Given the hand-to-mouth existence of many people living in the communities we serve, saving money for larger expenses is challenging. A savings group (also called a Village Savings and Loan Association, or VSLA) offers an economic empowerment solution, in the form of a self-regulated group of 10-30 people who provide financial services to each other.
Savings groups are made up of people who come together voluntarily once a week. Each member is required to buy at least one share every week, which goes into a savings fund. After a few months of contributions, people can borrow from the fund with a service or interest fee and a short-term payback period. Fees paid on loans go back into the group fund, and the members can decide together how to use the money to benefit the community.
Savings groups are strong ways of building social trust and local leadership. They encourage the idea that the people themselves are the key to solving their own problems, rather than handouts or looking to outsiders for aid. Savings groups encourage people to turn to one another for help and see themselves as capable of financial independence.
The hand up you provide could be the turning point for an individual who has expressed a genuine desire to improve his or her circumstances.
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