The Money Managers BO
written by
Mala Kumar
illustrated by Deepa
OK 3
Balsavar
Shall we buy a badminton set? Make your own
piggy bank!
Do you know who
Kuber, Dhanadhan and Chanakya are? 1
We spend a big part of our lives using money in some way or the other. Money keeps moving from one place to another, and from one person to another. As we grow up, we learn to make the best use of our money. There are experts who can tell us how to manage our money well. There are many people and institutions who help to make our money grow. We shall call these people or institutions our Money Managers. Some Money Managers help us save, some lend money when we need it, and some others help our money grow. 2
Terrific Trio There are three kinds of money managers. Let's put these managers in three teams called Team Kuber, Team Dhanadhan and Team Chanakya.
TEAM KUBER
TEAM DHANADHAN
TEAM CHANAKYA
The Money Savers The Money Lenders
Those who make money grow
Piggy bank
Money Lender
Bank
Money Collector
Bank
Insurance Company
Chit Fund
Relative
Fund Manager
Bank
Pawn Broker
Self Help Group
Self Help Group
Did you notice that there are some players who are in more than one team? 3
Team Kuber, the Money Savers The simplest kind of manager is a money saver. A piggy bank is what most children use to save money. Money collectors, chit fund organisers, self-help groups and banks help us to save.
I have an idea! Let's save a little every week. When this is full, we can buy our own cricket set!
4
My Fat Piggy The simplest kind of money saver is the Piggy Bank. This is an example of home savings. Piggy banks used to be made with clay, ceramic or glass. One could drop coins or folded notes through a slot on top. The only way to take out the money was to break open the piggy bank. Later, piggy banks came with small openings through which one could take out the money. Now we do not have to break such piggy banks!
The Pygmies are a tribe of small people who live in various parts of Africa. The word pygmy has now come to mean anything small.
Why is he called Pygmy Collector? Lala Lalchand is a huge man. But he is called a pygmy collector. He is not a small-built man like the pygmies, but the money he collects from the people in our community are very small amounts. Why do people give him money? 5
You want to buy a colourful seat cover for your bicycle. Your parents refuse to give you money for that since they don't think it is a necessary purchase. "Buy it with your savings if you want!" says your mother. The temptation to break open the piggy bank is strong. If you do break it, then you are likely to feel bad later since you probably were saving for something bigger, like a football. Grown-ups have the same temptation when they are in charge of their own savings, and when the money saver, like a piggy bank, is close at hand. To avoid such situations, they save money with Money Collectors, or Pygmy Money Collectors like Lala Lalchand. A pygmy collector meets all his clients, or people who have decided to save with him. He collects the savings of each person every day and puts it away in a safe place. He writes down the amount given by each saver in his little book, so that, at the end of the month, both he and the saver knows how much each of them has saved with him.
Quick, take this money before I spend it! What if the money collector runs away?
Before handing over money to anyone, one must always find out if the person is trustworthy. Lala Lalchand is a very senior and respected man in my community. 6
Let's start a Fund! The chit fund is a special kind of saving system that is practised mostly in India. A group of people, let's say 20 people, who want to save together become subscribers to a chit fund. The group decides what the saving amount will be each year. The group also decides when the chit will start and how long it will run.
How does this chit fund work?
We each give `100 a month. That means I give `1,200 a year.
The money is invested. At the end of the year we get back our money and interest on it!
And together, we save 20 x 1200, 24,000 rupees!
And don't forget each month one of us gets to draw out some of the money!
That's great! I want to join this chit fund!
Each month, a meeting is held, one member gets a chance to take a certain amount of money from this collected money. This member is decided by a draw of lots. Or, if a member needs money urgently during that particular month, she asks for it. At the end of 12 months, members have not only earned an interest (called dividend) each month, but also get back their saved money. It is very important to make sure that the chit fund run in your village or community is registered or run by a trustworthy person. 7