We have successfully made it through more than half of the dreaded January. The fridges might have been a bit less full than it should, and come month end, we might be choking with financial fear due to possible December debts still looming over our heads. The reality for a lot of people is that financial planning during the December / January period is incredibly difficult for one simple reason, there was no financial planning done.
There are a large group of South Africans however, who have chosen for that not to be their fate. They have decided on sound financial planning all year round so that they are part of the few that are not choking come 31 January. Dimpho Jacobs, from Number Five, Galeshewe, is in her 7th year of running her stokvel and has assisted many people in maintaining sound financial planning over the most stressful financial periods.
“We started this society in 2013. We were three women, all of us were working women and we decided to put R500 away every month for a period of 12 months so that we could have a lump sum of R5500 by November 2013. We started the stokvel because of the economic difficulties we face in this day and age. We were three struggling women and we wanted to plan ahead so as to free ourselves from extra financial pressures,” Dimpho explained.
A stokvel is a savings or investment society to which members regularly contribute an agreed amount and from which they receive a lump sum payment. The conditions vary from group to group as there are many differing stokvel types. Stokvels in the local community are commonly referred to as “societies” and for many, it has turned out to be one of the most important groups they are a part of. It is estimated that one in every two black adult South Africans is a member of at least one of 800 000 stokvels. Black adult South Africans invest approximately R50 billion in stokvels a year.
The benefits of being a part of a savings club like a stokvel are many:
– Knowing that you will receive a certain fixed amount of money at a specified time helps you to plan your finances accordingly.
– It is a safer means of saving as there is a reduced chance of your savings being stolen because it is secured in a credible institution rather than it being saved in a secret spot at home.
– You may learn something. Some stokvels operate like investment clubs and invest in the stock exchange or companies. Members do their homework, deliberate about which shares or companies to invest in and make investment decisions.
– The fact that you are saving with a group of people makes the need to continue with your monthly contribution much easier. The peer pressure forces one to save, versus if you were trying to accumulate a certain amount of savings on your own.
– Some of the added benefits are a sense of community and socialising. Some stokvel members traditionally meet regularly and make an occasion of the meetings.
– You can get better returns at a lower cost when pooling money together. When the amount being banked is larger, there is a higher interest rate to be earned. If the amount is large enough, banks chargers can also be lowered.
Dimpho’s stokvel consists mostly of women and she is happy and proud of the ladies who have successfully been able to receive lump sums of money at the end of each year, “Most of us in the society are women. Single women and single mothers who are heading up households alone. Each person knows why they are saving and what they are saving for. Some are trying to save towards a big purchase and others are saving for school fees, school stationery and general necessities around the house for the next year.
No matter what the need is for saving, we accept anyone that is prepared to save at least R500 a month. There is no maximum limit to one’s contribution per month”. Dimpho goes on to state that her life is much more stress free and she continues to go into every New Year at peace because she has planned ahead.