Last month, when we shared the experiences of five women dealing with Black Tax on our insights page, we received feedback from readers who saw themselves in these stories and wanted advice on dealing with the situation without sending the wrong signals to loved ones. It also turned out that more women were struggling to balance what to give and keep when it came to their monies.
And oh, if you are wondering what Black Tax is, it’s the income Black professionals are expected to give their families to meet their needs and wants. So essentially, part of your income is either your brother’s lesson fees, momsy’s shop rent, or whatever may come to pass here. Your money is entirely never your money.
To be clear, we don’t condemn giving in any way. On the contrary, it’s a wonderful thing to help family and friends in need. But when it consistently impacts your finances, it’s time to draw the line between your responsibility and overload. Thus, this article will look at effective ways to deal with Black Tax before it deals with you.
Be aware of your financial condition: Before you take any financial responsibility towards family members, be sure you can do so. This is achieved by knowing your net worth. Your net worth is a snapshot of your financial condition. To arrive at it, subtract the value of your assets from your liabilities. The value is your net worth.
Start by making a comprehensive list of your assets. Your asset is anything of value that you own. Anything that brings income for you, e.g. dividend income from shares, rental income from landed property, car, cash, insurance, etc. Also, list your liabilities (Liabilities are expenses that take from you, for example, rent, t-fare, debt, bills, etc.). Then, subtract the total value of both sides, and the final value is your net worth. This is essential to determine your capability and know what you can afford. It will also help you set realistic and specific financial goals.
Set up a budget: Operating without a budget is like driving a car without gear. You have no control over where you’re headed too. Create a budget to categorize your needs, wants and savings. Your family’s expenses should fall under your needs. If your expenses exceed the money allocated to your needs, you might want to dip into your wants fund. But make sure your funds allocated to savings and investment remain untouched.
Pay yourself first: Give what is left after you have paid yourself first through savings and investment. Grow your emergency funds. Put on your oxygen mask before you try to revive another person. This is important for attaining financial independence. Else, you will perpetuate a cycle of dependency. I bet you don’t want to be that person.
Choose your battles wisely: Don’t overwhelm yourself with financial responsibilities. And I understand that sometimes it’s beyond your control, but you must also work within your financial limits; otherwise, a breakdown could be inevitable.
Learn to say no: This stems from the previous point. We should be comfortable saying no to things that could potentially hurt us. Saying no isn’t bad when you can’t afford to help financially. At least you’re being honest rather than saying yes, posting the person, or ruining your finances.
Set deadlines: Make it clear that you’re supportive for a period. Request to see the results of your efforts on them. Don’t just spoon-feed and make them comfortable. Assist the family member to be empowered, after which they resume responsibility.
Have a financial plan: Everybody needs a plan to succeed in life. Businesses need short and long-term plans to stay successful. So have a plan for your money for your finances. Determine where you need to be and plan accordingly.
Exercise financial discipline: Be truthful in following your budget. Act like your finances are important. Instil good money values in your family members, and if you’re married, extend these lessons to your children as well. Work with your family members to make sound financial decisions, and brick by brick, you start to lay a solid financial foundation for you and your family.
Have you found a way to strike a balance with Black Tax? Why not share with us in the comment section below? You might just be helping a sister out.