Black Tax! By now, you may have heard this term. Investec defines black tax as financial support that someone is obliged to provide to their family on a consistent and continuous basis outside of their daily expenses.
Many consider it as a payback for sacrifices previous generations made to secure a future for someone. It could be parents, relatives, or older siblings.
A young Kenyan professional who has been experiencing the weight of black tax firsthand has reached out for help. He says he is even contemplating quitting his job.
“I earn Sh70,000, but I am left with nearly nothing after paying bills and sending money to parents and relatives. Hata heri unemployment sasa (better to be unemployed),” he wrote.
This young man’s tribulations are not new, and many people, especially people of colour, know too well the pangs of black tax. With the rising cost of living, the situation has even been exacerbated by the endless WhatsApp group contributions for school fees, medical care, and funerals within families.
Personal finance expert and career coach Susan Mtana responded to the plight of the young man, offering a realistic and thoughtful perspective.
“You can’t solve every problem in the world, no matter how many people need help. Taking care of yourself is important — you shouldn’t sacrifice your well-being just to support others. Yes, there will always be needy cases, but you can’t be giving from the first to the last day of the month. Sometimes, people, including your family members even family — assume that because you live in the city, you’re earning big and living well, but that’s not always true.
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So, allow me to tell the person who has an issue with KSh 70,000: let him look around. There are so many people in Kenya who are earning even less than KSh 70,000. In finance, it’s not about how much you make; you may make a lot, but if you don’t know how to manage your money effectively, even if you earn 100k or 200k, you’ll still have the same issue of financial discipline,” Mtana explained.
What is financial discipline?
She emphasized that financial discipline, not just income, is the key to navigating such challenges.
“I’d encourage the person to first work on their financial discipline before anything else. We have the 50-30-20 rule, where you distribute your income: 50 percent to needs or must-haves, 30 percent to things that are good but not necessary, and 20 percent for savings and investments,” she suggested.
According to Mtana, the young professional could apply this rule by ensuring that all the must-haves, including standing bills, are covered using 50 percent of the Sh70,000 salary. She recommended allocating 20 percent immediately to savings and investments and using the remaining 30 percent for other expenses.
“Let him start this plan straightaway and review his progress even six months later—he’ll likely be in a better place,” she advised, adding that living within one’s means while finding other avenues to increase income is crucial.
Be intentional about saving
Mtana also posed a tough but necessary question:
“When you’re thinking of quitting, ask yourself: What is your plan if you can’t manage the 70,000? How else will you survive after quitting?”
She stressed the importance of being intentional about saving, as spending without a plan leads to nothing being left, a highway to poverty and mental problems.
“He should prioritise saving and investing, then readjust his expenses accordingly: 30 percent for entertainment and luxuries and 50 percent of his salary on must-haves. Financial discipline is key. Even if he earns a hundred thousand, he should look around at those who do non-salary jobs but still manage to pay school fees, rent, and save. It’s about him taking charge of his discipline,” Mtana explained.
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She urged the young man to create a financial plan with clear targets, such as what he wants to save, invest in, or achieve, using the 50-30-20 rule as a guide.
“Discipline isn’t easy; it requires sacrificing some luxuries to redirect money to essential areas first. Let him work on his discipline and mindset—everything is doable if you work with what you have in hand,” she noted.
Mental and self esteem issues
Apart from financial discipline, Mtana alluded that the individual could unknowingly be suffering from poor self-esteem or related emotional issues. This, she said, constantly pushes people to seek validation from others by trying to please them even beyond their means.
The coach advised that it was time the young professional also sought help from a psychologist to be able to manage mental issues linked with finances and self-esteem.
Also, the issue may not be about money at all. He could be dealing with emotional challenges that need counselling or therapy. It’s important to learn to say no. And remember, “no” is a complete answer. If someone asks for help, it’s okay to say, ‘I’m not in a position to assist right now,’ without feeling guilty — because that’s the honest truth,” she concluded.
