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Friday letters are usually dedicated to taking questions from our community. Do you have a question for us? Please feel free to
- send an e-mail to info@themoneyafrica.com; or
- send a DM to any of our social media channels, or
- simply fill out this form. Don’t worry, your responses are kept anonymous.
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Question
How can I be consistent in saving?
Answer
First off, a big thumbs up to you for making the decision to be consistent in saving. It’s a very good money habit. Let’s break down some practical tips to help you be consistent in saving.
1. Automate your savings:
Take the manual work out of saving by using apps that let you set up automatic transfers to your savings. It’s like putting your savings on autopilot – less effort, more results.
2. Create a budget:
A budget helps you understand where your money goes. Use budgeting apps to categorise expenses and allocate a specific portion of your income to savings.
3. Emergency fund:
An emergency fund provides a financial safety net. Save a portion of your income specifically for unexpected expenses. Financial experts recommend having 3 to 6 months’ worth of living expenses set aside.
4. Set realistic goals:
Define clear and achievable savings goals. Whether it’s for a vacation, a down payment on a house, or retirement, having specific objectives makes it easier to track progress and stay committed.
5. Cut unnecessary expenses:
Analyse your spending habits to identify areas where you can cut back. This might involve renegotiating bills, eliminating subscription services you don’t use, or finding more cost-effective alternatives.
Remember, consistently implementing these strategies over time is key to building and maintaining a successful savings habit.
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Question
How do I say “no” to family needs?
Most of my finances are spent on family members. How do I curb this to enable me to meet my financial goals?
Answer
This situation is also known as black tax. Black tax is a term that originated in South Africa for money that Black workers, especially professionals and others with higher income, give their parents, siblings, or other family members. Oftentimes, it is done out of obligation or a deeply ingrained sense of family responsibility.
It can be very hard turning down family members who always ask for money. It is even much harder because they are the same folks you see often. I know you want to be responsible for your family, but it is very important to strike a balance for your financial well-being. So, how do you manage black tax?
Here are a few steps you can take:
1. Have an open conversation with your family
It is good to have a conversation with your family members about their needs and your financial goals. You can try to make them understand that you need to cut back on spending on family needs so you can save and meet your personal financial goals.
2. Draw up a budget
If you have several relatives who depend on you for their sustenance, you should draw up a budget for them. Depending on how much you earn, you can budget a portion of it. Once you exhaust that portion, be firm not to accept any other request except it is a life-threatening issue.
3. Sign up for health insurance
A large chunk of black taxes goes to healthcare. You can sign up for a health insurance package that covers some members of your family.
4. Empowerment
For family members who are willing and able to work, you can teach them how to fish instead of just giving them fish. Not only will they be self-sufficient, but they can also pass the favour down the line. This can come in the form of enrolling them in short courses, building a competitive CV for them, helping them acquire new skills, etc.
5. Let management handle it
If you are a popular figure, for example, you can refer such requests to either your financial manager or advisor. That lessens the pressure on you and makes the person consider their requests carefully before making them.
While the word “no” has a negative connotation, sometimes you need to make use of it. If you cannot afford a bill from a family member, politely decline it. Let go of the guilt as you cannot pour from an empty cup.
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We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
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