Stokvels are not a new phenomenon to the majority of South Africans who grew up in and around townships with black women-lead families. The collective power of burial stokvels form a big part of our collective psyche and for most, the earliest introduction to the camaraderie of stokvels and financial literacy. Stokvels have come a long way from being just for burials and small investments, and have rather evolved to high budget stokvels where young professionals can pool their resources to reach common material goals like owning property and getting big investments under their belts.
If you don’t know what a stokvel is and are looking for ways to make your money work for you, especially in this economy, you’ve come to the right place. A stokvel could do wonders for you in reaching your set mid or long-term goals. Here’s what you need to know about stokvels.
What is a stokvel?
A stokvel is made up of several people who pool together and contribute a certain amount of money a month towards reaching a set goal. The members collectively assign the designated member who receives a lump sum each respective month and it rotates.
How does a stokvel make money?
Stokvels make money in various ways, including purchasing items that they can rent out at a fee for special occasions like catering pots and gas stoves. The members pool money together to purchase said items and they get to share in the profits of those items plus get to use these things when they have occasions that call for it.
Stokvels also help you save money for short or mid-term goals because unlike putting it into a bank account where you can easily access it, you can’t get the money until your designated month – this works well for people who struggle with discipline when saving for something.
Another way stokvels make money is the affiliate marketing structure where the more people you get to sign-up, the more money you make. This model is prevalent in WhatsApp stokvels.
How do I join a stokvel?
Start your stokvel with your group of friends, colleagues or people in your neighbourhood that you trust. Starting a stokvel is easy if you do it with people who you share common interests or goals with. A good example is people who have a shared culinary interest aspiring to get the latest set of Le Creuset pots or colleagues who have different reasons for wanting a lump sum on specified months. Starting your stokvel is the way to go if you don’t know anyone who is already in one.
How to start your own stokvel?
Starting your stokvel is easy:
- Decide on the type of stokvel and the rules
- Recruit members from your inner circle
- Open a stokvel account. All major banks in South Africa have stokvel accounts
- Put money in
- Reap the rewards
Whether it be for a steady flow of income during the pandemic, or a specific financial goal you want to reach, stokvels are a viable option to reach your goals and make your money do all the work.