For a great number of people (here I will safely focus on Nigeria where saving through group contribution is a common experience, to a large percentage of classes of income), group contribution is seen as a great way to save money or raise large amounts of money to enable one make large purchases or payments than your regular monthly income would permit you to.
The idea behind this group contribution is basically to agree with a group of persons mostly work colleagues or/and friends to come together and pick turns for each member of the group to receive an agreed amount donated equally by all other members of the group. The group could be as few as five persons or as large as ten to twenty persons. This means that if for instance you have agree that there will be a total of say ten persons making up that group and each person is to donate say ten thousand naira per pay period within the duration or lifespan of that group contribution cycle, you all come together to agree on when the start month would be (a lot of people start from January for easy management) and then choose who receives the group donations in each of ten months; that is January to October. A total of a hundred thousand naira is due this way to each person as their turn to receive the donation comes up. This amount includes of course the recipient's own donation as well . At the end of the duration, if the group is interested in continuing, they may decide to reshuffle turns or maintain the same arrangement.
The donation amount varies. The amount is usually highly dependent on the income level of those involved. Most times, the group is formed among work colleagues as it is easier to know when salaries are paid and also to easily keep tab on every member of the group.
It might sound like a lot of fun and a very good way to save and raise money and I honestly can not dispute that because when you receive your share of the donations, you are empowered to make purchases to the tune that would normally take you a long time to achieve on your own.
Now this does not go without risks as there could be an unexpected death or one form of mishap to one or more members of the group. There might be other types of risks involved and the problem of determining how those who were yet to receive their own donations would be compensated, leading to a lot of disagreements and so on.
I have been particularly involved in this group contributions on various levels and felt that it had helped me settle a lot of bills, but the moment I decided to take my finances by the horn (figuratively), it dawned on me that I really did not need to raise or save money that way. I was practically tied down after receiving my donation and could not do anything about it until the period of the contribution elapsed. There really was no freedom per se. Real freedom actually comes with having your income at the end of each pay period 100% and being able to decide what to do with it. Osusu to my opinion after delving into it for years, is actually another face of slavery too because as long as you have people to settle each pay period, you can not spend as you would like to.
The only instance when this conclusion may vary is for when you are disciplined enough to keep most of the lump sum you collect when it comes to your turn to receive the donation, however a great percentage of persons do not do this.
The driving factor behind this means of raising money is mostly to easily get a lump sum amount of money. Funny enough, all that is really needed is to properly budget your income and ensure you have a substantial amount going to savings. If you require a particular huge expense to be made, you just needed to add it to your wish-list and then begin to work financially towards it. One way you could work towards achieving that target is through what is referred to as sinking funds.
Following a sinking funds routine requires that you first decide on one or more things you would like to purchase or pay for. It could range from clothing, a car, rent, school fees, a house, name it. After you have decide on these, you calculate how much it would cost to pay for them and for how long you might need to put some money aside for this venture, and then start keeping said money aside with every income you receive.
There are various ways you could consider to put away the money being saved. It could be in an envelope labelled with the purpose of that sinking fund and kept aside, for those operating the cash envelope system. Keeping aside also could be in the bank. Personally I automate my sinking funds in the bank from the amount I have kept as lump sum for saving. What I do here is instruct my bank to periodically on a given date each month, deduct a specific amount of money from my savings account into another account intended for a particular savings goal such as when I need to plan to attend my church's annual international conference, when saving for Christmas or my next wardrobe makeover, which by the way I now do quite low key. Frugal is the word baby!
Yes I no longer buy my clothing whenever like I used to do. I learnt from some acquaintance the importance of periodic wardrobe replacement. So now I do this in a particular time each year putting into consideration when prices for such items have dipped a bit. One good thing about automating your sinking funds is that you cannot withdraw from that account until the end date is reached and so you are sure that you will never have a shortfall as a result. I need to sound here that you need to determine what is okay to automate. Emergency funds for instance should never be automated with a freeze on the account because even though you should never spend your emergency money unless there is a real emergency, an emergency can come up at the least unexpected time. So you want to make your emergency fund sort of readily available.
I realize that it could be a Herculean feat to de-programme the minds of many people to understand that Osusu does not really solve your problem. It could even plunge the undisciplined person into more money problems because if you are not disciplined with money, when you receive your bulk contribution payment, you would have a tough time effectively managing your money. So one could become a serious debtor just by partnering in an Osusu venture.
With this said I strongly advice training yourself to be money disciplined and to manage your money yourself.
I am aware of certain persons who hand over the amount of money that they want saved to someone they think they can trust to keep safe for them until they need it. Sadly, although this has worked for some, what is to say that the person holding your money may not need cash so much that they decide to borrow yours and may not be able to put it back by the time you need to use your money or heck make away with your hard earnings for that matter?
So you see, Osusu or what ever way you might be keeping money away, managing your own money is still unrivaled in my opinion. It gives you freedom that you cannot have in most of the other ways. This coming from someone who has ventured into these other money saving methods.
We would like to have your comment on your opinion about the Osusu or group contribution for saving money strategy.
Life would have been so much easier for many of us if only we had paid closer attention to what we heard and saw around us that are useful for our personal application. One of such is the simple ways that monies were efficiently managed in homes in times past to the
