Hierarchy of contribution
I got such advice from a preacher, don't waste your time doing contributions. His view was that these things take people nowhere. Ok, many boast they have achieved a lot through the process of contribution. Two sets of people speaking the vice, so who should I side with? I also have to admit I have been in a savings group before while I was a worker. So what was the experience?
So what's the vision of this savings group? To raise money to put into a project or just to use it as a future expense. The idea here is that when many eyes are watching your savings habit, you will have to sit up.
There are always many things to look out for here. Are the people making up the group ‘money worthing’ or better put ‘financeable’. What do I mean here, many may not be able to pay back because of how they see money. They don't see it as a Tool to make more but rather a means of direct expenses.
source
So answering the question of what was my experience in the first paragraph, let me get to the solution; I decided to get my contribution very early. I think I was among the first three and I had my reasons. My friends were depending solely on salary and by then I had kick started my business Journey. I was not ready to risk my salary with anyone that has no other means ‘or tangible means’ to pay up in case he got sacked.
They were ready to comply with me, as I said, me being involved also made others join and yes, they knew they would certainly be able to get back their contribution turns from me. From what I have come to realize in this contribution group, some are taking loans while others are saver.
The latter are the ones benefiting because it is at a zero interest rate. When you are in business, you know what it means to stack a contribution and get your turn in the 12th month, yes, it is a big loss.
An entrepreneur sees money as ‘currency’ and we ALL know the key characteristics of current; to flow. Some have been in a contribution group for years without any positive improvement; they get the loan after 10 months or so and start it over. I mean, we are talking of currency, something that is facing devaluation everyday.
source
So yes from here I can also see the views of the preacher, these contributions most times keep people small. It gives you a very small mentality about money; not thinking about expansion. I mean, how many big businesses save money to get to where they are.
It would have been one tiring process in the absence of interest for compounding. They just get to the banks and take advantage of OPM (Other People's Money). This shows that savings is not that this savings for contribution activities is not really that profitable.
Do you observe that a higher percentage of those who are in these savings contributions are always highly in debt? Their idea is always a one time clearance when they get their turn and they start afresh.
The only advantage I see here as I earlier said is making good use of the hierarchy if you are an entrepreneur trying to get a zero interest loan. For instance, if contributions are to be made by 12 persons for the period of 12 months. The most beneficial person is one who took first (condition being if he/she is an entrepreneur with flywheels to spin interest out).
To conclude, let me add, you know not many of us are good at punching the calculator. Always boring and yes it comes with some ignorant cost. Saving is good, first it helps to trigger discipline.
Nevertheless, do well not to tie yourself round in a smaller Circle year after year. Secondly, don't have the mentality of saving for later expenses, there is no growth here. Learn the habit of investing for a compounding interest. Personally, I feel the standards of these contributions should be adjusted to favor those who take it last; maybe an interest as compensation. It would have made more sense at least.
Posted Using INLEO