Family and Friends Savings Club

Family and Friends Savings Club

A couple years ago, I was reading Latina Magazine and they were discussing ways to save money to fund your business. They mentioned how in the Latin community, it is very common for family and friends to help each other get their business off the ground — they do this by funding it within the family or circle of friends. No outside banks, investors or anything else for that matter. I was really intrigued by this idea. 

Latina Magazine Family Loan Image

Have you considered a “savings club” with your friends and family to help fund your business? Or even pay for something that got broke {car, fridge, washer), down payment on a house or sending someone off to college? I personally would if it is done right and can help the family and friendship bond grow stronger.

As mentioned in the above article, you don’t want to be the person who burns others in the group so there is a “social pressure” of sorts to not be the bad apple. Let’s break down how you can start a beneficial savings club with friends and family.

Selection Process

Not just anyone can be apart of this elite group of friends or family. You want to make sure everyone has a common interest that unites the group to stand together – think of this is a NBA draft pick. To go in the first round is crucial to so many young men, to be in the top 10 is even more pivotal. Create a criteria list for everyone in the group – what characteristic should they have? Are they financial sound with their money? Are they trying to achieve big dreams that impact the community or even the world? Do you consider them loyal, trustworthy and honest? Remember, money can change things so you want someone who is trustworthy.

Legal Aspects

Everyone gets touchy when you talk about money or legal matters. It’s not something you can tiptoe around, nor would I want you to. Simple payment agreements should be signed, stating you are committing your time and money to this savings group. Furthermore, that each member is bounded by this contract and must fulfill the arrangement. You want to protect yourself and your money, perhaps consult a lawyer on what type of contracts and/or agreements you will need to put in place.

Money Breakdown

I believe there should be a loan minimum and a maximum that the group does — simply because you don’t want someone coming into the group needing $10,000 from nine other people, that puts stress on others in the group. Personally, I believe the $1000-$2500 range is a good range divided by ten friends and no one will put stress on each other. Determine the length of time for the loans. We don’t want someone owing money ten years from now. You can create a lottery of sorts or a system for the order of who gets the loans.

Educate The Group On Money

I am firm believer that money is a tool and so many times people literally just do not know how to handle it correctly. Hence the habits of horrible money management skills.The group should meet once a month to work on bettering their finances as a whole and not just depending on the group to fund their business or education or whatever else. This will increase your bond as friends and family. The group is not created just to fund an idea, it’s there to educate also.

What are your thoughts on starting a savings club to help you and friends launch your business? Think this is great idea for the right set of friends and family that want to help each other take it to the next level in all areas of life?

Remember – your questions, suggestions and passions are what helps shape our content: will you please leave a comment or idea about today’s blog and let us know what you think?
 
Photography image by Tracy; image sourced by Flickr Creative Commons

Written by Tasha

  • Elesha

    Great idea. Never thought of this. I may have to bring this up to my closest friends and family members to see what they think about it. Thanks.

    • imperfctconcept

      Yes, I would bring this concept up to them and just see what they think. I think it can truly work if everyone is supportive and on the same page. Sorta of crowd funding but with family and friends

  • Pingback: Establishing A Budget For Your Small Business

  • Pingback: Power of 10 Referrals | Imperfect Concepts