Can you afford to pay “black tax”?

“Black tax” refers to the financial support traditionally provided to family members – often parents – by black professionals. It may be a way of life, but it can harm your financial security.

Ndumi Hadebe, author of Handle Black Tax Like a Pro, offers advice on how to manage black tax payments to your relatives.

Tip: Prioritise your financial stability – learn more about savings and investments.

What is black tax, and when should you pay it?

There is no simple definition of black tax – every situation is unique, says Hadebe.

“Each of us must find our own way to manage this issue by taking responsibility and setting boundaries,” she explains.

She recommends having a conversation about black tax with your family as soon as you start working.

Be sure to consider your own living expenses before committing to a regular monthly payment, she advises.

How much should you pay?

Be honest about the support you can provide, Hadebe says. If you don’t, you risk being unable to save for your future. 

“For every R100 you give to a family member, you must invest R100 for yourself as well,” she says.

If there are ad-hoc requests for funds, refer your family to the amount you decided on, and don’t fall into the trap of always giving cash when asked. “If you do this, they’ll assume you have an endless flow of money,” she cautions.

Set a timeframe

Set a timeframe for ongoing payments. If you don’t specify a period, the arrangement will be open-ended.

Find out how the money will be spent, and whether there is a long-term plan to help the recipients become financially independent.

How to make black tax work

Conversations must happen in a safe space, Hadebe says. She suggests using the “formula” of “truth plus love, minus right”.

“In any disagreement, we always want to be right,” she explains. “Taking responsibility for our decisions removes the desire to be right, and commits us to finding a solution.”

Take note of your language, she cautions. “How you say something is more important than what you say.

“Be truthful and share your feelings. Make it clear to everyone that if you’re in debt because you’re paying black tax, you can’t help anyone else.”

Failure to manage black tax can have negative consequences for your family, Hadebe warns.

“It’s very sad if you’re only contacted when someone needs money. Address the issues so that money isn’t the only thing keeping your family together.”

Tip: Struggling to meet your financial obligations? Consider debt consolidation to alleviate the strain.