In the financial world they call it a Rotating Credit and Savings Association. A snap definition is as follows:

A Rotating Credit and Savings Association or ROSCA is an alternative financial vehicle in which a group of people fills the role of an informal financial institution. This happens via repeated contributions and withdrawals to and from a common fund.  — source

Rotating Credit and Savings Association (ROSCA)

A Rotating Credit and Savings Association or ROSCA is an alternative financial vehicle in which a group of individuals fills the role of an informal financial institution. This happens via repeated contributions and withdrawals to and from a common fund. Rotating Credit and Savings Associations are most common in developing economies or among immigrant groups in the developed world.

When I first heard of a rotating credit and savings association, it was on Twitter.

And scrolling through the thread, I came to a WaPo article. After getting familiar with the idea I thought it would be useful, especially for people who are like-minded and willing to try something different. It won’t work without a tight circle though.

It’s not something new either. Having read through a couple of pieces, it’s a tool that’s been used for some time and it even caught attention from the Fed.

However, the reason to being excited is because yes, there’s money involved, but mainly because we’re building a system, and a system of trust with people who are able to give. I can’t emphasize this enough. But not does it require trust, it requires respect for the group and an understanding to why it’s formed!

But I would recommend it be done within the community where people can meet face-to-face and because with technology being available, people could use tools available for this purpose (i.e. web chats, cash sending apps, private messaging forums), but it could backfire or become unnecessary red tape, something that’s avoidedable when things are hand-to-hand.

People can always work a job, keep up a business and earn money the regular way of course. But what’s not smart about setting aside funds and being involved in one of these with close friends, family or partners? It’s not to say it wouldn’t be helpful because it would and for multiple reasons. I know I’ll be setting one up and in a way that gives back more than monthly payments. More on this later.

All in all, I urge whoever is reading this to think about it because I have and would definitely carry out this in my community. The idea is simple but most importantly decentralized, so anybody can get involved. It requires trust, a purpose and long-term planning, and that ultimately means commitment to someone other than ourselves.

Free Flow

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