Can Traditional Savings Group Still Work In Today’s Economy?

[Rruchi man]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

For anything regarding a group, it depends on the members, and if these members have trust within themselves, these sorts of arrangements obviously work even if the members are not physically present.

But these days, I will advise that rather than blind trust, people who are in those sorts of agreements with themselves should ensure that everyone in the agreement has something to lose if they default; there even needs to be a legal agreement that is signed

[Bitcoin Maxi]

Traditional saving groups is still very much effective even in our economy today because it is what really help most local market traders and small scale business people to save up some money from their proceeds that will help them to either stock up their market or sort out other bills. This method has always been helpful to them because it encourages saving. To avoid the risk that is mainly a particular member failing to contribute for others after he has taken his, the best way is to save with group of people of serious and like-minds, the people in the same business that you know very well and people driven towards achieving the same purpose to which the group was made.

[Crypto_Timothy]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

I think so long as the factor remains that someone would stop and take all the money leaving the group short-handed as you said, as long as that remains a factor, this group saving thing will always be a problem. Now if the digital tool comes with a strong backing policy that ensures the safety of the distribution amongst the group and of course if the policy is broken, serious actions should then be taken against the person and there should be an insurance in the system that ensures the money keeps flowing. If this can be achieved then it will be very good, some bank apps, they have savings campaign you can join, some even have Leaderboard for consistency but it's individual and not like where you can borrow money another person but the idea is as you see others actively saving up for something, it can motivate you to want to save as well, something like that is also what a try.

[bhadz]

This suits in our local which is called "cooperative". With the coop, it's about pooling the funds or savings of all members and the organization(coop) will invest it into assets or businesses that will generate money. And the profit is shared to all of those who's got the savings per annum, depending on the membership so there's also the tier system on how much revenue will be shared to each member. Not only in businesses and assets they are financing but also gives credit/loan to individual members too and that's why it's helpful.

[Darker45]

Not a fan of this kind of scheme. Perhaps it works to some mainly because of the lack of self-discipline. Moreover, as far as I know, most of this kind of community savings didn't end well.

If you get $1,200 once a year by contributing $100 monthly to the community savings, you could also do it on your own. After all, you're just getting what you're contributing anyway. It's even safer that way.  With this saving scheme, the points of failure are unnecessarily multiplied.

Digital tools may improve this. For example, in terms of transparency. But it isn't necessarily made reliable. There's too much trust involved in this system. You need to trust every member, and every point of trust is a risk.

[blockman]

Not a fan of this kind of scheme. Perhaps it works to some mainly because of the lack of self-discipline. Moreover, as far as I know, most of this kind of community savings didn't end well.

If you get $1,200 once a year by contributing $100 monthly to the community savings, you could also do it on your own. After all, you're just getting what you're contributing anyway. It's even safer that way.  With this saving scheme, the points of failure are unnecessarily multiplied.

Digital tools may improve this. For example, in terms of transparency. But it isn't necessarily made reliable. There's too much trust involved in this system. You need to trust every member, and every point of trust is a risk.

I agree, this isn't ideal for those who had a terrible experience with how their group managed their money or doesn't trust other people to handle their savings. There's not a lot of incentives for an individual to get into this but, maybe just for the very few ones can matter. Better to handle your own savings and you can pull it out anytime you wish to. I think with these community or group savings, there are thresholds of how long you have to lock the savings before they allow you to withdraw so, you'll not be able to use it in times of emergencies although that's really a separate account to save with.

[viljy]

Joint savings always border, to some extent, on a pyramid scheme. It’s important to ensure that this boundary isn’t crossed. In general, something like this even existed in the USSR and was called a mutual aid fund. So, for this to work (and for the next participant not to run off with the money, leaving the others with an empty fund) there was a powerful incentive - the fear of public condemnation. Is it possible to replace such an incentive with a digital tool? I think it is. If this digital tool automatically deducts a portion of each participant’s income.

That is, upon joining this "savings cooperative", the participant voluntarily grants the digital tool the right to automatically deduct a contribution for a certain period (which the participant may subsequently extend). In this way, the participant acquires the right to receive financial assistance from the cooperative. What should be done if the participant loses their source of income? - Wait until they find a job again or start receiving benefits, during which period their right to financial assistance from the cooperative will be suspended. Well, something like that.

[Tamaperdana]

Snip

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

Having a savings group can be useful these days, as long as everyone works well together and can be trusted in all aspects. If one or more members are untrustworthy and disrupt the group's activities, things could go awry. So, if everyone is trustworthy and ends up forming a savings group, yes, that's possible and might be a good idea. But personally, I'm not too interested in doing that. Money that sits idle and isn't allocated to other things will clearly be eroded by inflation, so I don't want that to happen. So, I prefer to save my own money in various assets and also keep some of it in the bank for daily needs. As for whether digital tools can be useful in a savings group, yes, they might be. For example, they can create data on each participant, and perhaps the money can be invested based on a collective decision. But, again, I emphasize that it depends on the people involved. So of course you have to keep looking and researching first who the members are who are participating to make everything even safer.

[letteredhub]

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

The original idea behind this style of savings was for the middle class worker whose salary can't immediately give them the financial strength to undertake a project that requires a substantial amount to conduct to finishing.

There are many downsides to this type of traditional savings through group funding for recieving in turns. It's not just about the group members voluntarily becoming unwilling to contribute for others after receiving in their turn, there's more to it. These are:

_Sudden death of member of the savings group that may have received his or her share already.
_Unexpected loss of job or any major sources of income the member had hoped on before joining the savings group.
_Sudden sickness that makes the member incapacitated to work or do anything. Etc.

What can digital tools or technology be done with under such circumstances?

[Marvelockg]

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

The major limitation of this system is the absent of collateral which would have served as a simple means through which any defaulter can be easily brought to book. on the forum for instance, such services do hold on some local board since members can be held accountable in the event that any decide to collect the huge some and fail to continue the chain for others that have not collected theirs. if their is a means through which members can be held accountable then such medium is a sue means that discourage borrowing and that helps one to save and gather in  bulk.

At present, the traditional saving group is very much active especially among traders even though the key limitation has been the absent of trust among participant.

[Ishicryptic]

There is strength in numbers when it comes to money and finance in general, with more money a business can increase and make profits many times over than how it can grow if there are limited funds so every businesses are looking for ways to gain financial strength to increase their businesses. Technology cannot replace traditional savings groups especially among small business owners and petty traders, because raising large sums of capitals are not easy, people form these savings groups to synergize and build pools of funds to support their members financially to increase their businesses.

To save money is not easy for many small business owners and they rely on these savings groups to mandate themselves to save because without such method it is not easy for a lot of them to save and get benefits to apply for loans. As far as there are the poor and the lower class in most societies traditional savings groups will continue to exist no matter the innovations in technology.

[Obulis]

People are still practicing this method of savings at least around me but all the disappointment that goes with it are also still happening, although there's now some sort of advancement like ensuring that it's done with people who are known from birth whose siblings, relatives and even parents are there and that's when it is happening in the country side. Somehow the discipline to save up this small amount to compound amount personally may be lacking but it becomes easier when these small amount is collected from different people to compound amount.
Well if anyone can't keep up with the discipline of saving small amount they can join such savings group but should do thorough analysis to know the person's involved but the best as much as I see savings is doing it by yourself with yourself and for yourself.

[Pearl_20]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

I think this method of savings is still working today, and is mostly happening among traders. It is actually a good system because traders uses it to boost their personal business since they may not have the access to take loan from the bank. However this system requires people who are trustworthy to be able to sustain sustain such contribution for very long term. Today, the existence of bank is actually making such contributions safer because individuals no longer hold such contributions in their hands instead they put the money in the bank with two or more signatories to the account to avoid an individual gaining access to that account.

Today, their is even more advancement on how traders or business people gain access to loan without going to the bank, sometimes individuals can come together and esterblish a cooperative where they contribute money periodically, and you get access to loan from these cooperatives with very minimal interest rate that is even lower than bank rate, you collect this loan as a member to run your personal business, and repay gradually without any pressure on you.

You're right the method still exist even among traders, some business people and even civil servants have cooperative where traditional savings takes place and it has really helped business owners like you said to raise money for their business and when they need to restock as well. I tried In one of those traditional savings and when it got to my turn people who are meant to pay didn't turn up and there was too many excuses and I've also seen cases where the person who was holding the money disappeared that's why the trust comes in because this style of saving requires trustworthy people.

The traditional savings has really advanced like you said people now longer keep money in a saving box rather they put their money in banks or pay directly to who might be the next to collect money since they take turns. I know one of the cooperative you just need to give them drink and tell them the amount you're to take and they will give without interest but you've to bring either drinks or kolanut for them to just pre informed them.

[Royal Cap]

To be honest, we still have such traditional savings groups here. It is very well known especially in the villages. It is still very popular because people can easily take loans there and can easily make their weekly savings. The loan installments and the installments for savings also come to them from their homes every week. But a bigger challenge than technology is the issue of people's honesty and trust. When a member at the end of the circle gets his allotted money, he can suddenly stop paying the installments. In a physical society, money could be collected by creating social or face to face pressure but that opportunity does not exist on an online platform or remotely.

[terrific]

Joint savings always border, to some extent, on a pyramid scheme. It’s important to ensure that this boundary isn’t crossed.

It can go there and that's why I am no fan of it.
When it's with the money, I'd avoid joining groups even if they're going to give you bunch of interest and stimulus.
My money, my rules. If I am not going to have credit advantage because I am not with them, I'll choose that and I don't want to get forced or encouraged to get into debt by a group just because they've got low interest rates for it.

[LogitechMouse]

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I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

I've seen this kind of way of saving money, but you've already said the risks of it, so I don't see it happening in a digital way. I think the traditional one will work way better especially when there are times where you've said it already. There are instances where the person/people might not continue to contribute anymore for various reasons.

Also, I don't think that there's a digital way for somebody to oblige you to pay in this kind of savings, and that's the hard part of it. I guess this is also the reason why I haven't participated in this kind of savings even though I knew it for a long time already. I'm not saying that it doesn't work though because at one point, people who participates into this one are being saved by the money that they're getting in various ways. If you will ask me, just going and invest it would always be better because there's one problem with this traditional savings. It can't beat inflation.

[Antotena]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

You want a straight answer, there is nothing beneficial about saving at this era. If you are making savings and it's for quick saves like an amount you will use in the next 4 months, it's reasonable to save. Anything outside that kind of settings, you are just letting inflation eat up the value of your money when you are supposed to be doing investment. If it's beneficial and profitable, I don't think the banks will offer you an option to make savings of your money.

I will say that cooperative are good but this also depend on what you want to do. If you have a permanent government job, they give loans to people but first you must make an X amount of deposit before you can get 2x of the amount, that kind of savings is good since you can use the money to start something, some people use such money for investment and the interest is very small and friendly. Other than that, forget about savings.

[YOSHIE]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

Have you ever heard of something called a digital social gathering system or Digital Savings Groups or what people often say is digital group savings, of course it is possible that people need to keep up with the times from traditional to digital.

But technology cannot be free from risk, when digital group savings are managed well and with the right infrastructure it will certainly have a positive impact and there are great benefits for those who have difficulty accessing credit and if it is managed correctly, digitalization will certainly be successful in creating good access to digital finance.

As I said above building traditional and digital savings has a variety of responses, digital risks being vulnerable to becoming victims of fraud when governance is not correct, Meanwhile, traditional trust savings in both groups have various risks, but all of them can be overcome depending on how you manage them.

[bangjoe]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

The concept in the neighborhood is called arisan where it consists of a group of people who pay every month and at the end of the month there are those who get the total amount of savings.

For example, a group of 10 people and each person pays $100 per month, and at the end of the month the names are written on a piece of paper and put in a jar then in a gacha to take one name that will be the winner of the savings for the first month, and so on until the last 10 months the members receive the payment.

This concept helps, it's just that this concept is on average done by people who know each other to reduce risk as you mentioned, and also there is always an agreement at the beginning.

[coin-investor]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

This is very popular in our country, we call this "Paluwagan". Even with digital tools to support group savings, it still depends on members' trustworthiness and consistency to sustain them.

I was once a member of this kind of group saving, and we had success with our collection because we screened each member and checked their capacity and character to pay.

No digital tool can surpass how members check their group before they start to sustain their group savings, it can help only with monitoring, but not with organizing.