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

[Pi-network314159]

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 understand everything you have said and honestly the risk of this type of cooperative organization is the inability of one person to continue because of financial challenges, and this will certainly break the chain expecialy if he has received but fail to pay others.

I think digital tool can make group saving more reliable source if done properly. Digital tool can be generated where each person in this cooperative organization will pay a huge amount of money as upfront before they start contribution, sothat in case you can't pay due to financial issues, your upfront can be used to settle others, reducing the stress looking for elsewhere to get the fund.  It will be calculated in a way that you cant excape it once you join and don't have money to contribute for another person.

[Iroh]

I would say the risks remains the same but the benefits are increased as there is more transparency involved seeing as there are now receipts proving or disproving every transaction. If anything, going digital has made banking transactions and operations easier to manage and operate as people can now send and receive money almost instantly. Sure better than having to spend some good time queuing up in a bank just to send a few bucks.
The risks remain the same. You have to have faith in the people you're doing this with that they'll keep to their end of the bargain. I say faith cause you never truly know someone.

Better still, draw up a binding contract to be safer.

[Sanitough]

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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?

In today's time, traditional savings groups can work properly. The problem of trust cannot be solved by technology alone. If contributions are being recorded digital , a person after receiving their part of share can still leave and the other ones with him have to suffer the entire loss.
Sometimes people struggle to contribute on a regular basis because sometimes they need money on urgent basis. I think that these groups should have clear and proper rules and there should be proper records and penalties for the members who fail to meet their part of commitment. They have to pay the penalty. This process is becoming more transparent with digital tools. But it is up to its members to choose the people who are trustworthy and also when they cannot afford money they should avoid contributing to loss.

Even if there are clear and distinct rules, if the said members are not responsible and trustworthy enough, this traditional saving group will end as a failure. That is why members should be carefully chosen, not just because they have their good and stable income, but most particularly they have good attitudes towards any group or organization that they belong to so that the rest of the members won't suffer from their irresponsibility.

However, technology is a lot of help, and that's undeniable. The only problem is, technology alone isn't enough to change the bad attitudes of the members of the group.

[BigTarget]

Firstly, the kind of savings group that gives out loans isn't the one you described, rather it's the group that every member contribute certain amounts weekly/monthly and keep it for financial dealings of which everyone gets their capital, as well as profits(with respect to amounts contributed) from financial activities at the end of the savings period.

If that's the case, then savings groups wouldn't give members huge loans unless they've valid collaterals, but they can manage soft loans based on your credit record. Another advantage is that it's collateral evaluation process cum funds distribution is faster compared to bank loans.

I would guess that when it comes to participating, there could be rules. It means that if the people could have multiple key holders, as in money can't be taken out quickly, then we could have a group where it has to be a vote that requires any money going in or out. This way you can prevent unwanted situations like those.

I am not saying this would be the ideal situation, but it would not be a terrible one either; it could work very well if it's done good. This isn't a simple task, but it isn't a very difficult one neither, you can arrange the system that way.

[Obim34]

It works if the people involved are understanding and trustworthy.  I know people who said they wouldn't have had saying or invested if not for this local savings scheme. The advantage is that there are no charges or interest for any financial transaction carried out within the contribution group. Since it is not a formal organisation, they are also flexible options that can be beneficial to members. I had a bad experience in one of these groups, and I decided to avoid the setup.

It is still in practice, and it does make sense. People don't put their life savings into that kind of savings, most times people indulging in the contribution are into it because of something they planned spending on during the end of the year.

This type of savings is done among the people with similar interests, business or neighbours that are capable, not just open to anyone, I have a first hand experience in this kind of savings, and it helps small business owners to save something at the end of the year.

[Stormisover]

It works if the people involved are understanding and trustworthy.  I know people who said they wouldn't have had saying or invested if not for this local savings scheme. The advantage is that there are no charges or interest for any financial transaction carried out within the contribution group. Since it is not a formal organisation, they are also flexible options that can be beneficial to members. I had a bad experience in one of these groups, and I decided to avoid the setup.

It is still in practice, and it does make sense. People don't put their life savings into that kind of savings, most times people indulging in the contribution are into it because of something they planned spending on during the end of the year.

This type of savings is done among the people with similar interests, business or neighbours that are capable, not just open to anyone, I have a first hand experience in this kind of savings, and it helps small business owners to save something at the end of the year.

Hearing some stories about this kind of saving, it can be really discouraging but however, it is very important that the money one is putting there should not in any way be part of their life saving. I know of one that the money just got missing at when it was close time for it to be shared accordingly, but I understood one thing which is, the money was never kept in the bank red flag, and the treasurer doesn't have a reputation character, it ended in fight and quarrels till date the money has not been recovered, I belong to one of this group anyways things has really been good and I never regretted joining.

[Obim34]

~snip.

There is financial discrimination in this situation, whoever coordinates and those belonging all have a financial level to where it becomes difficult to assume they can default, there are levels to it, those who are below capable are not allowed to join.

I know about this kind of cooperative, that is near a decade now, every cooperation has a reputation, check their operations before joining.

[Ever-young]

Like you called it, traditional savings group, if it ever needs any advancement, it wouldn’t be much, what this group actually needs is people with integrity. People without ulterior motives. Because things to put in consideration is the people and their sources of income. This problems most times arises from having participants that are not doing anything to earn income.

That’s by the way if there should be an advancement, I suggest introduction of collateral medium where if you don’t pay you loose the item, and the  item must worth more than the money. I dont think too much needs to be done about it else it will shift from what it originally is.

[Versatile_choice]

Hearing some stories about this kind of saving, it can be really discouraging but however, it is very important that the money one is putting there should not in any way be part of their life saving. I know of one that the money just got missing at when it was close time for it to be shared accordingly, but I understood one thing which is, the money was never kept in the bank red flag, and the treasurer doesn't have a reputation character, it ended in fight and quarrels till date the money has not been recovered, I belong to one of this group anyways things has really been good and I never regretted joining.

Yeah, many people made this mistake of investing their life savings in this traditional savings and I must say that some really enjoyed it while some end up regretting. when I made some investigations to see the reason why Many have chosen to invest their whole savings in traditional savings, then I find out that those who chose to throw all their money in traditional savings are those that doesn't know how to save by themselves if not giving It out to someone or through this method. Although I quite agree with this method but sometimes we also need to consider the risk in given out our life savings to someone to hold even though the person has a good reputation yet it's not safe because scammers could attack him some day.