Spending a significant amount of your salary on looking after your extended family affects your ability to save for your future, Lesego Mpete, the corporate benefits consultant at BDO Employee Benefits, says.

Only a quarter of South Africans between the ages of 18 and 30 are saving for retirement, according to the Old Mutual Savings and Investment Monitor. To a large extent, this is because they use their incomes to support their extended families instead of saving and preserving some of their hard-earned money, she says.

Mpete says the cost of looking after family is often referred to as a “black tax”, although the practice is not unique to black South Africans. The black tax can trap your family in a cycle of poverty, because if you do not save for a comfortable retirement, you will have to depend financially on your children. They, in turn, will be burdened with paying a heavy black tax, which will affect their ability to save for their future, Mpete says.

Radhika Daya, an assistant financial planner at BDO Wealth Advisers, says this does not mean that young professionals should not assist their families.

She says you need to understand that helping your family is not about how much you earn, but how much you spend.

“You can be earning a meagre salary, but if you do proper budgeting and planning, you can find something to save. Saving is a long-term project; therefore, you can start with an amount that you can afford, no matter how little you think it is. This can be increased as your financial situation improves,” Daya says.

It also helps to manage family expectations. Having a frank conversation about what you can afford to spend on family financial obligations will help them to understand your financial situation, she says.

“Show them that, instead of spending R1000 on something, you can spend R800 and save the R200 so that it can accumulate interest in the long-term. Have a conversation with them about budgeting. Your family needs to understand that you are not walking away from your responsibilities. Making them understand this will help to put a stop to the cycle of debt, as better money management will lead to a curb in irresponsible spending,” Daya says.