Money Africa: How to deal with black tax

Nigeria and indeed Africa is very family-oriented. Everyone is family. Your grandmother’s first son’s wife (you get the pun?). The kids that lived next door, but spent most of the time with living with your parents. Family is good. Family makes life interesting.

Sometimes, however, the family can be a burden. When young individuals barely starting out, have relatives dependent on them for financial sustenance, this is known as black tax.

Its called a tax, because it prevents them from building wealth. The phrase is largely associated with “black” or coloured people because they typically have a large number of dependants.

How do you manage black tax?

It can be very hard turning down relatives who ask for money. It’s even much harder because they are the very same folk you see often. So how do you manage black tax? Here are a few steps, you can take?

Draw up a budget

If you have several relatives dependent on you for their sustenance, you should draw up a budget for them. Depending on how much you earn, you can budget as much as a quarter of your income for family expenses.

Once you exhaust this, please be firm except it is a life-threatening issue

Sign up for health insurance

A large chunk of many black taxes goes to healthcare. You can sign up for a health insurance package that covers some members of your family.

Empower

For family members that are willing and enable to work, you can set up in a business that they have passion for, rather than just monthly payments. Not only will they be self-sufficient, but they can also pass the favour on, down the line.

Let management handle it

If you are a popular figure, for example, you can refer such requests to either your financial manager or advisor. That lessens the pressure on you, as well as makes the person consider their requests carefully before making them.

Say No

While the word, NO has a negative connotation, sometimes you need to make use of it. If you cannot afford a bill from a family member, please decline. Do so, however, in a calm and respectful manner, so they are not offended.