Building Wealth…Balancing Act with Black Tax
In many African and diasporic communities, the term Black tax has become both a badge of honour and a financial burden. It represents the informal financial support many young professionals offer to their families—paying hospital bills, covering school fees, buying clothing, or even contributing to home keeps and rentals.
While the intentions are noble, the long-term effect can be a significant dent in personal wealth accumulation. So how do you strike a balance between responsibility and personal prosperity?
The answer lies in understanding your financial limitations, clearly defining the percentage of your income allocated to Black tax, and creating a growth-focused wealth-building plan.
Black tax isn’t just a monthly bank transfer; it’s a deeply rooted cultural obligation. For many, it’s about giving back to the parents who sacrificed everything or supporting siblings to gain a better future.
But when this support becomes indefinite and unstructured, it can prevent you from achieving personal financial goals like saving for a home, investing, or even affording quality healthcare for yourself and your immediate family.
To manage this responsibility effectively, the first step is to assess your finances:
· Calculate Your Net Salary: This is what you take home after taxes.
· List All Fixed Expenses: Rent/mortgage, insurance, car payments, etc.
· Include Variable Expenses: Transportation, utilities, leisure, etc.
· Set Aside Savings & Investments: Ideally 10–20% of your income.
Now, with your basic needs met and your future secured through savings or investments, you’ll arrive at a clear picture of your discretionary income—the amount that can potentially be allocated to Black tax.
This step requires honesty and discipline. Let’s say you earn N450,000 after tax and your expenses and investments cost you N100,000. That leaves N350,000. From here, you could decide that 10–15% of your net income (N35,000–N52,500) is what you can afford to allocate monthly for family assistance.
This isn’t just a number; it’s a boundary. It allows you to support your family without compromising your own future. If your siblings need help with hospital bills or your parents’ medical aid falls short, this portion can go toward such emergencies—but only within this defined limit.
Therefore, it’s crucial to distinguish between occasional support (e.g., paying for a family member’s surgery) and ongoing expenses (e.g., monthly rental or school fees). Each requires different planning:
Emergency or medical support: Set up an emergency family fund as part of your savings portfolio. Allocate a fixed amount monthly toward this until it reaches a comfortable buffer (e.g., N25,000).
Monthly obligations:* _Build them into your monthly budget and review annually. Are they still necessary? Can someone else in the family contribute?
One of the hidden curses of Black tax is that it often operates in silence and guilt. Communicating your financial goals with your family might be difficult, but it’s essential. Help them understand that your boundaries aren’t selfish—they’re strategic. Over time, share financial literacy with them to create self-sufficiency.
Once you’ve structured your Black tax, you’ll be amazed at how much clearer your wealth-building path becomes: You can set long-term goals: Homeownership, retirement, or a business venture.
You maintain peace of mind: Knowing emergencies won’t derail your finances. You encourage generational growth: By modeling financial discipline, you’re laying the groundwork for generational wealth that doesn’t rely solely on one person.
Black tax is not a curse—lack of planning is. It becomes a curse when it blinds you to your future and keeps you trapped in a cycle of dependency. But with clear boundaries, a structured budget, and open communication, it becomes a tool to uplift your family while simultaneously building your legacy. Let your salary work for both your present and your future. Grow wealth, support wisely, and transform obligation into empowerment. #Building Wealth…Balancing Act with Black Tax#
