Do-It-Together Savings!

Some of the CIFORD guardians at their weekly meeting.

Women at a savings group meeting in Meru, Kenya.

Have you noticed that many DIY (do-it-yourself) projects are best done DIT (do-it-together)? A friend’s DIY deck-building work party is much more done as a group rather than a drawn-out process done on his own. And the project is competed much sooner working together with everyone contributing!

So maybe it’s no surprise that the same is also true for DIY saving.

What is DIY saving?

It could be anything from the informal savings and loans group in Malawi (and the recently trained group in Zambia), to borrowing money from family members, to stuffing cash under the mattress for safekeeping.

DIY savings does not just happen in Africa, but in North America too, as highlighted in an NPR Planet Money podcasts* over the summer. This 15-minute episode discussed a man who gave small ($20) loans to friends and a woman in Harlem who was part of an informal savings group called a susu.

I got SO excited listening to the story about the susu because that’s exactly what SIA is helping to start in Kenya. The susus, also called merry-go-round funds, were something Del promoted back at the beginning days of SIA.

So what is a susu? In the story, the susu was a group of 13 colleagues who got together every-other week and at each session they contributed a set amount of money to the pot. Then they drew lots to set the order for when each person got to take the whole collected amount. For example, if there are 10 people in the susu and each person contributes $10 each week, then every week one person gets to take home the $100 pot. Clever, huh?!

It’s DIY because it is under the radar of the formal banking system. But actually, it is DIT with the group aspect making it a more fun AND more effective way of saving.

The group on the podcast mentions three benefits of a susu compared with formal banking. And the benefits are confirmed by stories I’ve heard from similar groups in Kenya:

ciford savings group

The group recorder makes sure that everyone has paid their part for the week.

Benefit #1: Peer Pressure

Raise your hand if you are sometimes temped to buy something that you can’t really afford. Well, a susu provides the good kind of peer pressure to get you to save at a consistent time and at a consistent rate. If you don’t contribute every session, you can get kicked out of the group and people will be mad at you!

If you didn’t raise your hand in answer to the question, you might have some valuable knowledge to share with other group members, providing extra peer pressure to save and ideas about how to do it.

#2 Limiting Access

DIT makes sure your savings are locked in for the duration of the savings cycle. Think of it like a CD savings account – you can’t access the funds once they are paid into the pot, thus saving you from impulse purchases. For women in Kenya, a savings group can help them save money from a harvest to have it ready when school fees become due.

After the savings group business is over; the women sing and dance together.

After the savings group business is over; the women sing and dance together.

#3 FUN!

This is a key part of DIT savings. Saving in a group might make it feel less like a chore, especially when you get to share your plans and dream with friends. People might get excited when they know they are helping you save to buy your first car or take a trip to an international CFO camp (two actual stories of savings usage that I heard in Kenya).  It also has the potential to open up conversations about money that might never happen otherwise.

Many things are more fun and easy when they are done together with friends. Why would saving money be any different? If you are interested in starting a susu – whether you are in North America or Africa – email me and I’ll send you some simple guides to help you get it going and keep it successful! Happy saving.

*A podcast is a short audio file that can be played online, or downloaded onto a listening devise like an iPod or iPhone. Planet Money discusses economics topics, making them understandable to the lay-person.

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3 Responses to “Do-It-Together Savings!”

  1. Donna Thomas September 11, 2013 12:19 am
    #

    the cool thing about the Susu is that a banker doesn’t take any cut of that saved money! Does the MAVISALO group take out an amount for administration? Do all of their funds go to benefit the whole group?

  2. Tanya Cothran September 11, 2013 8:46 am
    #

    Hi Donna,
    MAVISALO doesn’t take a cut of the savings, but they do charge a small 5% interest on their loans. Part of the loan interest goes back to benefit the whole group through member disbursements at the end of the year, another part goes to a social fund which benefits needy people in the community, and a third part goes to pay for photocopies, office rental, and perpetuating the chicken project. So, the members benefit in many different ways! Of course, all money decisions are made by consensus by all members.
    Good question!
    ~Tanya

  3. Caleb J. Injuko November 19, 2013 5:24 am
    #

    We like it.Many hands make work light like building the tower of babel in the
    bible.Genesis chapter 11

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