Four tips to address black tax as finances take strain during lockdown

Don't wait until you can see your family again to discuss what you can afford

When we feel helpless we often stay mum because we feel we have no control, but there is always something you can do, says financial planner and columnist Zanele Kunene. 

Family money matters need to be addressed and can’t wait until you see them again. Picture: 123RF/ANDRIY POPOV
Family money matters need to be addressed and can’t wait until you see them again. Picture: 123RF/ANDRIY POPOV

How should I tell my family back home that I am struggling to support them? And that I am anxious about the future? I am angry because I feel that the Covid-19 lockdown has robbed me. I feel helpless and sad because I don’t know when it is going to end. 

Do you find having these conversations with yourself?

Zanele Kunene
Zanele Kunene

When we feel helpless we often don’t do anything because it feels like we have no control. But there is always something you can do. 

Recently a friend who was barely getting by found he was digging deeper into his pocket to send money home to his family. Then, the coronavirus forced him to think about how he was sending the money home as he wanted to ensure that his grandmother made fewer trips to town to withdraw the cash. 

It was then that he decided to embrace technology and send money home in a lump sum instead of a string of smaller amounts. Doing this minimised the travelling costs.  

Just by reviewing his usual way of doing things, my friend was able to improve the situation.

There are many financial services that allow you to buy items without using cash. This may require some effort, by doing research on which platform is the most user-friendly and the most cost-effective.

There is no escaping black tax – but if it is tipping your finances over the edge, you have to address it now. You cannot wait until the next graduation or funeral. 

Due to the travel restrictions, it is impossible for us to bring everyone together to discuss the money matters face to face. 

To add to the disconnect, not everyone has access to a good network connection or is comfortable using video calling, which leaves you with the old-style phone calls. Over the phone, we can’t read body language and create that personal connection, but it is all we have. 

So how do we go about using it to raise the issues that must be addressed?

First, examine your motives for raising concerns and outline your approach. You want to avoid sounding critical and arrogant and doing this will help you filter out the personal issues you may have with the people you are talking to - this is not the time to bring up how offended you were about something that happened at the Christmas lunch. 

Second, realise that we are all a little more emotional right now, so try not to take the comments personally and be more compassionate as you share your concerns. Remind yourself that you are not talking to your opponents, but rather your partners in this mission.

The third tip is to set an amount you can commit to, taking into account your financial wellbeing and your family’s basic needs.

Often we determine the value of our assistance by our dependants' needs and not on the income we have available to help. If you are paying for the school fees, the daily household expenses and medical costs, it is not easy to just walk away. 

It is important to know that you have not failed your family or let them down by revising how much you send home. You are actually doing the opposite. 

By adding structure to your assistance, it becomes easier for them to plan and manage the funds. It is also an opportunity to educate yourself and your family about good financial principles like sticking to a budget. 

As you share your expectations, try not to be defensive and allow them to share with you their fears and concerns.

If your dependants live far away from you, another good idea is to appoint a family manager, usually the person everyone looks to for guidance and handles the complex family issues. 

This person can share with you the correct information regarding what is happening in the home and also assist you by stepping in and reasoning with your family. 

This is not to suggest that you shift the responsibility to someone else. The family manager's role is to support the action plan that was agreed upon. 

You can assist the family manager by scheduling calls with your family regularly to find ways to support them with their struggles without the need for financial aid.

It may be tough, but there is a bigger goal ahead where we all win in due time. As we sit in the lockdown for yet another week, let us accept that life has changed and it needs us to put together a strategy that positions us closer to breaking the taxing cycle of black tax and better money management skills. 

* Kunene is an associate financial planner at BDO Wealth Advisers who holds the Certified Financial Planner accreditation