There’s a new Plasma TV or ostrich leather couch you’ve been eyeing for a while now… but your saving efforts seem futile. What can you do? How can you save better? Stokvels can help you score your saving goals!
How it works: For example, Sindi is in a stokvel group with six people. They’ve decided to contribute R500 a month. They will each get a pay out twice yearly. They’ve appointed Thabo to be their money handler; he deposits everybody’s R500 monthly contribution into the bank account (or puts cash in the hands) of the person who is due to benefit that month.
How to Start your own stovel:
• Choose the right members – Choose people you can trust. Dishonest people tend to disappear after they’ve got their money, and fail to contribute to others. Choose people who can stick to the rules!
• Choose a goal for the stokvel – Some stokvels contribute money so they can buy groceries and others for home appliances; some pay someone in cash monthly, while others simply invest the money in a joint stokvel account. Decide what your goal is at the outset and stick to it.
• Decide how the pay-out will be made – Will the money get deposited or given in cash form? These conversations need to happen before time. Most groups will opt to deposit the money due to safety reasons.
• Have a clear set of rules – Everyone should know the rules and stick to them. Rules can include penalty fees for late contributions. Decide who keeps bank slips and what happens when a person can’t continue with the stokvel. There might be a need to have a formal contract based on your relationship and how big the group is.
• Save with purpose – You need to know why you’re personally joining a stokvel. Will you pay off a debt or invest for your children’s education? If you have a clear goal in mind, you will be more likely to reach it.
Quick disadvantages of stokvels
There is a downside to everything… so be aware of these dangers and figure out how you can minimise the risk of them happening to you.
• A fellow member may go AWOL after they’ve received their money.
• In most cases there’s no interest on contributions.
• Payments could be insufficient to meet your needs.
Quick advantages of stokvels
But there are lots of upsides too… think about the following:
• Saving through a stokvel gets you into the healthy habit of regular saving.
• You can finally buy something or settle a debt you’ve been battling to save for.
• You can loan out the money and receive competitive interest.
Now that you know that starting a stokvel is not rocket science, are you ready to form your own one and start to save?
Tell us: Are you in a stokvel already? How has it helped you?