The meaning of the word ‘Ubuntu’ is deeply rooted in African philosophy and ideology. A Nguni term, ‘Ubuntu’ roughly translates to ‘human kindness’ and often encompasses greater aspects of humanity and human essence, largely in relation to other people.
At Northwood Financial Services cc, we use the word ‘ubuntu’ with our clients to describe a situation that develops when our extended family expects us to be kind, even if their demands are unaffordable.
I first became aware of these types of situations when the Peters family approached me for help. A married couple; the wife is a qualified auditor and the husband is a civil engineer. Between them, they are wealthy – in fact, they own a total of six properties together, each with a small bond. On the surface, their wealth value appears to be more than satisfactory, so where does the problem lie?
The first home is occupied by the Peters family themselves. The other five homes are occupied by various members of their extended family. Of these five homes, not one of the five units pays any form of rent. As well as allowing the extended family members to live rent-free, the Peters have to pay additional fees for rates, water, and electricity – for each individual household. During trying times of requesting forms of income from these extended family members, discussions would turn into heated fights where very personal matters became accusation points in the argument.
With this, the Peters were spending 40% of their own income to support their extended family, and as a consequence, they were deeply in debt.
Sipho came to see me a week ago. He has just graduated from CPUT, and just bought his own car as well as a small apartment. Sipho is on his way to building a career and is setting up the foundation building blocks for his future life. His problem also lies in his family ties. As the first member of the family to study, find employment and begin generating an income stream, he is expected to educate three of his sister’s children, as well as an aunt who spends a lot of time at the casino.
What do the tens of thousands of listeners do, when family’s demands become unaffordable?
Our first encounter with others is through our families.
- They hold a heavy lever of influence over us,
- They play a monumental role in our own personal development, and
- Many of us come from dysfunctional families.
So the question remains: What is my financial obligation to my family?
A close friend of mine has two rules for dealing with unwarranted ‘Ubuntu Tax’:
- Never loan any money to a family member. This creates a relationship that takes you from being a family member or a close friend to being a banker.
- Never give financial support unless there is a need for it, as well as evidence of rational financial behaviour.
What are your thoughts on Ubuntu Tax? Are you in a position where you are supporting your extended family members – even at the cost of your own financial health?
If you’re seeking sound financial planning solutions and advice, contact Northwood Financial Services cc to book a free consultation and receive a free a copy of our ROADMAP.