Stokvels can be a confusing topic and are frequently overcomplicated or confused with pyramid schemes. A stokvel, when done correctly – is not a pyramid scheme and helps people save in a way that makes acquiring more significant purchases easier.
What is a stokvel?
Stokvels – put simply is a saving club. Six or more people get together with a common goal to accomplish. If everyone put’s in R10 over 12 months, everyone gets R120 rand for one month out of the year.
Basic stokvels first started before 1990 in South Africa. It got its name from people visiting stock fairs, where there would be mini farmstalls, and everyone would have fun and support each other’s business. These social gatherings then changed to groups of women having tea at each other’s homes.
Everyone would get a turn to host a tea party. The guests would then reward the host for her hospitality by bringing her gifts.
South African stokvels have since evolved and become more saving orientated. The idea is that it’s easier to contribute R10 towards something that you want and never have access to the funds and get the total amount that you are saving towards instead of slowly seeing the funds increase in your accounts, resisting the temptation to purchase things on the way.
Types of Stokvels
There are many things that people can “jointly save for” or types of stokvels that can be formed, such as for a home, and possibly labelling it “dream home stokvel” or “property stokvel” are just a few types of stokvels that in South Africa.
However, one should always be wary when joining online community stokvels, as it is a lot easier for an individual to pretend to be someone they are not. In regular stokvels, the central theme is an equal success, equal sacrifice – this is much more challenging to enforce in online communities. What can one do if the person ghosts?
How to set up a Stokvel
Different types of stokvels require different kinds of setups. The most important part of setting up a stokvel is getting the right people to participate. Having someone who will only wait for their benefit to manifest and then level would be detrimental to everyone involved once you have your inner circle on board.
Putting the expectations and requirements in writing is also vital. Depending on the contributions and pay-out size, getting a lawyer to oversee the process might not be a terrible idea.
Once you have the paperwork out of the way, the next step is to get a bank to pay the money into. Nedbank offers a specialized Stokvel account with various benefits, such as a 10% discount on groceries and up to R10 000 funeral cover. To open a Stokvel account with Nedbank – the following is required:
- A minimum of R100 is required.
- Each member must have a valid South African identity book or card and a permanent residency permit.
- A copy of the constitution of your stokvel.
- Proof of address for each stokvel member (e.g., a phone bill).
- A copy of the meeting minutes from which the decision to create a stokvel account was made.
Benefits of a Stokvel
Stokvels in South Africa have one enormous benefit: it requires less self-control to purchase something you would otherwise need to save for. When saving, it often involves a lot of discipline and self-control to say no to purchases you could potentially now afford. Other challenges include resisting the urge to spend a copious amount on small purchases.
However, with stokvels, this is not a problem. If all you have to do is contribute R10, it is much easier. There is also a legal requirement and social pressure to make that contribution. It is encouraging you to prioritize your savings. This pressure would not be present if you were simply saving in isolation.
Have you considered joining a stokvel to force you to pay yourself first? Let us know on Instagram @onceaweekblog.