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  Black Tax refers to the financial support that professionals and income earners, in general, are expected to give to their extended families and sometimes even their communities. This can be a significant financial burden, especially for young workers and entrepreneurs who are just starting to establish themselves. Here’s a guide on how to deal with this cultural and economic phenomenon.
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Open the Lines of Communication

It’s vital to talk openly with your family about your financial situation. This doesn’t mean revealing every detail, but having an open dialogue about what you can and cannot afford, and your future financial plans can help set boundaries.

Prioritize Your Financial Health

Before assisting others, you’ll need to ensure that your finances are in order. This includes saving (setting aside an emergency fund), investing (making provisions for your future by acquiring assets that generate returns financial returns over time), and debt management (ensuring that any personal debts are managed or reduced).

Set Clear Boundaries

Decide on how much you can afford to contribute towards family support without compromising your financial health. Once you’ve determined this amount, stick to it. There will be pressure on you to give more, but don’t loosen up your self-imposed restrictions unless it’s a serious emergency. You’ll be better for this in the medium to long run.
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Consider Financial Education

Do what you can to educate younger family members about finances, saving, investing, and the value of money. With a greater appreciation for the dynamics of money, they will be better positioned to earn more for themselves, and prudently manage what they have.

Engage in Collaborative Investments

Instead of just giving money, consider setting up collaborative investments. For instance, if a family member wants to start a business, you could contribute as an investor rather than just handing out cash. This ensures that the money is being used productively and that there’s potential for returns.

Remember the Power of ‘No’

While it may be difficult, it is okay to say no when you cannot afford to provide financial assistance. It is essential to prioritize financial well-being, but sometimes this means making tough decisions. There is always the risk of a negative impact on your relationships, but you can certainly avoid such an outcome if you navigate the situation tactfully.
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Final Words

Dealing with Black Tax requires a delicate balance between understanding cultural responsibilities and maintaining personal financial health. While it is commendable to support one’s family and community, it is equally vital to ensure that this support does not jeopardize one’s future or well-being. Through open communication, clear boundaries, and wise financial planning, one can navigate the complexities of Black Tax more effectively. Featured Image Source: Talking Money
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This article was first published on 29th August 2023

ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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