If you come from a working-class family you’re probably familiar with the term black tax. If not, simply put, it’s money that black professionals are expected to give every month to support family members that are in financial need. The world is divided about this familial responsibility. Some people are for it and some aren’t. Today we’re not going to discuss if it’s good or not. Instead, we will, however, talk about how we can prevent it from putting us at financial risk.
Studies show that one in five millennials are financially taking care of both parents and sometimes extended family members. While this is a noble thing to do, it can put young people in the deepest throes of debt. Apart from this, it delays some important aspects of their lives, such as buying a house, paying back student loans and saving for retirement. Overseas holidays? Forget about that.
Truth be told, some people are blessed with parents who, although need money, are cautious about plunging their kids into debt. Then there are the parents who feel their children owe them. I’ve heard horror stories where young professionals have to disclose their income to their families and often have to give up a huge chunk of their pay cheque. This leaves them with just enough to pay rent, commute to work and buy groceries with whatever is left or turn to loan sharks just to make it through the month. I exist on both ends of the spectrum.
My mom has always explicitly expressed her lack of interest in our money. All she wants is for us to take care of ourselves. My father on the other hand is a different breed. He has a long list of needs, gifts for Father’s Day, Christmas, birthdays, sick dogs, doctor’s appointments, you name it, my father will make sure you take care of it. Considering that he chose to be an absent father, it shocks me every time he makes demands of financial support.
If your family depends on you to keep the ship afloat, here are some tips to help you manage their expectations.
Don’t tell them how much you earn
Making your salary public knowledge will create feelings of resentment should your salary not stretch as much as your family thinks it should. Sometimes this can devolve into verbal fights. A friend once told me that her very employed older sister asks her for frequent loans which she seldom pays back. Once she told her she didn’t have money. Her sister lost it, demanding to know what she does with her money since she doesn’t have kids, student loans, a car, or a house. According to her sister, based on what my friend earns, she should always have money.
Set clear expectations when handing out loans
Despite the allowance you give to your family every month, there will always be a request for extra. In such cases, you should make it clear that what you will be giving beyond the allowance is a loan. Then set clear guidelines on how you want the money paid back and the frequency in which you expect it. You also have the right to ask what the money will be used for, the last thing you want is for irresponsible purchases being made. Imagine finding out that you broke into your savings account because mom saw a dress on sale she simply had to have.
Understandably, asking such questions might be awkward at first, but rather you have a few minutes of awkwardness than risk ruining meaningful relationships over money. This will also teach your family which problems to bring to your doorstep and which ones you will not stand for.
Lean on your siblings for support
Where money is concerned, you will deal with feelings of guilt and fear — inconsiderate family members will make sure of it.
Up until this year, Big Brother Bear and I never talked about financial obligations to our parents although we both send money home frequently. My father took advantage of this loophole, he gladly took money from him and then came to me for more. It wasn’t uncommon for me to wake up to messages stating how disappointed he is that I didn’t do this and that for him. And sometimes instead of saying thank you, he would pout and drop hints about how Big Brother Bear gives him way more than I do.
When the texts and the emotional blackmail became increasingly unbearable, I reached out to my brothers, I told them about what I was going through. My older brother told me to cut him off, and if I felt brave enough, I should ask him what he does with the money he gets from him every month.
Siblings should chip in too
Caring for extended family members is something that should come from the heart and one that shouldn’t hinder your financial health long term. With that said, talk to your employed siblings about how to better care for the family. Decide who does what and when. Even better, you can put money together then have one of you send it to your family as a “gift from us”. This leaves no room for manipulation. And most importantly, the family can’t pit you against each other.
The money you give should not be set in stone
Don’t tell them how much they can expect from you. This not only eases the pressure on you but will also train them not to over budget. This way you can give what you can afford without feeling guilty or breaking the bank.
Pay yourself first
I’m fully aware that not everyone is privileged enough to have disposable income. Even so, if you go through your monthly expenses with a fine-toothed comb, you will realise that if you forgo some things here and there, you might have a few bucks to put toward your savings.
Now putting your money in your savings account and not making it work for you is not ideal. Open an investment account. You can buy shares on platforms like Easy Equities for as little as R5. Start now – your 65-year-old self will love you for it.
Read another writer’s differing opinion on black tax here
Tell us: What are your tips on dealing with black tax?