How to deal with the burden of Black Tax

Do you ever feel like your money gets spent on others before you can even spend on yourself?

It can be hard to put effort into your job, then have a slice of your income go into the pocket of others who rely on you. 'Black Tax' is a term used by members of the Black community, but it also resonates with other ethnic groups. It refers to regular payments given to family members, to help support them financially. The term has its roots in South Africa, due to financial inequalities faced by many households there. But these inequalities also exist in plenty of other countries – and Black Tax tags along. For example, GOV.UK (Opens in new window) lists Black households as one of those with the highest unemployment rate. We spoke to some people who face Black Tax to get a better understanding of their experiences and how they manage it:

"I associate Black Tax with the things I can't not do", says Bibi (32). "It has nothing to do with me. It has to do with the fact I have access to what my closest friends and family don't have financially. It is usually to do with basic needs. It’s not going away. At this point, it is an obligation."

For Emmanuel (27), "Black Tax is more from friends and acquaintances."

Nonso (25) likens Black Tax to “filling up financial holes that would otherwise remain open in the family”.

Like Bibi, Emmanuel and Nonso, many Black professionals face a similar situation. How can you draw the line between optional acts of financial support and necessary ones?

The aeroplane scenario

Before take-off, the flight attendant tells all passengers to "put your oxygen mask on first". This is to make sure you're well protected and not putting yourself at risk in an emergency. You can think of your finances the same way. Remember that you can only help others if you're in a good financial position.

Setting healthy boundaries

Healthy boundaries can help improve the quality of your relationships. A good way to make sure that you're not guilt tripped into spending is by setting some boundaries. This could be practical or more direct. You can try creating a specific money pot for family and putting a limit on it.

Nonso points out that with Black Tax, "you are working but not for yourself alone. There are other people you need to pull up the ladder with you, else their weight will make you stagnant." Helping others in your family become independent is a good way to spread the Black Tax burden. This could mean a one-off sponsorship to help them learn a trade or access resources.

Crunching the numbers

"Managing my money has helped me navigate Black Tax", says Bibi. "This means understanding what my income is, what my expenses are and what expenses I can't get rid of. Go back to the basics. What's your income? What are your key expenses? Work out the difference and figure what you can give towards Black Tax. Having savings pots helps with that. I keep specific pots and automatically fund the account on the first of every month. To manage my relationship with my family, I try not to be very bossy to the point where it is uncomfortable."

She also adds that there may be an upside to Black Tax, "Black Tax isn't something that's nice to have, but it helps me think about my life and revenue streams. If I didn't have that, I would be too relaxed."

For Emmanuel, it is a simple case of opportunity cost. "I focus on my relationship with the person and see if I can give up something else”, he says.

Generosity and support are a huge part of most cultures. But it's important to feel and be in control of your money, too. As Nonso put it, "at the end of the day, it is a thing of the mind. You can decide to shut everyone out or extend compassion."

Recommended reading

• How budgeting can help you stay on track
• How to help close the racial wealth gap
• How culture inflluences our ideas about money

Disclaimer: This article is for information only and does not constitute financial advice.