Earlier this year, I came across a concept that not only allowed me to save, but also become more efficient in practicing group economics. It helped alleviate the feeling of “living from paycheck to paycheck” and allowed me to properly manage and store money with discipline. The method is called Sou – Sou.
A sou-sou is a West African form of rotating savings and credit association, a type of informal savings club arrangement between a small group of people. The basic principle is that each member of the group makes a standard contribution to a common fund once per time period. Then each period the total contributions are disbursed to a single member of the group. The recipient changes each period in a rotating fashion such that all the members of the group are eventually recipients.
- A member who receives distribution early would be perceived as a loan. They collect a larger sum of money early and “repay” as they make contributions going forward throughout the cycle
- A member who receives a distribution toward the end of a rotation has effectively been “saving” their contributions leading up to disbursal
- Since a Sou-Sou is not a written or legal contract, it relies on personal trust to discourage malfeasance. For this reason it is more likely that participants are of the same community and know each other.
With this concept, I was successful in gathering six people (including myself) to participate into the savings pool. The group consisted of two cousins, brother, father and spouse. Collectively, we opted to put $50 into the pot, meaning each week a total of $300 was disbursed in rotation evenly. We managed to complete three rotations without flaw and in turn, I managed to save roughly around $900 in a short amount of weeks.
Not only did the process allow me to build my savings, but it helped me understand how much there is to gain from uniting on a family scale. It made me wonder, what if THIS method was practiced on a wider scale of people within different communities? There is power in numbers!
If you plan to try this out with your circle of Family and Friends, under that everyone within the group must trust EVERYONE! If that is NOT the case, more than likely it will not work.