Whether you call it “black tax” or the “sandwich generation”, the obligation placed on those who achieve a degree of financial success to provide for their extended families and communities is a financial reality faced by a growing number of South Africans.
According to the 2023 Old Mutual Savings and Investment Monitor research report, the “sandwich generation” (people supporting not only children but also parents and other older dependents) increased from 39% in 2022 to 43% this year. The percentage of respondents supporting adult dependants rose to 50% this year while the percentage of respondents supporting dependent children reached a new high of 79%.
Read: Confidence in the economy at an 8-year low, Old Mutual research finds
Headlining the latest episode of Think Big – a webinar series purposed towards engaging prominent thought leaders on some of the country’s most pressing issues – published author and self-leadership coach Ndumi Hadebe (pictured) said black tax is multi-layered and complex.
“And why we’re still calling it black tax three decades later into democracy; perhaps the reality is that the transformation financially did not happen as fast as we thought it would. A big part of our society is still facing this responsibility.”
She added it was called a “tax” is because it feels compulsory for many people.
“They inherited (it), their uncles did it, their mothers and fathers, students; and, therefore, they feel that they have to do it.”
But, she said, the term “black tax” needs to shake off any negative connotations.
“In us calling it black tax, it’s not because we are shaming it; it’s not because we are against that. It is us simply recognising it, recognising that this is a responsibility that we have as this generation who have access to money and access to opportunities. And we want to do it with love and compassion.”
Hadebe is the author of Handle Black Tax Like a Pro – Setting Boundaries, Improving Relationships and Achieving Freedom, a book about how to strike a healthy balance between assisting family members and planning to reach your financial goals.
While doing her research for the book, Hadebe said a common denominator was that people were getting into debt to fund a request from a family member that could have waited.
“We are going upstream, not wanting to wait, not wanting to save, not wanting to plan and project in terms of what is it that we need, what is it that we want.”
She said another commonality was that, while an expectation existed, families did not engage with each other on the realities surrounding their financial situation.
“Families do not talk about black tax. What we do instead is that we complain about it on social media, we become keyboard warriors. We talk about it at dinners with our friends and our colleagues. But we do not afford our families the right of reply, and I feel this is the biggest shortfall that we are making,” said Hadebe.
Acknowledgement and accountability
Remedying this must begin with the acknowledgement that the issue needs to be addressed, and as the party providing the financial assistance, to take responsibility for your part in creating the problem.
“We – if I say, we, I mean us who are earners of money and payers of black tax – we, to some degree, enjoy a tiny little bit of helping, it feels good to help. So, we continue doing it, and we keep ourselves stuck in the washing machine of black tax by just not being able to say, I’d love to help you with 1-2-3, except perhaps not today, perhaps not this month.”
Hadebe said the starting point is for an individual to acknowledge that they need to do something about their situation. She said, in her case, it was when she realised that she had been working since the age of 18 but had nothing to show for it.
“And whose fault was that? It was mine.”
The book suggests calling a family meeting and engaging with family members in a way that is not accusatory but takes accountability.
“You won’t be showing up in an accusatory tone, where it’s like, you know, you guys have been expecting these things from me. And look at me now. I’m 40 and I’ve got nothing to show for it. Nobody pointed a gun at you.”
Hadebe says, to avoid drama, timing is everything.
“I advise strongly to do it when nothing has happened. When nothing is about to happen. You simply look into the situation, and you say, I’ve made some irresponsible decisions, and I must take accountability going forward.”
These open conversations allow for a degree of transparency where the reality of one’s financial situation can be brought to light. Transparency, as Hadebe pointed out, is often the key to healing past emotional wounds and settling disagreements – a way of cleaning the slate and creating a platform for honest, clear communication.
Setting clear boundaries
The next step in becoming accountable to oneself and to one’s family is to communicate how finances will be allocated going forward. This may entail communicating how one’s finances will be used to pay off debt, build up an emergency savings fund, and meet one’s own financial obligations. The key to laying these boundaries down firmly lies in being assertive, or as Hadebe puts it, “not asking for permission, because when you ask for permission, you disempower yourself”.
Hadebe suggested that families sit down and look at a long-term plan to build a financial legacy.
“If we don’t want our kids to inherit debt from us, if we don’t want to be sitting here as their black tax, then we ought to do this differently. And starting with defining what that looks like. Once it becomes crystal clear what it is that we want, it will inform everything else that we do. Because right now our goals, the things that we say we want, are not quite matching with our behaviour.”
Working collectively
Once this step has been taken, families can work collectively towards better financial planning. And while this process will look different from case to case, a few basic principles apply. One of these principles is finding ways to minimise expenses – an onus that does not only fall on the shoulders of the person providing financial assistance but on each individual family member.
Hadebe advocated taking a close look at one’s lifestyle and the choices we make around spending money. She said in the tough economic times in which many South African find themselves, we needed to take a hard look at the luxuries we can’t afford.
“What can we cut down on? What is a need? Is DStv necessary? Is buying at a certain supermarket necessary? Can we cut this credit card? So, that’s the first conversation. But the second conversation is for people to realise that long term, if there is nothing to draw from, then there is absolutely nothing.”
And she said, waiting on leaders to start solving inequities and start creating opportunities, putting an end to the need for black tax, has not proved to be helpful. She said we had to recognise that this may still be here for a long time.
“And that is precisely why we have to do it differently. Because if we do it with debt, if we do it in a way that is costly to us, costly to our families, it means we have less capacity to help other people.”
Hadebe believes that if we feel that the closing of the wealth gap is not moving fast enough – because of the government or whoever we hold accountable, it means we have to take the responsibility of moving things forward.
“But we cannot do it without having resources. So, we have to be strategic and deliberate and be committed to delayed gratification to be able to do this.”
