Budget what you spend on supporting relatives

Tuesday January 26 2021

You must plan well to avoid a drain out as a result of attempting to support relatives. PHOTO | Edgar R. Batte

By Charlotte Ninsiima

Giving back is part of a larger tradition that transcends centuries. It is a reality of life that carries satisfaction and deliverance to some.

No matter who you give, it is a form of transfer payment that is more common or institutionalised in some societies such as South Africa, where professionals are expected to share a portion of their incomes to support their extended families. 

Certainly, it is here that the term black tax, which is popular in US and south Africa, could have originated. 

In Uganda, the term black tax might be alien but when put differently, such as extended family support, it quickly registers.

Therefore, it is not surprising that many Twitter users recently jumped onto a trending hashtag ‘#black tax’, which had been questioning the derogatory reference to blacks.

For starters, the phase black tax is definitely derogatory but it has its origin in the US, where the phrase tries to describes the racial dimensions that perpetuate a cycle of inequality such as low pay and low standards of education among black Americans. 


The derogatory connotation could have been intended to discourage transfer payments that put pressure on wealth building.

However, whereas transfer payments might be discouraged in the West because of the structure of their families, in Africa it is extremely difficult.

Newton Buteraba, a business advisor and wealth coach concurs here and notes that giving in any form has been with us for ages.

“We share every little we have. As long as you earn, you will have beneficiaries because of our extended family setting.  Whites normally have nuclear families, hence they have less pressure than African. This has a strong effect on wealth building, which requires one to save for investment,” he says.

Our social setup, he says, is made up of extended families, some of whom have been supportive on our way up.

Therefore, according to James Abola, a personal finance consultant, society sets us up into a tradition that demands that we give or transfer a certain part of our income to family and friends or the vulnerable of society.

This, he says, has been the nucleus of society even before monetisation.

In Africa, particularly in Uganda, majority of the population depends on substance earnings either from surpluses from the farm or a corner shop.

Therefore, such livelihoods narrow opportunities and the capacity of many people to look after themselves and their families, which shifts focus to a few family members and friends that hold paying jobs or relatively prosperous business.

However, unknowingly this curtails wealth creation, which creates a cycle of revolving inability and a raft of working poor people and weak businesses that take years or never grow into anything beyond substance.

Often times, transfer payments create a situation, which because of pressure, cuts back on the ability of entrepreneurs to separate the business from the individual.

“There is no separation between the entrepreneur and the business,” Abola says and cite the origin of phrases and nicknames such as mukono gamu (read stingy), which are thrown in the faces of people that try to separate the business from the individual.

Actually, many people will attempt not to put their personal burden on the business.  But because people don’t appreciate this, they turn to blackmail and name calling.

Therefore, in such circumstances the business person or employee will have to live with blackmail or put a noose around their business in an attempt to support family and friends.

Dealing with relatives’ support pressures  

Be honest about your earnings

Working on a fixed salary or business income is definitive in itself. Therefore, unless, you have a second regular income, you should never budget out of your main income.

Create a budget

It is important that you understand how your support budget looks like outside your family fucntions. This gives you the ability to understand where and how you will obtain the money you intend to give out. In any case, never attempt to be generous outside what you have budgeted, unless you are sure there has been growht in income.

Learn to say no

It doesn’t help you to sink yourself while making others happy.

Transfer payments in themself put pressure on your income and lower your ability to save for reinvestment. Therefore, according to Butereba, don’t become a bank to others as you kill your dreams.

“You will never invest in anything because you are always on the wall,” he says.

Schedule a percentage

Just like income tax, which is 30 per cent, Value Added Tax, which is 18 per cent and tithe, which is 10 per cent, schedule a portion to give in transfer payments.