Five Steps To Better Saving

By Samuel Ukah

(If you always have to send money home or to friends then read this because I’ll show you better ways of paying the black tax without becoming broke at the end of the month.)

Being born the first son and having four younger ones made me understand the reason behind the logic “black tax”.

As a first child, it’s almost difficult to say no to any request from any of your family members. You see everyone as yourself and hence feel naturally obliged to take care of them.

This is even made worse by a belief in Africa that the child has to take care of his parents. Please don’t get me wrong. I know this is Biblical but I’ll show you something shortly on how we’ve abused it.

If your parents send you to school, you’re automatically their retirement investment. I remember a Nollywood movie I saw not quite long ago where a man depended totally in his son to finish school, get a big job and then come take care of him.

Well, this guy finished with a first-class degree and after a couple of years when no job was forthcoming, all hell was let loose in that family. The guy became a disappointment and frustrated at life.

What led us to this situation?

Well, It’s been there for hundreds of years but it was different then. People didn’t have to look for jobs, they just needed to be strong to farm. That way, parents were never disappointed in their children.

Black tax became clearer to me after I finished from the university and couldn’t boast of up-to N500,000 as an investment. This was demoralizing because, with about 4 scholarships, I had enough money as a student.

A certain year, I was paid close to N1 million by different companies. I couldn’t account for how I was spending my money. I didn’t know how to save. Everyone’s problem was my problem so I gave until I didn’t know when to stop.

Haven’t you experienced something similar?

This is what is called “black tax”. Having to carter for your family members and sometimes, friends. An unchecked life of paying the black tax will leave you retiring and having to depend on others for your upkeep.

So, what’s my advice to you as a first child with a lot of responsibilities on your shoulder? How can you pay this tax and still have a great investment to fall back to in life?

1. Don’t Disclose Your Monthly Earnings to Your Extended Family

It’s okay for your family members to know that you are working or doing something meaningful. But the day they know your total income in a month, their needs will multiply and your phone will ring more often.

Only people who can help you manage your finances such as your spouse should know your total income. Others should be allowed to stay guessing what it is. Don’t multiply your problems by yourself.

2. Budget Your Earnings

I learned this the hard way. Don’t wait until you receive your income to budget what it will be used for. Have a comprehensive list of what each sum of money will be used for. Plan for your investments and projects. Give them proper attention.

3. Open an automatic savings account

This does not have anything with your bank’s savings account. It’s almost useless in planning for your life. Special services like cowrywise.com and piggybank.com and alertpay.com are awesome ways of doing this.

On a platform like Cowrywise, you connect your bank account to it and automate how much should be moved from your bank account to each savings plan. (You can create as many plans as you like). Their interest is also better than what your bank will offer you. And you can save as little as N1000 per month.Once a plan is created on cowrywise.com, you can’t touch the money until the savings window expires. You can save for future investments or projects such as buying properties, investing in FG bonds, etc.

If you know any other great plan, please feel free to share in the comments section.

4. Push Money into Your investment portfolio first

Immediately you receive your earnings for the month, pay yourself by sending money into your savings portfolio. Do this before you remove money for anything else. If you believe in tithing like me, please remove your tithe first.

5. Decide How Much ‘Black Tax” You’ll Pay in a month

Decide clearly what percentage of your earnings should go into assisting your family and friends. Set a limit. If you decide it’s N10 naira, aim not to go above it.

Not every need must be met. The compulsory ones are those that bother around survival. Anything outside survival needs does not require immediate attention.

If someone needs money for clothes and there’s a bigger need like feeding or school fees, focus on the feeding and school fees. Shift the request for clothing to another month when they’ll be some space to accommodate it.

Well, I’m not working for any investment platform neither am I advertising for Cowrywise. I only want to share with you lessons that have helped me make better choices which I’m certain will help you.

Don’t become a black tax and remember that not every black tax must be paid. This post was motivated by an email I received from cowrywise. Wishing you a great week.

Stay winning and favoured.