At the heart of most hardworking African immigrants, lies a common story. Our income isn’t just for our personal expenses, it also contributes to the needs of our families back home. Whether it’s for your mum’s rent, brother’s school fees, or funding a cousin’s business venture, the money we earn here serves a dual purpose, and this responsibility can easily grow each month while it is a testament to our commitment and love for family, it can often drain us financially and emotionally. This is known as Black Tax
Black Tax is the financial burden that most black families and immigrants endure to support their extended families back home even though for many especially those with low-paying jobs it can be a constant struggle.
With the current economic climate affecting both black and white people, the cost of living crisis, It can be hard especially to maintain financial stability while extending financial support to loved ones back home
The concept of Black Tax has deep historical and cultural roots in black communities. According to the World Bank, they estimated diaspora remittances to Nigeria at $168billion in the past 8 years
For many Black taxpayers from middle class or low incomes family, the struggle is twofold: limited financial resources and a lack of understanding of wealth. Often, the perception among families is that their diaspora-based relatives are significantly wealthier than they are because they earn more, It is true that they earn a higher income but are also faced with higher living costs
As a result, many hardworking Black taxpayers just have enough money to make ends meet after paying all the bills, the income that looks big starts feeling like pocket change while his loved ones back home see him as a successful person with deep pockets this is the harsh reality.
This is not unique to the UK where i live according to Shawn Rochester in his new book “The Black Tax: The Cost of Being Black in America,” many Black Americans are in a similar position. Despite working harder than white americans, they are still playing catch-up. It’s like running a race where the finish line keeps moving further away.
For Black professionals and entrepreneurs, the reality of the Black Tax can translate into significant financial strain. It’s not just about having less money at the end of the day—it’s about the ripple effects this has on all aspects of their financial lives.
The Strain on Personal Finance, Savings, and Investments
Whether it’s to support family members back home or to contribute to local community initiatives, Black Tax often means that a substantial portion of one’s income is redirected from personal savings or investments.
This can hinder long-term financial planning, making goals such as buying real estate, preparing for retirement or building net worth more challenging for many black people
The Pressure and Responsibility of Being a Financial Provider
For Chika a doctor with the NHS like Many African immigrants, she feels a profound sense of responsibility, and guilt, towards their families. The stress of being seen as the financial provider, the chosen one even when she is struggling, can be overwhelming.
Success Breeds Success
The good news is despite the considerable burdens, there’s also a silver lining. When immigrants support their families back home in the right way, they’re not just giving handouts; they will be contributing to their loved one’s success and that’s a big deal.
They’re providing opportunities for a better life, for higher education, for a chance to break out of the cycle. In a way, they’re planting seeds for a future where the success story isn’t just one person’s but that of an entire family.
So, the question is – how can one continue to support loved ones the right way and without spiraling into financial distress?
The answer lies in striking a balance. It’s about understanding your financial responsibility, setting boundaries, and taking steps to ensure you’re not jeopardizing your financial stability.
Establish Boundaries: Honest communication with family members about financial limitations is essential.
A key starting point is to decide how much you can give in relation to your income.
Budgeting: This is the natural next step after you have decided. Incorporate familial financial obligations into your personal budget.
This will provide a clear view of your financial landscape and inform better decisions.
Saving: The instruction of the air hostess, before the plane takes off, applies here.
Make sure you have applied your oxygen mask before helping your child or loved one.
Building an emergency fund and prioritizing future savings can act as a buffer against financial strain, helping preserve financial stability.
Seeking Advice: When it all feels too overwhelming, seeking advice from financial advisors or counselors can help. They can provide strategies to better manage your finances.
Navigating the Black Tax is an ongoing process and there are several strategies we can employ to lessen its impact.
Understand your Motivation
Start by understanding your motivations for supporting your family. Do you feel compelled to help due to a sense of duty, or because it gives you a sense of power and control?
Teaching Financial Literacy and Changing Cultural Norms
One of the most significant steps you can take to combat the effects of the Black Tax is to focus on education. Because the real problem for many is when the demand to support falls on one person. By teaching your family members about financial literacy, you’re not just providing them with a one-off gift—you’re equipping them with the tools they need to build a more secure financial future.
Overcoming Black Tax is not just about individual level financial management.
It requires systemic changes, like seeking community and pushing for policies that help bridge the racial wealth gap at the state and federal government.
Encouraging the growth of black-owned businesses, black neighborhoods and advocating for fair lending practices can make a significant difference to black residents and business owners.
Have an estate plan
Having an estate plan isn’t just for the wealthy even with a low-paying job you can direct the assets you accumulate to the intended heirs. An example of how you can do this is to establish a will and if you have a life insurance policy, make sure it’s in a trust
Build a community
The people you surround yourself with have a direct correlation to building wealth. You want to be intentional about this and surround yourself with like-minded and supportive people so you don’t feel isolated and together you change future generations.
Black Tax – it’s a complicated issue, a tug of war between personal aspirations and familial responsibilities. But with hard work, the right approach and understanding, it doesn’t always have to be a losing game and you can still reach your financial goals and build generational wealth.
