Don't borrow to pay the black tax
If there is one way you should not finance black tax, it is by borrowing, Kgodiso Mokonyane, Momentum's segment head for the middle market, says. That only makes your financial position worse.
Most South Africans have borrowed heavily, Mokonyane observes.
She cites figures from debt counsellor Debt Rescue, which state that 75% of salaries of more than 50% of the population go to paying off debts.
The National Credit Regulator says 6500 people apply for debt counselling every month.
These figures do not include the unofficial or informal debts owed to the mashonisas or loan sharks.
The loan sharks can charge as much as 100% interest, especially when they know their victim is desperate to pay black tax or any other need.
Try pooling your savings
A savings pool, even a savings club or stokvel, can ease the burden of black tax, Gerald Mwandiambira - an independent financial planner with Sugar Creek Wealth and the acting CEO of the Savings Institute of South Africa - says.
Mwandiambira says stokvels can be used by extended families to raise money for their children and the elderly.
He says families should adopt the commonwealth system, where major expenses are shared by members of extended families. This would reduce the burden of black tax for each individual in the extended family.
He says in some cultures in Uganda, the entire village contributes towards a young man's lobola, making it less strenuous for him and his parents. The commonwealth system is in evidence to a lesser extent at funerals, he says.
Most family members' contributions go towards feeding the mourners. However, key expenses such as for coffin and hearse fall on a few individuals.
Funeral policies taken out for extended families can lessen the burden on one person as insurance firms generally make it cheaper to insure large groups, he says.
How to balance financial obligations
Here is some good practical advice with tips from Kenosi Magosha, head of client solutions for recurring savings at Sanlam, Kgodiso Mokonyane, Momentum's segment head for the middle market, Gerald Mwandiambira, independent financial adviser with Sugar Creek Wealth and Allan van Zyl, investment consultant at 10X.