Stokvels: Make your Stokvel Payout Work for You

STOKVELS

MAKE YOUR STOKVEL PAYOUT WORK FOR YOU! Paving the way to a more financially secure future

Many people make the mistake of thinking that their stokvel payouts are lump sums that they can spend all at once. Our payouts are usually spent on food and, more often than not, we splurge on gifts for ourselves and our loved ones – often buying unnecessary items. We have all made the mistake of spending the money in our heads before getting the actual payout, but what if we looked at our payout as an opportunity for wealth creation, a means to deplete some debt or as a financial cushion for a rainy day? What would be the best way to utilise this money? Here are some ways to make your stokvel payout work for you.

The importance of saving for that rainy day

Emergencies can happen at any time and are a normal part of life. How prepared will you be when emergencies arise? Emergencies often require money and if you are ill-prepared, you may be forced

"Many South Africans don’t make adequate provision for their retirement, and often end up relying on their children to provide for them in old age."

to take out a loan and open yourself up to risks that might impact your finances for years to come. Be smart, think ahead and use part of your stokvel payout every year to save for rainy days.

Budget wisely

Bad spending habits get us into debt. Plan your spending in advance by creating a budget that will prevent any impulse purchases. Most importantly, keep a close eye on all aspects of your financial affairs throughout the year. While saving is a wise thing to do, spoiling yourself a little with a small portion of the stokvel payout is not a crime.

Pay off debt

If you have any debt on an account, credit card, home loan or car, make an effort to pay these off as soon as you can. Any credit agreement comes with interest charges, and this interest will continue to add to the amount you owe. By paying off the debt you have, you will save on the interest being added to the debt every month. Start off by paying the account you are closest to paying off, or pay the debt with the highest interest rate. Improving your credit score is a direct benefit to you when you pay what you owe ahead of time.

Invest in education and your retirement

The financial decisions that you make today will make a huge difference to your children’s future. The cost of education is increasing every year. Investing some money from your stokvel payout for your children’s education means that you will be able to provide for their tertiary education. Investing in your retirement is equally as important. Many South Africans don’t make adequate provision for their retirement, and often end up relying on their children to provide for them in old age. There are also many pensioners who rely on the state for grants. It is a well-known fact that state grants barely cover the basic needs of a pensioner. Plan ahead for your retirement by putting away an amount from your stokvel payout every year.

Those dreaded grudge purchases

Remember those terrible things that we know we have to pay for, but don’t particularly want to pay? Whether your vehicle needs a new set of tyres or shocks or your home is crying out for some maintenance work, we all have grudge purchases. Spending money on your home or car is necessary. Any maintenance work that requires immediate attention should be attended to using a portion of your payout. Your stokvel payout is the result of many months of responsible saving on your behalf – use (or save) your hard-earned cash wisely, and pave the way to a more financially secure future.