As we celebrated Heritage Day on the 24th September, I hope we had some time to reflect on what heritage means. We always beam with pride when we reminisce about our cultures and traditions. I would also like us to consider some hereditary practices that do not necessarily foster growth. Let us explore Heritage tax…
Heritage tax is a very complex concept to understand, because it involves many subjective factors. There are emotions of empathy and even guilt involved. Although a saying like “you educate a woman, you educate a nation” makes us feel so proud of being women, it also adds weight to our already over-stretched finances. As women we are never really satisfied with being successful while the rest of our family members are struggling, we really have a soft spot when it comes to helping our relatives succeed.
However, success comes at a cost. That cost is what many call “black tax”, it is the obligation, (although usually done voluntarily) to make sure that family is taken care of before doing anything for ourselves. It has been formally defined by Busang Senne of the Wits Vuvuzela as a dynamic of financial exchanges between and within black families.
Heritage tax interventions may include the responsibility of making sure that there is a proper house for our parents to live in, helping parents with tuition for younger siblings, helping with monthly groceries, financially supporting unemployed family members etc. Here are some recommendations for making sure that we assist responsibly; Manage family member expectations, we need to Speak openly about money, many times women do not speak openly about money.
We need to talk openly about how much money we are making, how much money we are spending, and how much money we are saving. Manage monthly expenses, we need to have a budget and keep to it and update it regularly, doing so keeps us accountable. It also helps us with being realistic about our financial status Seek professional financial advice to gain proficiency about the use capital market instruments and its products. Historically, financial planning has not been taught in school, it should not be a shame for women to seek financial advice. Many times, we end up resorting to seeking personal loans because of our inability to say no, or because there is no option to say no, because ultimately, we are only as successful as the weakest one in the family.
Not all credit is bad credit, because some credit can fund capital projects that can yield income or buy assets that appreciate. In this case educating a younger sibling and building a home may be unavoidable and would lead to better welfare for the family. Accessing credit is not always a bad thing, when done exercising caution. There are a few things that women need to lookout for when accessing credit facilities; Make sure that you are dealing with a licensed financial services provider (FSP). Licensed financial services provide will have a license registration number that they obtain from the Financial Sector Conduct Authority (FSCA) which give some satisfaction that they have met the minimum requirements to become a lender. You will also have access a complaints Ombud when there is a breach of contract terms.
Make sure that you disclose your income and expenditure details honestly. Although the National Credit Regulator(NCR) exists to make sure that there are responsible lending practices and we are treated fairly as consumers, it is also our responsibility to make sure that we provide the correct financial details, that we do not over inflate our incomes or underestimate our expenses in order to get credit we should not be getting. Take your affordability into account when accessing credit. Make sure that you understand the lending agreement terms, these are loan period, interest rate, monthly repayment, early settlement penalties etc. All decisions we make in life are subject to risk, financial decisions are no different. When accessing credit, we need to consider the risk of not being able to make monthly repayments or even settling our
debt in the event of retrenchment, death, disability or critical illness. We cannot completely eliminate risk; we can mitigate the risk of not being able to earn an income by applying for Credit life insurance that will settle our debt when we can’t. There is no solution to the heritage problem that we are faced with, since a lot of historic factors are responsible for the state that we find ourselves in. we can, however, educate one another to better manage what we have. Ladies, please remember the words of Penny Reid when she says “Don’t set yourself on fire trying to keep others warm”. Fetch your financial freedom! Fetch your life!