Black tax: drawing the line is essential
Play open cards about your finances with your family
The family responsibility, which has come to be known as “black tax”, is becoming increasingly difficult to keep up with as the cost of living continues to shoot through the roof.
While it is seen as the right thing to do to give back to one’s parents and sometimes extended family, the cost of such an exercise can be financially draining.
What adds fuel to the fire is that the black tax model is largely a cash transfer system, with an increasingly complex network of dependants and an extending list of needs for arguably a diminishing income base.
Sipho Mncwabe, head adviser for transformation at SanlamConnect and Farzana Botha, Segment Solutions manager at Sanlam Savings, say that black tax can help unite families, through honest conversations and shared goals. They add that while being honest about what one can afford can be challenging, it is nevertheless important to play open cards about one’s finances to avoid overstretching one’s budget.
Mncwabe said: “It is important for caretakers to realise that decades of unbalanced allocation of resources have resulted in inequality and poverty for many South Africans. Against this background, it is important to balance one’s compassion with realism, and accept that we will be one of the links in a chain of change.”
Botha said: “It is vital to see your financial position as one of leadership. Through your lived experience, you can offer more than just your financial aid. You can also offer your intellectual and emotional aid.”
Mncwabe and Botha provide the following tips to ensure black tax doesn’t sink you:
1. Know your limits and stick to them
Being honest about what you can and cannot afford, especially when confronted with family members who may be experiencing challenging times, can be difficult. Nonetheless, it is an important lesson to master. Overstretching your budget has the potential to leave you unable to assist your family or yourself.
2. Money is not your only resource
When giving financial assistance it is important to remember that the more you help your family plan for tomorrow, the more you are equipping them, and future generations, to be financially independent.
3. Have tough conversations
None of this can happen without open and honest communication. Unfortunately for many South Africans, conversations about money can be sensitive. Destigmatising financial conversations is the most important step in the process of turning “black tax” into a tax return. This means having frank discussions that specify the nature of the financial assistance you will be offering – outlining why you are helping, the duration, and what you hope to achieve. Facilitate a conversation between yourself, your family and a holistic financial adviser who can help map out attainable goals, unique to your circumstances.
Black tax can unite families through honest conversations, shared goals
4. Look after yourself
While empathy and support are necessary human characteristics, be careful of sacrificing your mental, physical and financial health on the altar of family responsibility. Remember that without you others may find themselves in greater difficulty and unconstrained support may not be constructive. Make sure all aspects of your mental, physical and financial health are in good shape. This may also ensure that your obligation feels less like a burden and more like an investment.