Finding the balance between family and finances
“Family” or “Black Tax” is a reality for many South African professionals. For many, it means if you earn a salary, you are expected to help provide financial relief to your own and sometimes extended families. Of course, this adds a lot of pressure to one’s budget, and our budgets are already stretched with the current economic situation.
When Black Tax isn’t managed properly, it can easily become a vicious cycle that negatively impacts your finances. Providing financial support to anyone can limit your opportunities to become financially independent and stable, but we still pay Black Tax because it’s family, right? It can be tough to achieve a balance between your financial freedom and family obligations. Tough, but not impossible.
Here are our top 6 tips to help you and your family achieve this balance:
-
Honesty is the best policy
Open, honest communication about expectations is key to successfully managing Black Tax or any other financial support you provide. Having conversations about needs vs luxuries and what you are or are not willing to provide for is essential to protect your hard-earned money and your family relationships. It will also help you say no to requests that do not fall into the boundaries you’ve set.
-
Set goals and deadlines
Perhaps you are providing financial support to help a family member complete their education. To avoid unmet expectations, sit down with the person and set realistic goals and deadlines. Be specific about how much you can offer and for how long. Discuss the commitment and results you’re expecting to see from them. Keep each other accountable to the specifics without being overly harsh because life happens sometimes, and it’s still your family!
-
Be prepared for the unexpected
As a provider for your family, it is vital to prepare for the unexpected. Build up your emergency fund to protect you and your family against things like unemployment, sickness, etc. The last thing you need when faced with an emergency or unexpected situation is the pressure of requiring additional funds and not having it.
-
Empower your family to become financially independent
It is good to keep in mind that the long-term goal of providing any financial assistance is to help the receiving party/parties become financially independent. Being financially dependent on anyone for a long time is a slippery slope and can become a comfort zone for some. Instil financial independence and resilience in those you support by helping them with their budgeting, sharing informative articles on managing debt and saving, getting them access to professional financial advice, etc.
-
Establish some ground rules
Setting ground rules or expectations will help keep the peace in any financial support situation. When people know what is expected of them, they tend to play nice. Therefore, communicate your commitment, expectations, and their role in it all. Financial support should not be at the expense of the supporter, and the person receiving the support should not commit to things requiring finances without your agreement or live beyond their means. Everyone does their part!
-
Make yourself and your finances a priority
If your financial situation is unhealthy, you can’t help yourself or your family. You can’t pour from an empty cup! Getting professional financial advice helps establish you financially by saving for the future – no matter what it might hold. In this way, you can remain financially independent and stable for the good of everyone involved. Establishing and implementing sound financial habits and principles in your life will ensure that your family will benefit from your financial prosperity.
mCubed is an expert independent fund administrator, and with us on your side, you can find financial balance through a retirement plan that considers your circumstances, obligations, etc. Members, clients, and participating employers of our retirement funds have access to the best investment administration and advice, excellent service, and complete transparency for the best long-term results. Our fund-appointed FAIS accredited financial advisors help to ensure a safe, financially sound, and prosperous retirement for you.
