TIL: What is a Savings Syndicate

One of the great things about moving to another country is learning how things are done differently. From when we are young, we learn about how to get through life from our parents, teachers, and community. And that is happening all over the world, except sometimes there are very different means to the same end. This week I learned how saving money can be handled differently, or for that matter, lay-a-way purchases and lending.

I was sitting in the office this week when a young man came in asking to speak to one of our staff. When I brought her over, she gave him some money and he left. I asked her what he was collecting money for. She told me it was for a savings syndicate. Here’s how it works. You get together about 20 friends who agree to pay $100 into a collective pot every two weeks. You put all of their names in a hat and draw out one name every two weeks and award the selected person the $2000 that was collected. So, if you are person number one, you will pay in $100 the first week and receive a lump sum of $2000. If you are person number 20, you have to wait a while, but it is the same amount you would wait if you were saving money on your own. This can make it easier for people to save up for big purchases, like appliances. Its also a quick method of fundraising. My friend Francine told me of one time when her neighbor needed money for an operation. The community decided to form a syndicate and just allow that neighbor to be the first person to receive the lump sum. They had to continue to pay into the syndicate over the next 19 weeks, but they were able to quickly accumulate the money they needed for medical expenses immediately.