Stokvel’s in South Africa are estimated to be valued at R25bn. Clearly this is a vehicle of generating money which needs to be explored. When one hears the word “Stokvel” young people do not come to mind. Traditionally stokvels have been associated with older people. I’m here to give you a fresh take on understanding stokvels and how you, as a young person can get involved in one.
What is a Stokvel?
In essence, a stokvel is a savings cluster where each member regularly contributes an amount to the group as per their agreement. The financial goal (reason for saving money) is determined by the members of the stokvel. The formalities of these organisations are determined by the members themselves; for example, the terms and conditions of the group’s operations.
How do stokvels operate?
Members of these organizations determine how formal their operations are. Some have a constitution which governs their operations; how money is invested, conditions for making withdrawals, penalties for failure of meeting the commitments etc. Other stokvels simply have a memorandum of understanding. A MOU is a document which serves to explain the terms and conditions of an organization’s agreement, what each member’s responsibility is, how they distribute their resources etc. The manner in which money is collected and distributed is determined by the group members themselves. How formal a stokvel can be is determined by the group members themselves.
The National Stokvel Association of South Africa (NASASA) is a body which stokvels can register under for free. NASASA aims to assist stokvels by providing them with information, services (financial advice) and opportunities for growth. By empowering these groups; NASASA is creating an environment which is conducive to the proper functioning of stokvels.
Stokvels are so popular that banks such as Nedbank and ABSA have created stokvel accounts. These are designed to cater for the specific needs of stokvels; by offering higher interest rates than regular savings accounts.
Benefits of being part of a Stokvel
- Safety net
Things your Stokvel could save up for
As a student, you have specific needs which need to be taken care of. Stokvels can assist in taking care of those needs. Identify the need and then that becomes the “savings goal” which the stokvel should fulfil. Here are a few things to consider as “savings goals” for your stokvel.
- Books: collage/varsity books are expensive so you can form a stokvel with your classmates and form a study group; where you save money to buy books/study material together for the study group. There are many bookstores which sell both new and second-hand books (buying second-hand is going to save you a lot of money).
- Food: if you are looking to stretch your money as far as you can; buying food in bulk is going to help you. Buy in bulk and divide the groceries amongst the stokvel members
- Entertainment: identify an activity your group would like to do for fun and save up towards that. Many service providers give group discounts for various things such as group spa days etc. How often the group does this is up to them.
- Travel: it seems like a luxury at first glance, but a travel stokvel is not far-fetched. Similar to entertainment activities, many travel packages give group discounts. Planning in advance can make traveling as often as you like possible. There are many inexpensive hidden treasures in South Africa waiting for you to explore them. Traveling is good for the soul, therapeutic and is a form of self-care.
- Investments: the money collected can also be put into an investment portfolio which the stokvel can buy shares from companies listed on the JSE or other businesses which need funding.
Stokvels no longer need to be seen as outdated or for old people. Young people can switch things up and add a modern twist to something that has proven to pass the test of time and actually work.