Funding the family: Black tax and the ‘sandwich generation’ are on the rise

As the “sandwich generation” continues to grow, with 43% of South Africans now supporting multiple generations, the financial and emotional strain of black tax has become a pressing concern.

Author of Handle Black Tax Like a Pro and expert Ndumi Hadebe explained “the sandwich generation is another term for black tax, that refers more to white people”.

According to Old Mutual’s Savings and Investment Monitor for 2023, the “sandwich generation” increased from 39% in 2022 to 43% in 2023.

The percentage of respondents supporting adult dependents rose to 50%, while the percentage supporting children reached a new high of 79%.

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Understanding black tax and the sandwich generation

Black tax refers to the financial burden placed on black individuals, particularly in South Africa, to support extended family members and community obligations.

Hadebe defined it as the responsibility inherited from parents due to their inability to participate in the economy during the apartheid era. They pass down this responsibility as it was passed on to them by their parents.

Black tax can come in the form of either time or money.

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“Some people do it willingly and some unwillingly. For some it’s explicit and for some implicit but it is happening nonetheless,” she said.

Hadebe said white people who have previously been exposed to economic access now find themselves part of a sandwich generation.

She said white families are often surprised by this, questioning “What happened? My parents suddenly ran out of their pension fund”. There may also be a shift in landscape and they find themselves destitute.

“The sandwich generation is encountering this for the first time. For us [black people], it’s been there. We are the first ones with the potential to break the cycle,” said Hadebe.

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Increasing trend of the ‘sandwich generation’

The rising trend of the sandwich generation is a concern, as it places significant pressure on individuals and families.

Speaking to The Citizen, Hadebe said she was not shocked by the increase and its implications for South Africans.

She said it goes hand in hand with unemployment, which increased to 32.9% in the first quarter of this year, up from 32.1% in the previous period.

“We cannot decrease the sandwich generation or the implications of black tax if we are unable to increase employment, especially for the youth,” she said.

The seasoned entrepreneur said one of the barriers to turning around these statistics for entrepreneurship to succeed. She, however, acknowledged how hard it is to start a business in SA.

“Even when a person has lost a job, for them to try to be self-employed is such a difficult task. Let alone, the fact that a lot of people don’t have an entrepreneurial spirit,” she added.

Navigating financial and emotional challenges

According to Hadebe, open communication is key to overcoming the financial and emotional challenges of supporting multiple generations. She encouraged engaging in “brutally” honest discussions about your financial standing.

She also questioned why black tax was often the elephant in the room.

“The lack of conversation is what keeps most families stuck.

“Talking about money is taboo in general. So of course this plays into people wanting to cage their salaries and financial standing. I feel that in the transparency dynamic also comes in how people feel about these things,” she said.

Not being transparent with one another’s financial standing invalidates people’s realities, she claimed

Budgeting and planning as well as setting financial goals play an integral part in this conversation.

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Black families are yet to reach the point of clearly defining their financial goals. This stands in the way of achieving these goals.

As a person not on the receiving end of black tax this may seem like your financial goals are being sabotaged by those dependent on you when in fact they are oblivious to said set goals.

Hadebe said financial goals must be out in the open and clearly defined by both families and individuals.

Alleviating the burden

To address the challenges of black tax and the sandwich generation, Hadebe proposed a change in how people perceive income-earning opportunities.

“We need to stop limiting ourselves from only seeing SA as the only place to make money, and looking as well as seeing physical opportunities as opposed to exploring online, digital space etc,” she advised.

Hadebe said people’s openness to learning how the digital world works, and also being open to freelancing in other countries alleviates the pressure of waiting to be employed in SA.

“Without money, we are unable to discuss boundaries.”

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