There are ways in which one can start beating the black tax. The most important of these is to live within your means.
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‘Black tax’ is a colloquial term used to describe young black people who share their salary with immediate and extended family while trying to manage their own expenses.

Chief Financial Officer of the Savings Institute, Gerald Mwandimbira, said a family may often have one person who has graduated from university in a well-paying job. 

“Black tax sees the person’s salary portioned off to support older parents or an extended family, while trying to raise a young family.”

“This puts one’s responsibilities in a 'sandwich' and hence this is often called the sandwich generation. The sandwich generation supports the generation above them, as well as the generation below. Making it difficult for the sandwich generation to save, which will in turn pass this tax down to future generations.”

He added that as a consequence of living above one’s means and supporting extended family, the sandwich generation has little or no savings.

There are ways in which one can start beating the black tax. The most important of these is to live within your means says Mwandimbira.

Signs that you are living above your means:

  • You save less than five percent of your net salary
  • You spend more on your car than your rent
  • You spend more than 30 percent of your salary on a home loan
  • You need an overdraft or credit card to survive
  • You have unmanageable debt.

“Once you know you are living above your means you need to adjust your lifestyle with a budget plan that makes you financially secure.”

He said people who live above their means may also need to manage their family’s expectations by allocating what they can spare and also learning to say “no”.

He added that it is important to save even while paying off debt. 

-This article was originally published in the GCIS Vuk'uzenzele.


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