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Navigating so-called black tax is less about money and more about communicating your boundaries, according to Ndumi Hadebe, the author of Black Tax: Handle Black Tax Like a Pro.
The term black tax originated in South Africa and describes a form of financial assistance that is typically quietly expected by family members of black workers who have achieved a sense of financial stability or success.
The most critical step in managing this tax is creating boundaries, says Hadebe, speaking at the PSG Think Big series talk on Tuesday.
She outlined how to handle black tax, saying it is imperative to firmly communicate how your finances will be allocated, including paying off debt, building an emergency savings fund, and meeting other financial obligations.
“[Don’t ask] for permission, because when you ask for permission, you disempower yourself,” she said.
Hadebe said the biggest shortfall is that families do not talk about black tax and the earner’s financial position. This may lead to a situation where the earner has inadequate savings, compromises their wealth creation journey, and even slips into debt from funding family responsibilities and requests that often could have waited.
“[The weight of black tax] … is not being fully recognised because we are not talking about it. We are not in a position to air our feelings and our thoughts about it; we certainly do not create the situations where we can actually air our feelings,” she said.
She added that to some extent these individuals enjoy assisting their families. “So we continue doing it and keep ourselves stuck in the washing machine of black tax.”
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Hadebe said earners should hold themselves accountable and avoid compromising their financial standing.
“This may mean admitting to having made irresponsible decisions [such as] getting into debt or not building up enough savings to continue to support the needs of the family,” Hadebe said.
This will allow for full transparency and bring to light the financial situation of the earner.
Lastly, minimising expenses, forgoing frivolous purchases, and sticking to a financial plan is imperative. This will go a long way to helping build a financial buffer so that unexpected events do not derail the earner’s financial plans.
Listen to this SAfm Market Update podcast with Fifi Peters:
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