Saving money in tough economic times
My husband and I talk about saving money all the time. A Rainy Day Fund. A New Roof Fund. A Mexico or Bust Fund. But we never do it. Saving money is hard. It’s like losing weight. It’s the type of thing that would be so much easier if you did it with a friend. But saving money with a friend? Preposterous! I’ve learned over the years it’s not a good idea to mix money with friends or family. Don’t go into business. Avoid giving out loans that you will inevitably need to ask for back. Money is the great evil monster that tramples friendships.
I think, however, that I’ve been proven wrong. My babysitter told me that she and nine friends each save a $100 a week together — for a payoff of $1,000 a week. My babysitter is from Guyana and her nine friends are from Trinidad. They are all female care-takers who met in my neighborhood, at the park, while tending to someone else’s children. One person is in charge of collecting $100, cash, each week from every woman participating. The $1,000 collected goes to a different woman each week. And every tenth week my babysitter gets her share.
OMG. I flood her with questions… Are you kidding? You trust these women? What if you are short one week and simply don’t have $100 to contribute? Is there a contract? How do you know the woman in charge won’t run off with your money?
My babysitter looks at me like I am the crazy one! This is something common in her world; both her mother and her grandmother did this in their time, back in Guyana. Yes, she trusts these women; they work on the honor system. If someone is short one week then they pay in an extra $100 the following week. If they don’t have the money the following week then they are shamed for not doing their part and possibly kicked out of the circle. And the person whose turn it was to receive the $1,000 gets only $900 — because even if she’d always been on time with her money, she has to take the brunt of the person who didn’t keep her end of the bargain. More shame to that person. This is all so un-American — trust and faith in other people. Well, do you know nine people you trust enough to do this with each week?
At the end of our conversation my babysitter thought it was important to note that none of their husbands know. For all ten women this is a secret savings fund for when they fall on hard economic times, or find a really nice new pair of shoes they must have.
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That’s amazing!
I don’t understand the math. Pardon my individualism and self-reliance, but if they each save $100 a week, after ten weeks each will have the same $1,000 — minus the excitement and the suspense of what happens if one lets the others down, and the shame, and the banishment from the circle, and oy vey the drama.
What am I missing? Admittedly, neither math nor savings are my strong suits.
It’s all about forcing you to save the money… for those people with little self-reliance. When doing it on your own — will you have the resolve to put $100 a week away? But — when you are committed to do it with a group of other people — the requirement is what motivates. Kind of like knowing you need to weigh in at a Weight Watcher’s meeting.
Olga, it’s not a math thing. The idea seems to be that the social pressure makes it more likely that these women will actually save the money. If they tell themselves to put aside $100 a week, some of them will and some of them won’t (maybe most of them won’t, which is why they joined a group like this in the first place), but if there is pressure from this group, they will put aside the money, and so they end up with $1,000 set aside every ten weeks instead of having spent it or having let their husbands spend it. But yes, of course, if they have the discipline, they could simply put the same amount aside.
At my last job my co-worker, who was Columbian if it matters, also did the same thing with her friends and family and Amy I had the same questions you did. I guess it works for them. :)
I see. Thank you for clearing that up. It makes more sense to me now. :)
i don’t know??!! this system to me seems more like a wager in a risky fund- you never know when it can crash…. perhaps i am just an untrusting American!
I just hope their husbands don’t read this or the gig is up! :)