Turning 'black tax' into a 'black dividend'
"Raise a child and s/he will also look after you in your old age," is the African proverb that defines many relationships between parents, relatives and children.
It feeds an expectation that you may be liable to carry a burden if you've studied and/or found a good job and are hoping to create wealth.
That expectation - which extends beyond immediate family to the clan of uncles, aunts and cousins - and the financial obligations that come with it have become known as the "black tax".
Your extended family may even have contributed to your success. At the crucial moment, an uncle sold his cow to help you pay fees, an aunt gave up her takings from the market to finance your much-needed laptop, while cousins chipped in with pocket money.
So, no, it's not payback time, but it is the proverbial "one good turn deserving another" in a perpetuating cycle.
The challenge is how to prevent this from causing you financial distress, having to constantly come to the aid of others. "We cannot avoid black tax. It is a fact of our lives." says Thembisa Mngadi, a financial planner with PSG.
"But we must take financial literacy and issues related to money seriously."
Mngadi says some people seek financial advice, hence they are able to budget and plan more effectively.
"If you can pay R400 or so to consult your doctor about your health, why can't you pay consultation [fees] towards your financial health?" says Mngadi, emphasising that being financially healthy enables one to be healthy in other areas of life.
Kenosi Magosha, Sanlam's head of client solutions for recurring savings, suggests that instead of being the centre of provision, it's better to empower family members to earn their own income, thereby increasing the collective family's earning ability.
In other words, enabling the family members to fish, rather than giving them fish.
You could do this by agreeing to fund educational needs and advising family members to approach other relatives for other needs.
Magosha says: "Empowerment doesn't have to be a university degree. There are vocational training facilities and practical skills that can be learnt to help individuals become self-employed."
Once the family members can fend for themselves, the breadwinner must focus on saving for their own future.
Both Mngadi and Magosha say managing family expectations, including saying no when there is an element of abuse, is crucial to ensuring that in the process of paying the "black tax", you are also left with something for yourself.
Allan van Zyl, the investment consultant at passive investment provider 10X, recommends that whatever your circumstances, you do not lose sight of saving for your retirement. He recommends that you set aside a minimum of 10% of your gross income for retirement savings, before anything else.
"You must remember that every time you're not saving for your retirement, your future self is staring at you in anger," he warns, adding that a good way to deal with financial obligations to family members is to factor them into your budget, allocating a fixed percentage, such as 5% or 10% of your budget monthly.
Getting medical cover for your extended family may also help reduce your "black tax", although a medical scheme membership can be expensive. Primary health care plans that cover out-of-hospital expenses in the private sector but leave you to access hospital services in the public sector may be cheaper options.
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