According to the Nigerian Immigration Service Migration Information Data Analysis System (MIDAS) | Balancing Black Tax and Your Finances, 3,679, 496 have left Nigeria to other countries within the last two years.
While emigration continues to rise due to various reasons, living abroad often comes with unique financial responsibilities, especially when it comes to supporting family and friends back home in Nigeria.
According to a report by the World Bank, Diasporans have become the largest revenue-generating constituency in Africa and other parts of the world with over $80 billion sent back to Africa in 2020.
This phenomenon, popularly known as the “black tax,” often places a significant burden on people who are trying to settle down, manage their finances and achieve their goals in a new country.
A family life expert and women’s rights activist, Mrs Funmi Goke thinks that while ‘black tax’ fosters a sense of communal support and solidarity, it also poses significant challenges for young adults striving to achieve financial independence and pursue their dreams and aspirations.
This is why balancing these demands is essential to ensure both your financial stability and your family’s well-being.
Are you wondering how best to manage‘black tax effectively even as you pursue your dreams and aspirations abroad? Here are some strategies to help you!
Draw The Line
Setting boundaries is the first step towards preventing financial strain and emotional stress.
Communicate clearly with your family and friends about what you can realistically afford. Create a monthly black tax budget and be assertive about dealing with family needs or requests.
The moment you reach your black tax target, push the rest of your needs for the following month, except in an emergency.
Prioritize Your Financial Health
According to a research by the Pew Research Center, clear communication about financial contributions helps in reducing familial pressure and improving overall satisfaction.
Always ensure that your personal financial needs come first, and any support you provide is based on your ability to do so.
Before saving the world, save and pay yourself first even as you create a plan that ensures you’re on the path to financial freedom.
Create a Detailed Budget
A 2021 survey by the International Monetary Fund (IMF) shows that expatriates often overestimate their financial capacity to support their family, leading to budgetary strains.
If you don’t have a good hang of your finances, you’re likely to bite more than you can chew with helping family and friends.
By tracking your spending, you can allocate funds more effectively between personal needs and family support. Create a list of all your sources of Income, expenses and other financial responsibilities.
Once this is okay, you can then allocate a specific portion of your income for black tax and ensure it is part of your monthly budget.
Set Up An Emergency Fund
According to Investopediia, the only person you can really depend on to get you out of trouble is you.
You cannot rely on family or friends, so an emergency fund acts as a financial cushion for these unexpected occurrences.
Aim to save at least 3-6 months’ worth of living expenses in an easily accessible account and avoid using it for non – emergencies.
Helping others is great, but improving your own financial health is even better!
Explore Additional Income Streams
A 2022 Upwork survey showed that 59% of freelancers agreed that side gigs significantly improved their financial situation.
Extra income can alleviate the financial pressure of supporting family while allowing you to maintain your personal financial goals.
Consider freelance work or side gigs that not leverage your skills and experience, but also boost your finances.
Regularly Review Your Financial Plan
When you regularly review your finances, you are able to stay on track with your budget and adjust for any changes in your financial situation.
Do a monthly review of your budget and expenses monthly to ensure you are sticking to your plan.
If you find yourself overspending, adjust your budget and savings plans based on changes in income or expenses.
Balancing financial support for family back home with your personal financial needs can be challenging, but with careful planning and the right strategies, it is manageable.
If you do it right, you can use black tax to turn your family and loved ones’ financial situations around. However, it could leave you in a financial crisis if you don’t know when to say “No” to some needs.
Find ways to help people to become financially literate. We believe this article would help you become a good black taxpayer. If you reside in the United States of America, you can use Pay4Me App to send money home in minutes.
For Nigerians living abroad, finding the right balance is key to ensuring both personal and familial financial well-being.
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