Recently, Twitter was agog with a short but relatable tweet of a young lady (@Ojima4) a tweet with content synonymous to what is known as the black tax in the southern parts of Africa. The black tax is a tradition so common that it earned a prominent spot in Trevor Noah’s “Born a Crime”, really beautiful book by the way.
To properly explain the black tax, we can lend the words of Gerald Mwandimbira of the Savings Institute, South Africa. In an interview with Vukuzenzele, a publication of the South African government, he said, “Black tax sees a person’s salary portioned off to support older parents or an extended family while trying to raise a young family.”
Further, he said, “This puts one’s responsibilities in a ‘sandwich’ and hence this is often called the sandwich generation. The sandwich generation supports the generation above them, as well as the generation below. Making it difficult for the sandwich generation to save, which will, in turn, pass this tax down to future generations.”
The consistent trend of difficulty with savings due to this “tax” can lead to a vicious cycle of generational dependence if not managed. Probably the root of this culture can be traced back to a common African saying — “It takes a village to raise a child”. Although there is a positive side to this saying, it also implies that enjoying success alone, as an African, is almost impossible.
This isn’t to say that there is anything noble in enjoying the benefits of your success on your own, especially without those that helped raise you, but when does sharing become harmful? When you find yourself not being able to take care of your necessities because you are too busy helping others, a line needs to be drawn. You need a balance to be able to sustain the help you lend out to others.
A number studies suggest that a majority of Africans are doing a poor job with savings and investments. Hence, sharing from what is probably not managed properly can only make things worse for the one who is being the good Samaritan. So the big questions are:
How can you do better with your personal finances?
How can you effectively juggle your needs and the needs of those who supported your development?
Answering the first question makes the solutions for the second a lot easier. Starting with the first, these are a few suggestions:
Although the black tax is almost unavoidable, you have a right to keep the total value of your income to yourself. If this can happen without any violent face-off with family members, please make your income your personal business
With your income well guarded, commit to budgeting your income properly and building an emergency fund. An emergency fund should contain 3 to 6 months of your living expenses. In my next post, I will expand on the process of building an emergency fund.
On juggling your needs with those of others you love, you should consider the following suggestions:
In your budget, set a cap for the black tax and stick to it. How do you stick to it? Pay yourself first and place up your savings and investments in locked accounts. Online wealth-tech platforms like Cowrywise can help automate savings into locked high-interest plans.
Set a necessity test, one that will guide what you pay the black tax for. Items should border around survival needs — feeding, housing, schooling and health.
Learn to say “no”. This is probably one of the most potent tools for preventing unplanned spending. If it isn’t a case that is a life-threatening one and doesn’t pass your budget or necessity test, kindly turn down the request. Saying no is a lot easier when you have first suggestion sorted.
A choice to manage the black tax will not only help you do better with your savings and build wealth, but it will also prevent you from becoming dependent on your children when you get older also. Do them a favour by making the right choices today.
Feranmi Ajetomobi
Feranmi handles brand engagement at Cowrywise, a wealth-tech company solving the problem of access to financial planning, automated savings and high-quality investments.
