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How to Stop Black Tax from Hurting Your Finances


“It takes a village to raise a child.” Ever heard of that saying? It is a literal or layman’s explanation of the issue of the Black tax. 

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The term “Black task” is said to have originated in South Africa, and many have speculated that such policies are one of the reasons why Black wealth is stunted. According to the Institute of Policy Studies, 37% of Black families in the United States (where the Black tax is common) have debts equal to or greater than their assets.

So this brings us to these queries:

  • What is Black Tax?
  • Why is it common among Blacks?
  • As Blacks, how can we avoid the Black tax?

What is the Black Tax?

Unlike the conventional definition of taxation, “Black tax” refers to the financial assistance automatically expected of a black person once they have finished their education and have begun to earn money through employment or business.

The whole point of the Black tax is to instill in people a desire to work hard, behave morally and with good judgment, eventually attend college, find employment, and begin “giving back to the community.”

In a way, it seems like the Black task is an already programmed trajectory of how things should turn out for Blacks, not minding whether or not the giving is joyful. 

Why is the Black tax common among Blacks?

Black tax is said to have resulted from economic imbalances dating back to slavery, historical injustice, structural inequality, educational disparities, and apartheid. In those times, the Blacks hardly had any opportunities, so a child, especially the firstborn, was trained with the “don’t forget where you’re coming from” mentality so that they would eventually become the ladder the other children would climb. 

Source: Freepik

So, even as there are still issues of injustice and racism, the black tax continues to ravage the black community. It’s like an order. And while some see it as an investment, others do not, particularly young business owners.

Is it a Burden or an Investment?

The black tax has a vital black-taxsocioeconomic role to play in the Black community. Over the years, it has uplifted the black community, enabling families to train their kids while building generational wealth.

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Zenkosi Dyomfana says, “If my family had not subscribed to this system of sacrifice, if my older brother and sister had not contributed once they had graduated, I would have never gone to university and become an investment professional.”

As much as this act of “sacrifice” has been a saving factor for many Blacks, we cannot ignore the consequences. For young entrepreneurs and professionals, the idea alone is already a setback. Sheena Allen, the CEO of Capway, said, “Instead of passing [money] down, saving, and investing, we have to pull it back because we have to help our family.” “It is one of the reasons we do not build generational wealth,” says Allen.

Young Black entrepreneurs may have to start from nothing. In most cases, there is no generational wealth or inheritance to fall back on in financially risky situations. As a result, it will take a significant amount of time and effort to build substantial wealth to improve the socioeconomic profile of the black community.

How to Black Tax without hurting 

Tax” by 401(K) 2013 is licensed under CC BY-SA 2.0.
  1. Set your priorities right

Do not try to handle everyone’s financial burden simultaneously. Eliminating pressure is the way to go because trying to fit everything in will only weigh you down in the long run. Finding out who or what is most important will assist you in developing a budget that is flexible with your income.

  1. Create a budget

After determining your priorities, the next thing is creating a budget. A budget that gives you room for investment, savings, personal upkeep, and other expenses.

  1. Set boundaries

Setting boundaries simply means defining what works for you and what doesn’t. Although communicating boundaries may be challenging, it saves you from emotional, mental, and financial stress. It also entails setting a deadline.

Why should you set boundaries? They make your dependents understand that you won’t be sending money or helping forever, except maybe your parents, who may not be able to work anymore. 

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  1. Knight in Shining Armour

Like someone said, “Don’t give me fish; teach me how to fish.” Teaching your dependents how to manage a budget, save, and invest, no matter how small, not only saves them money but also helps them plan their own lives. 

Source: Freepik
  1. Have “money talks.”

One of the reasons we have financial problems is that “money talks” rarely come up in family discussions. Most of the younger generation end up ignorant because we don’t talk about these things. Creating a safe space where everyone can learn about money and come up with solutions to financial issues pushes everyone toward financial freedom. 

Shalom Ngbala-Okpabi
Shalom Ngbala-Okpabi
We learned to read and write in school, and I took mine to another level.


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