Greetings, and welcome to the twenty-fifth edition of Wallet Wellness in 2024 - your midweek source of practical financial tips to elevate your money management skills!

We hope you had a chance to check out the last edition where we discussed the minimalist budget and why you need it in 2024. In today’s edition, we will look into ‘black tax’ and how we can better support our families financially.

As always, be sure to check out the Concept Corner below for a deep dive into the money concept of the week.

Let’s dive in!

MONEY254 TIP OF THE WEEK

Black Tax: How To Get Better at Supporting Your Family Financially 👨‍👩‍👧‍👧💰

We all love our folk. Right? Having been brought up in communities where we are almost obligated to take care of our kin once we have successfully graduated from school and landed a job. Without which there is possible resentment which eventually leads to guilt. This is the burden of black tax.

‘Black tax’ is a term used to describe the duty of a black child either the firstborn child or those who are seen to have ‘made it’ to support their extended family financially.

This could be, supporting their elderly parents, educating their siblings, building family homes, funding their sibling businesses, etc.

How Does Black Tax Affect Your Well-Being?

• It can affect your ability to save

• It can affect your ability to invest and delay your financial goals

• It can limit your lifestyle choices

• It can make it harder to build generational wealth

• It can affect how you relate to your family members

• It can negatively impact your mental health

If these effects are real, how then can we support our loved ones without getting ourselves into debt or damaging our relationship with those we hold most dear; just because we could not help them at the time they needed us? 

Let’s explore below how to balance between our personal financial goals and our black tax obligations

1. Set Clear Boundaries and Expectations  🚧

Define for yourself what is okay or not to disclose to your family. Then, clearly discuss your financial situation and what you can reasonably provide to your family members.

• How to Do It: Be Compassionate Yet Firm: Approach discussions with empathy but maintain firmness in adhering to your set limits and financial goals. Learn More.

• Why It Matters: Having your relatives meddle in your financial plans or sometimes dictating how you should spend your hard-earned money may derail all your plans.

Remember, two broke people cannot help each other.

• Do not reveal your financial information such as your payday or how much you earn.

2. Prioritize Your Financial Goals

Before you get into sending money back home, sort out your personal needs such as bills and savings. Pay yourself first.

• How to Do It: List all your financial objectives in order of priority.

• Consider Automating Your Savings and Payments: Setting up automatic transfers or payments ensures that savings and bills are consistently sorted ahead of discretionary spending. Learn More.

• Why It Matters: Once you have your priorities in check and sorted, you can responsibly support your family members without compromising your own financial security.

3. Budget for Black Tax 📝

Set aside a specific amount of money within your overall monthly budget to financially support your relatives.

1. How to Do It: Allocate a Specific Amount monthly depending on your income without hurting your pocket.Read More.

2. Be transparent with your family about what you can reasonably provide to manage their expectations.

3. Why It Matters: Having a budget and sticking to it will not only help manage your income better but this will also preserve your relationship with your loved ones when there are no surprises about family needs that are unmet.

4. Collaborate with Family Members 🤝

Engage in open communication and mutual agreement either with siblings or members of the extended family to come up with a family financial support plan.

1. How to Do It: Create a joint account for monthly contributions amongst family members. Decide how much each of you should contribute and only use the money when the need arises. This plan should align with everyone's financial capabilities and goals. Read More.

2. Why It Matters: It not only improves unity in family ties through empowering each other, but it will also help distribute the burden of responsibility amongst members of the family making it more bearable.

5. Do Not be An Enabler of Bad Money Habits/Addictions 🚫🍻

Sometimes tough love is what our loved ones need.

If you know that giving someone money will end up being harmful, for example, those who suffer from alcoholism, gambling or other addictions, don’t give them money. Giving them handouts only fuels the addiction.

• How to Do It: Find alternative ways of helping: Instead of giving them money, do grocery shopping for them, pay bills for them directly or consider paying for a class where they can learn a new skill.

• Set deadlines on how long you can offer support to get yourself off the dependency cycle.

• Why It Matters: Being firm on not enabling bad habits encourages our loved ones to take ownership of their financial decisions and behaviours, especially with the right kind of support.

Once they are on their feet, then you can venture into your financial goals with full focus.

There is a sense of pride and satisfaction that kicks in when we are able to be there for the ones we love, especially with regard to financial support. It brings in a sense of success. It’s like you have really made it, right?

Now, we have the keys to unlock the next level of managing our black tax obligation. We no longer need to ignore those constant calls that come streaming in after payday.

We need not wallow in a sea of guilt just because we are so heavily burdened by the responsibility to take care and support our family members. 

There is no reason you should dread crossing paths with the cousin we once ignored because your budget was too tight at the time; maybe you had just sorted out another cousin a few days before. 

We can navigate these conversations with ease - both in mind and in our pockets.

Remember, different families have different cultures and expectations. No two families are alike, you’ve got to learn how to deal with yours.

CONCEPT CORNER

Paying Yourself First

"Paying yourself first" is a strategic financial practice where you allocate a portion of your income to savings or investments as soon as you receive it, prior to addressing other expenses. This approach ensures consistent progress towards your financial goals and encourages disciplined money management. This method is a proactive step towards achieving financial independence and peace of mind. Read More.

Money and Me

“Exactly How Much is Enough for Me?“

“…I’m tired of this system…I want an alternative perspective - one that cherishes contentment over relentless pursuit. There is liberty - freedom - in finding satisfaction in having "enough" and embracing a more balanced approach to life, and finances.

I don’t want to be rich. I just want to be content…” Read More.

MONEY254 #MONEYTOK

What Is The Maximum Amount You Can Save When Earning Ksh. 50k Salary In Nairobi?

Budgeting especially with the rise in the cost of living today is crucial. In today’s MoneyTok, we have a look at an example of how much one could save from a salary of Ksh50K living in Nairobi. Watch The Video and read more about budgeting on this article.

@money254hq

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That's it for the twenty-fifth Wallet Wellness edition of 2024! We hope these financial tips have added some energy to your hustle. Stay tuned for more practical insights in our next edition of "Wallet Wellness" next week and watch out for Money Weekly on your inbox this Friday.

Also, don’t forget to download the Money254 App on the Google Play Store, and remember that we can help you compare over 300 loans, savings accounts, current accounts, and more if you’re thinking about your next product.

Cheers to your wallet's well-being!

Money254 editorial team.