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Saving the ‘ubuntu’ way – how to benefit from a stokvel

16 July 2014 Irlon Terblanche, FNB

Stokvels are uniquely South African and are very powerful as saving with a group encourages good saving behaviour. This savings month, consider pooling your money in a group to get greater return.

“Saving with a group creates positive pressure to keep up with contributions which is why many South Africans choose to use stokvels as a way of saving,” says Irlon Terblanche CEO of Value Banking Solutions at FNB.

A stokvel is a communal savings fund where members use their combined savings to set aside money for a specific goal.

“The end goal can be almost anything,” says Terblanche. “Stokvels can be used as a way for funding groceries, burials, weddings, school fees or holidays.”

The stokvel is governed by its members who decide on a goal and the rules for the savings. The amounts contributed can vary from a few rands to thousands paid either weekly, fortnightly or per a month.

Saving in a stokvel has been traced all the way back to 1932. There are an estimated 421 000 stokvels in South Africa with 8.6 million South Africans belonging to one, according to research conducted by African Response* in May 2014.

“There are many reasons why stokvels are such a successful way of saving,” adds Terblanche. “One major reason is accountability, the fact that you are a member of a group that has a common goal and defined contributions makes it very hard to shirk on your savings responsibilities, which people are tempted to when saving individually.”

Most stokvels have rules in place such as if you miss a payment or miss a few meetings in a row you lose your membership and forfeit your contributions, making members commit to saving.

“It is usual to be invited to a stokvel, however, it is just as easy to start your own one with a group of friends or colleagues. There are a few things to keep in mind when deciding to start your own stokvel,” says Terblanche.

• Make sure that you know and trust the members that you have selected
• Be very clear about the goal of the stokvel from the outset, is it for buying groceries in bulk, paying a lump sum to a member each month or for investing purposes?
• Decide as a group on a set of rules and regulations that will govern the stokvel and have each member commit to this, this is unique to each group
• Set regular meetings so all members are in touch and involved

“It is a good idea to have a bank account to distribute the funds into, this needs to be a transactional account so money can be deposited and/or accessed easily, and it should be interest bearing,” says Terblanche.

FNB’s Stokvel bank account is aimed specifically for saving as a group. It has a very low monthly fee of R5.75 per month and other benefits such as if an amount of over R5000 is kept in the account throughout the month, 10 free qualifying transactions are allowed.

“We find that the majority of stokvel accounts are opened at the beginning of the year, as people start to save early in the year for the festive season or for unexpected events in the year,” continued Terblanche. “One of the advantages of the FNB Stokvel account is that it allows for up to three signatories so not only one person is responsible for the money.”

On average FNB’s Stokvel accounts are held for around five years, which shows that once beginning a stokvel, people are committed to saving for a good period of time.

“There are obviously some risks involved in starting a stokvel, the most common one being if someone doesn’t honour their commitment to pay, however, this should be discussed by the committee and a process put should be put in place to deal with these instances,” concludes Terblanche.

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