Seun is currently undergoing his National Youth Service Corps program. He earns N33,000 from the Federal Government and N5,000 from his place of primary assignment. 

Last Saturday was his father’s social club meeting, and Seun was asked to buy drinks for the celebration. Seun 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.”  

Are you like Seun dealing with added responsibilities from family? You are not alone. We spoke to several young Nigerians who are struggling with the financial pressures of being the family breadwinners. 

What is Black Tax? 

Black Tax, in its simplest form, is money that black people or people of colour (POC) give every month to their family members, especially struggling ones to support them. 

90 million Nigerians live below the national poverty line, and this puts pressure on those who earn more to support those who don’t. 

Bolaji works for a telecommunication firm in Lagos, earning N160,000 per month. Last month, she told the MoneyRise team she had to buy 2 mobile phones for her siblings; and this month, she is preparing to pay half of her parent’s house rent. Asking if she can save or build wealth, doing that, she says it has an impact on her ability to save or build wealth.

In her words, “Instead of saving a significant portion of my money, I always have to worry about that cousin that needs to go to school or the little brother that needs new shoes”. 

The root of the culture of Black Tax, can be found in the African philosophy that says “It takes a village to raise a child”. In return, the child grows up and takes care of the village that nurtured them. This care comes in the form of providing for parents and community members who supported you while you grew; and it ranges from paying rent to paying school fees of a relative, buying clothes and starting a business for them and generally, catering to their financial needs.

Speaking to Chukwuma on how black tax affects his income, he sounded quite excited like he had been waiting for someone to broach the conversation with him. He says the biggest challenge he faces with black tax is not knowing how to say no. 

Chukwuma is currently in a tight corner as his dad wants him to contribute N150,000 towards his younger brother’s school fees. In his words, “I don’t know how to tell him that I do not have the money.”  

Taiwo likens Black Tax to a rat race — an endless or pointless pursuit. He is struggling to be financially free and the family weight on his shoulders keeps dragging him back every time. 

“I earn money, but can’t seem to get my finances in order”, he said. “I have just rented and furnished my parents’ new apartment and next month, I am going to pay for my brother’s school fees.”

How to Deal with Black Tax

It’s a blessing to be able to provide for the family but if black tax is not properly managed, it can lead to resentment and the inability to save and build generational wealth.

Here’s how to deal with it

  • 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, 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 wealth plan on Rise.