I remember as a child my mother and aunts would get together and form a Christmas stokvel group. From January to November they would be saving money together.

Once the saving period was complete, they would go to a wholesalers shop and buy Christmas goodies in bulk. On that same day, the goods would be placed in the yard and equally distributed amongst them.

As a child this was exciting to watch, seeing all that food you knew would be devoured in December straight through to February (yes there was that much).

I noticed how the stokvel brought them together; they’d spend that whole day chatting and laughing, and the kids would also be there playing and sneakily stealing some of the sugary stuff.

It created a sisterhood amongst our mothers, and the kids - well we just enjoyed eating the food.

What is a stokvel?
A stokvel is a proudly South African, informal way of saving money.  A group of people(friends, family or associates) come together and work out a way of saving money towards a common goal.  Apparently stokvels started around the 19th century in the Eastern Cape but back then, instead of money, people exchanged cattle and crop.

It's now the 21st century and stokvels are still going strong, so clearly this informal method of saving money works very well. But like most things in life, with the good comes the bad.

Risks associated with stokvels
The biggest risk to be aware of are the scammers out there who see stokvels as an easy way to launder money from groups that are often considered uneducated or vulnerable.  So often we hear stories about how people lost large sums of money after investing in a business that promised them a large pay-out after a certain time.

There was an incident in KZN which left people in despair and broke before Christmas.  The members of this stokvel contributed large amounts of money and in the end the guy in charge of the savings disappeared with all the cash.

The money the members had been saving  would be used for Christmas shopping but one selfish and greedy person ruined what was meant to be a festive time. These scams can literally ruin lives and destroy families, so do your research before trusting a business or stranger with your money.

Most of us know about pyramid schemes that promise you a huge pay-out from a small monthly deposit. Sure, pyramid schemes work, but only for the few people at the top. The people at the bottom never receive a pay-out and even if they do, it’s usually not as much as they expected.

If a stranger or a ‘business’ that you don’t know or seems dodgy approaches you with a group savings and investment idea, it’s best to say no thanks and walk away. The bigger the group or more distant the association, the harder it will be to trace down the person you suspect of scamming you.

So basically, trust and accountability are the core values to a successful stokvel.

Benefits of a stokvel
In addition to saving for Christmas or a certain event, some people use stokvels for long term goals – like their children’s education, sustaining their household or paying for a funeral. 

An education savings group is an excellent idea especially if we consider the many benefits of having an educated child, especially in a society like ours. A “stokvel education” can be a great way of empowering people who don't have much but want to transform their lives in the long run.

I imagine parents who use stokvel savings to  put their children through school feel an overwhelming sense of reward and achievement. It takes great discipline and responsibility to religiously save money when you already don't have a lot of it.

A stokvel is a great savings network for people who would otherwise be denied loans because of bad credit or unemployment. And when you're part of a stokvel you don't have to worry about expensive bank charges and unfavourable interest rates.  So, in many cases you can save a lot more money than you would at a bank.

Certain banks, like FNB and African Bank, have even recently introduced the idea of stokvel saving to their customers – proving how successful a good stokvel savings plan can be.

So as the year draws to a close,  why not gather all your close friends or associates and form your own stokvel for the following year? It's a great way to save money (and enjoy tea and cup cakes with the people that you trust.)

To read more on why you should start a stokvel, click here.

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