Is contribution an efficient way of saving money?

[Etini]

In Nigeria, there is what we call contribution. I don't know if it exists in other climes. It is an informal way of saving money. In this system, a group of people comes together and agree on a specific amount. This amount is what every member of the group would contribute. They then decide on the period of contribution. They can decide to contribute monthly or weekly.

Every cycle of the contribution represents one round. And for each round, the pulled funds are given to one member of the group, and it goes round so everyone can be given the bulk sum. I love it because it helps you to save money for big projects. It also helps people go don't have a banking culture to develop a saving habit. This form of saving is supposed to be done only with people who have a high level of trust. It also requires that the group is realistic as regards the amount every member of the group can easily meet up with.

 

[Abigael]

This is a very good method of saving money and it is common in my country Kenya too. In fact, I am in two of such groups myself.

As you said, it has to consist of really trustworthy people and the amount contributed periodically is achievable by all members. It also has to consider the period for giving each member the money. One would get tired waiting for months to receive their savings.

The good thing about these groups is that they help you save with discipline. If you were the one saving your own money, you could easily fall for the temptation of spending your saved money. But in this, you have to wait for a while to get your money.

You can also plan on using this saving method to save for huge projects ahead. Let's say you are saving money to satrt a business, so you contribute to these groups and when you receive you money, it will be such a high amount that is just enough for the business.

 

[Shigobad2020]

Contribution to me is a very good method of saving , most especially when you realises you can't save on your own without spending the money like myself . I am a teacher and I have realises that contribution can help you go a long way in assisting you most especially when you have a target in mind , like you wanted to buy a land , a car or even build a house . You can contribute in group which is the best way or you can rather start your contribution alone by using a piggy bank and having a stipulated amount you will be putting in everyday , weekly or monthly .
Like in my organisation , we contributes ten thousand naira each on month end and we are ten , so one person goes home with a hundred thousand naira monthly , which we do every month for ten months .

 

[Heartstrings]

Contribution is a good method of saving and I really do like it,it has Indeed help so many people in financial aspect and will continue to help. I think this type of contribution is very common all over the world,as it gives one the opportunity to save a huge amount of money,with no interest or what do ever. Infact when it's not yet your own turn to take the money and you need an urgent emergency financial thing to sort out, you can easily plead to be given to sort out your issues,why the said person gives to you on agreement, that yours would be shifted to the person when the time comes.

I like and prefer this type of saving if at all the money is there, because it also gives you some kind of confidence that your money is safe,if at all there is trust between everyone that involves in it.

 

[King bell]

Yes, in 3rd world countries, people save money in forms of contributions. However, that's not the best way to save money.
There are many factors contributing to how much you can save. Contributions are always saved at the current price of what they're lending out and don't put a cap on the amount that can be saved either. These types of saving methods take up a lot more capital than a savings account would.

You have much better saving chances in an investment account which has low interest rates, uses inflationary savings accounts, and doesn't keep track of your contributions month to month like with donations or loans that you make to support people who need it or work for yourself at home as opposed to getting paid through contributions. Those types of saving methods are better ways of saving money than making contributions.

To be more specific, a savings account offers you no interest at all. Investments accounts offer you interest rates that are low and still can put a cap on the amount you want to save. It's not so much about how much you save, but how you save it. Contributions almost always take up more capital than an investment account might, so I would say no because contributing just isn't the best way to save money.