At a time when the cost of living seems to only go up, South Africans are finding innovative ways to save money, turning to traditional stokvels for communal financial support.
As we navigate through March, the urgency to save money resonates more than ever, echoing the New Year’s resolutions many have set to secure their futures or prepare for rainy days.
Stokvels as defined by the National Stokvel Association of South Africa (Nasasa), are collective savings schemes where members contribute a fixed sum of money into a common pool at regular intervals.
This practice, deeply rooted in community and cooperation, offers a diverse array of savings models catering to different needs, from basic rotational clubs to investment and borrowing groups.
With a valuation of over R50-billion, the stokvel industry stands as a significant component of the country’s informal economy, second only to the taxi industry.
The appeal to stokvels lies not just in their financial benefits but also in the social solidarity value they provide. They make saving a less daunting task,
especially for those who find the prospect of saving individually challenging.
Saving money is not just about setting aside a large sum of money at once. Nowadays, social media challenges inspire people to save incrementally, starting with amounts as little as R10 a month. For some, the prospect of saving, even modest amounts, can be intimidating when tackled solo, leading them to participate in stokvels as they encourage a culture of saving regardless of one’s financial situation.
However, the journey of stokvels has not been without its challenges. The industry has been targeted by fraudulent schemes and robberies, particularly during December’s peak cash-in-transit periods.
This has prompted interventions by financial institutions and organisations like Nasasa, aiming to bolster financial literacy among stokvel members and offer safer, more profitable savings solutions.
Highlighting the financial prudence of stokvels, 1Life Insurance points out that money saved through these schemes often enjoys better interest rates and lower fees compared to traditional bank accounts.
This is a crucial aspect for the undisciplined spender, for whom the structured and community-focused nature of stokvels can provide a much-needed framework for saving.
“Just as some people exercise more when they have an exercise buddy, others find it easier to save when they do it in a group.
For the undisciplined spender who is constantly cashing in their savings, a stokvel, or group savings club, could be the answer.”
1Life Insurance offers the following essential tips to help you start a successful stokvel:
- Organise an initial meeting: Gather like-minded individuals with a shared savings goal to discuss and agree on the stokvel’s objectives, membership and contributions.
- Decide on a name and draft a constitution: Choose a unique name and draft a constitution detailing operational aspects like contribution collection, meeting schedules, investment strategies, withdrawal policies, and new member addition procedures.
- Open a bank account: Opt for a bank account with security features and minimal fees, requiring multiple signatories for transactions to enhance
security. Consider accounts specifically designed for stokvels, offered by banks like First National Bank, Absa, Nedbank, Standard Bank, Postbank and African Bank.
- Host the first official meeting: With the constitution and bank account ready, hold your first meeting to begin the savings journey.
- Select members wisely: Choose trustworthy members who share similar financial goals and values.
- Communicate clearly and regularly: Keep all members informed about progress and decisions through open communication.
- Stay committed: Encourage consistent contributions and active participation to achieve the stokvel’s objectives.
- Review and adapt: Regularly assess the stokvel’s performance and adjust strategies as necessary to meet collective goals.
- Understand legal and financial regulations: Familiarise yourself with legal and financial regulations affecting stokvels to ensure compliance and safeguard your collective investment.
- Leverage technology for efficiency: Use technology for managing contributions, communication, and tracking the stokvel’s progress to enhance efficiency and transparency.
