It’s that time of the year. Bulk-buying season or payout season for stokvels!
This can be a stressful time for stokvel members, as there are a number of factors to deal with.
Two-thirds of grocery stokvels make bulk purchases from various retailers and wholesalers once a year, over the last four months of the year.
Two-thirds of grocery stokvels make bulk purchases from various retailers and wholesalers once a year, over the last four months of the year. Here are some frequently asked questions by stokvels when it comes to buying in bulk:
Should we withdraw our cash from the bank to go to retailers to buy?
That's a big NO!
Stokvels are targets for criminals during this time for cash robberies. Stokvel members should rather arrange with the retailer or wholesaler for electronic transfers (EFT) 24-48 hours prior to bulk-buying day, so they don’t carry any cash with them. The bank needs the bank details of the retailer or wholesaler with a reference that will allow the retailer to identify your deposit. The bank will provide you with proof of payment, which you can provide to the retailer or wholesaler in need. Your bank can also write a bank-guaranteed cheque for you - no-one except the person it is made out to can deposit it.
Lastly, stokvels should rather NOT keep their monies with retailers for "convenience". This money doesn’t grow in interest and only benefits the retailer, not the stokvel.
Which stores are best to buy from?
When it comes to store choice, stokvels need to shop around way before bulk-buying day in order to get a store that can meet most of their needs − such as availability and validity of stock. Considerations are price, whether they will get a real beneficial discount as a group (ask for proof if you have to), customer care (they are bringing a lot of money to the retailer, they need to be treated well as important customers) − and added benefits such as offering delivery and packing are also important.
It is important for stokvel representatives to have great negotiation skills to communicate with retailers, so that after the shopping experience they don’t feel hard done by by the retailer. Stokvels have a very high buying power, so they are powerful in the wholesale and retail industry. They must just use their power!
The most anticipated time of the year for many South African families is December. This is not only because of the festive cheer, but because they are stokvel members, and with that comes some temporary financial relief this month. Here are some frequently asked questions by stokvels when it comes to payouts:
Should we share our cash in hand?
That's a big NO!
I encourage members to transfer money directly to their bank accounts. Do all your bookkeeping beforehand and make sure every stokvel member has a bank account. Your local bank branch can arrange for payments to be made directly to individual members’ accounts. And members don’t have to withdraw all their monies when they receive it, they can withdraw the cash in smaller amounts over a few days or swipe bank cards. This way, you minimise the chances of losing money to robbery. Criminals are more likely to target stokvel members as the festive season approaches as they know that they are being paid out for the holidays, so be warned!
What should I do with my payout, if don’t want to spend it on bulk buying?
It is important to have a goal in mind for your stokvel payout, if you are planning not to spend it on bulk buying. Most people have a lot of debt, so target paying at least one of your debts and pay it off. If you have high-interest debt looming over you, payout money can be a way to making a dent in the balance and possibly pay off the debt entirely.
Save some of your payout for rainy days (start or boost your emergency fund). Things like a job loss, natural disaster or even car trouble happen and your emergency fund is for such times. It can give you peace of mind and a backup plan for anything unexpected that may come your way in the new year.
If there is still money remaining from your payout, invest! Why? Because invested money creates money - when you invest, time allows your invested money to grow and compounding makes your money work harder for you; investing also help your money beat inflation (when money buys you less than what it used to); and investing is a step in the right direction to being financially secure. Learn about legitimate investments and/or get a financial advisor and start investing.
The whole process of paying off debt, saving for emergencies and investing doesn’t have to happen in one financial year or payout, for example, you can plan that for the first year, you pay off some debt, the next year, save for emergencies, the following, invest, and so on. And all this cannot be done properly without a budget to reach your goal or plan.
So whether you are bulk buying with your stokvel or getting a payout, do your homework. Make sure you come out as a winner and benefit from being part of a stokvel!
Two lucky stokvel members stand a chance to win a copy of Stokvels - How They Can Make Your Money Work For You. To stand a chance of winning, email your contact details as well as your stokvel group name to firstname.lastname@example.org
About the book:
The South African economy has a secret weapon: stokvels. At present, around R49-billion is saved annually by more than 11-million South Africans in more than 800 000 stokvels. But how can you harness this collective power to achieve your savings goals?
This book simply and clearly explains basic financial principles and how to make sound financial decisions, and contains all the necessary information you need about stokvels, including how stokvels emerged and how they have evolved; how to set up a stokvel, and the admin, challenges and benefits involved in running one; the opportunities stokvels provide and how financial institutions, retailers, corporates and businesses that deal with them can leverage their buying power; and the future landscape of stokvels.
Whether you’re looking to fund your monthly groceries or have set your sights on buying property, joining a stokvel can help you achieve your goal quickly, without having to borrow money from the bank.
Appealing to readers who are already in a stokvel, those who want to be in one, and even those who never thought of joining one, this book explains how to use the power of a collective to save for a goal, make money on investments, and, ultimately, achieve financial security.
About the author:
Palesa Lengolo is a finance professional with 10 years’ experience in financial services in the fields of accounting, investments and banking. With qualifications in accounting science and financial information systems, she is a member of the South African Institute of Business Accountants. While she’s passionate about her corporate career, she is also committed to empowering people with investment and financial education via Palengo Holdings, an investments holding company. Palesa has been featured on CNBC Africa, Metro FM, Moneyweb, Power987 FM, CliffCentral, DStv 157, Soweto TV and YFM.