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How to handle black tax



Addressing the challenges of black tax necessitates the cultivation of effective personal finance habits and the establishment of clear boundaries. While it may initially be challenging, acquiring this skill is crucial. Ultimately, as you enhance your financial standing, your family will come to understand that you can provide greater support and assistance when you are in a more stable financial position, JOSEPHINE OGUNDEJI writes

A member of the National Youth Service Corp, Adeoti Felix, is currently undergoing his compulsory service year, earning N33,000 from the Federal Government and N10,000 from his place of primary assignment as a teacher in Ogbomoso, in Oyo State.

Last Saturday was a general family meeting consisting of both his nuclear and external families, hence, he was tasked with the duty of buying drinks for the meeting. Felix sent N40,000 for the drinks, everything he earned last month went into purchasing them. I asked why he did that and he replied, “I had to do it.”

This financial juggling act is a shared experience among many young Nigerians, each dealing with their unique notes of responsibility in the big picture of life.

Black Tax, in its essence, represents the financial support that black individuals or people of colour provide to their family members, particularly those facing economic hardships.

 In Nigeria, where over 90 million people live below the national poverty line, according to figures from the National Bureau of Statistics, those with higher incomes often find themselves under pressure to assist struggling relatives.

Many young working adults, particularly in Africa, may have experienced the concept of “black tax,” as defined by Investopedia as the financial responsibility carried by successful individuals to support less financially secure family members. Notably, variations of this practice exist globally. In certain Asian cultures, there’s a similar phenomenon called “filial piety,” where adult children financially assist their ageing parents. Likewise, some Latin American cultures involve providing financial support to extended family members.

While the intention behind paying black tax is often noble, it has led some individuals, in various parts of the world, into challenging financial situations. The burden of supporting family members has, in some cases, hindered people from investing in their futures, creating financial strains and limitations.

The history of black tax can be traced back to the legacy of apartheid in South Africa, which ended in the 1990s. During the apartheid era, Black individuals and families were denied access to many economic opportunities and resources, and as a result, they often relied on the support of extended family and community members to make ends meet.

When apartheid ended, many Black individuals and families gained access to new economic opportunities and were able to improve their financial situations. However, they continued to feel a sense of responsibility towards their extended family and community, and this financial obligation became known as the “black tax.”

A shoemaker, Adeshina Bolaji, for instance, working at Yaba Market in Lagos, who is still trying to stabilise his business is currently facing pressure from his father to contribute N150,000 towards his younger brother’s school fees. Bolaji finds himself at a loss on how to communicate that he doesn’t have the financial means.

He said, “It’s challenging for me. My business is still finding its footing, and now my father is urging me to contribute N150,000 for my younger brother’s school fees. I want to support my family, but it’s hard to communicate that I don’t have the financial means at the moment. It’s not just about the money, it’s emotionally draining. I feel torn between meeting family expectations and the reality of building my business. There’s a weight on my shoulders, and it’s affecting me deeply.”

The roots of the Black Tax culture can be traced back to the African philosophy that emphasises the communal responsibility of raising a child. The belief is that as individuals succeed, they must give back and support the community that played a role in their upbringing. This support takes various forms, ranging from covering parents’ rent to paying relatives’ school fees, buying clothes, and even helping them start businesses.

For Taiwo, Black Tax feels like an unending and frustrating race. Despite earning a decent income, he struggles to attain financial freedom because the ongoing financial responsibilities for his family continually set him back.

Recently, Taiwo Olufemi rented and furnished his parents’ new apartment, and he anticipates sending money to his family for Yuletide next month. This constant weight of family financial obligations hinders his efforts to organise his finances and achieve the financial freedom he aspires to.

“The reality is, I’ve rented and furnished my parents’ new apartment, and as the festive season approaches, I know I’ll be sending more money to my family next month. This perpetual weight of family financial obligations makes it incredibly difficult for me to organise my finances effectively. It’s like I’m stuck in a loop, struggling to achieve the financial freedom I so desperately want,” he told our correspondent.

How to Deal with Black Tax

According to RiseVest, the ability to provide for the family is a blessing, but mismanaging black tax can lead to resentment and hinder the ability to save for generational wealth.

Here are some suggestions on how to navigate and address this challenge

Everyone does not need to know how much you earn: When people know how much you earn, it’s easier for them to be entitled to your help. Try as much as possible to not disclose your earnings.

Set a black tax budget: Set an amount that you can give out in a month. Once you’ve reached that limit, tell them to wait till next month, except it is an emergency.

It is important to have a necessity test: This means choosing your battles and only paying for what is necessary like education and basic physiological needs. There’s no reason to pay for things like parties or drinks.

Learn how to say no: If you didn’t exist they would have found another means to solve their problems so be comfortable with saying no.

Insurance is important: To avoid emergency bills, it is important to pay for insurance that can cover unforeseen expenses. Paying for insurance such as home insurance, health insurance, and comprehensive car insurance will help ease the financial stress relating to issues like this.

Pay Yourself First: Putting some money aside for retirement is a way to avoid not falling into the cycle of dependency. Rise has a build wealth plan where you put the money you set aside.

Financial goals are important to you: Set specific, measurable, achievable, relevant, and time-bound goals that will give you the financial freedom and wealth you seek. You can start by creating a build-a-wealth plan.


A Chartered Accountant, Ososan Oluwafemi said initiating financial stability often begins with a foundational practice, budgeting.

He said, “Establishing a well-thought-out budget provides a roadmap for managing income and expenses, offering a clear picture of financial health. The essence lies in not just creating a budget but adhering to it diligently. While circumstances may necessitate occasional deviations, meticulous budgeting minimises the frequency of unplanned expenses and sets the stage for effective financial management.

“An integral part of this financial strategy involves reducing the amount of spare cash readily available. The logic is simple: limited spare cash leaves less room for impulsive spending. A primary method to achieve this reduction is through savings and investments. By channelling funds into instruments that carry penalties for early withdrawal, individuals commit to a long-term financial approach, instilling discipline and discouraging hasty financial decisions.

“Investing in instruments with penalties for premature withdrawals encompasses various options, such as term deposits, bonds, and retirement accounts. These instruments not only demand commitment to a specified timeframe but also present the potential for higher returns over the long run. This aligns with the overarching philosophy of sacrificing short-term liquidity for the promise of substantial financial growth. In essence, starting with budgeting and progressing to strategic investments with penalties for early withdrawal forms a comprehensive financial management approach. It combines the prudence of budgetary discipline with the commitment demanded by long-term investments, creating a framework that encourages financial stability and growth while minimising the impact of unforeseen financial challenges.”

Emergency funds

A financial Analyst, Gbemisola Joel, said the creation and maintenance of an emergency fund played a pivotal role in handling black tax.

She said, “By having a financial safety net, individuals can handle unexpected expenses without compromising their ability to meet familial obligations. This not only ensures a buffer for unforeseen circumstances but also safeguards long-term financial goals, such as education, homeownership, and retirement.

Encouraging financial independence within the family is the third key aspect. Supporting relatives in their efforts to develop skills and enhance their earning potential can alleviate the long-term financial burden. Additionally, fostering education and professional growth empowers family members to contribute positively to their financial well-being.”

Financial education

Joel asserted that financial education was essential as it would adequately empower people with the knowledge and skills needed to make informed financial decisions, budget effectively, manage debt wisely, and plan for the future, including retirement.

She said, “Seeking professional financial advice is essential. Financial advisors can provide personalised guidance, helping individuals create a sustainable plan that balances familial obligations with personal financial goals. Legal agreements may also be considered when providing financial assistance, formalising the terms and expectations to prevent misunderstandings and ensure clarity.

“In addition, investing for the future is a critical element. Individuals should explore wise investment strategies that align with their financial goals, aiming to grow wealth and create additional income streams. Finally, prioritising self-care is essential.”