit my job. That way, everyone will remain jobless and no one will be disturbing me for money every time."

From her tone, I knew she was overwhelmed for her to utter such a statement. This is however the reality of most young adults who are hardworking and would like to embark on financial freedom, but always have one responsibility or the other that makes their financial goal unattainable. This perpetual levy is called “black tax.”

What is black tax?

"Black tax is the process of taking a portion of a person’s salary to support older parents or an extended family – while trying to raise a young family."?

???????????????????????????????????– Gerald Mwandimbira, Savings Institute, South Africa

Black tax impacts your finances and those of your generations to come in several ways. It affects your ability to save and invest, and negatively impacts your mental health.

How, then, do you deal with black tax?

I know it’s not a bad thing to provide support for your loved ones; you only need to put some measures in place, so as to avoid hurting your financial goals.?

Remove? yourself from the dependency circle. Have an emergency fund. You need to ask yourself: "If I lost my job tomorrow, how long will I survive while maintaining the same lifestyle and not become a burden to my loved ones?”

Have a solid financial plan that ensures you systematically make monthly progress in your journey to financial freedom. This plan should take into account your debts, savings, investments and retirement plan. It should also be able to cover all your financial obligations.

Set a deadline on how long you can offer financial support. I am sure you do not want a situation where somebody makes an assumption that you will support them forever. Unless it’s your elderly parent who doesn’t have any other source of income and is your primary responsibility.?

Always pay yourself first before you help others. Before you think of saving others, ensure you save yourself first. It may be an amount as low as 10% or any amount that works for you. Activate automatic saving and investment on your account to instill discipline.

Just when you think you are the saviour of the world, people will look for an alternative when you are down and can no longer be of help.

Lastly, do not reveal your financial information. This aspect of you should be private. Some people will monitor your pay day so as to know the best time to demand for money, while others will guilt-trip you anytime you buy something expensive for yourself. Know that you deserve to give yourself a good treat after you have done the work.?

There are other ways you can help your family members without offering financial support. You can help them review their CV, prepare them for interviews, connect them with people in your network, recommend skills that could boost their income, teach them about financial literacy and the importance of budgeting.