Understanding jam’iya or social savings clubs

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The Kingdom of Saudi Arabia conducted a study in 2018 that looked into consumers’ money habits. One of the interesting data showed how consumers mainly rely on banking institutes to save money, but the next most popular option is through a social savings club!

If you’re looking for an effective way to save money, we’ve got one for you: social savings club (aka jam’iya)!

What is a social savings club?

Imagine a group of friends or family members coming together with a common goal: to save money together. That’s essentially what a social savings club or a jam’iya is all about.

The practice is called rotating scoring and credit associations (ROSCA).

It’s a traditional form of saving where members pool their resources, typically on a regular basis, and take turns receiving a lump sum.

Here’s how it works
1. Formation

A group of people needs to agree to form a jam’iya. This can be friends from school, relatives, or members of a community.

2. Contributions

Each member agrees to contribute a fixed amount of money to the club regularly. This could be weekly, monthly, or on any agreed-upon schedule.

3. Rotation

Once all members have contributed their share for the cycle, one member receives the pooled sum. The rotation continues until each member has received their share.

4. Consistency

The process repeats over a defined period, ensuring that every member gets a turn to receive the lump sum.

So why should I consider joining a social savings club?

Now that you understand the basics, let’s delve into why social savings clubs can be particularly beneficial for young Saudis in Saudi Arabia:

  1. Cultural and social aspects: in Saudi Arabian culture, community and social connections are highly valued. Joining a social savings club allows you to strengthen bonds with friends or family members while working towards a common financial goal.
  2. Financial discipline: participating in jam’iya instills financial discipline from a young age. By committing to regular contributions and understanding the importance of saving, you develop essential money management skills that will serve them well in the future.
  3. Access to lump sums: need to save up for a big purchase like a new gadget, a special event, or even educational expenses? Social savings clubs provide access to lump sums of money that can help you achieve their goals without the need for traditional loans or credit.
  4. No interest or fees: unlike some formal financial institutions, social savings clubs operate without charging interest or fees. This makes them a cost-effective and accessible way for you to save money.
  5. Support system: in times of need, such as emergencies or unexpected expenses, social savings clubs can serve as a support system. Members can rely on each other for financial assistance, fostering a sense of trust and camaraderie.
How to get started

If you’re interested in joining or starting a social savings club, here are some steps to get you started:

  1. Gather a group: reach out to friends, classmates, or family members who share your interest in saving money.
  2. Set clear guidelines: define the rules and guidelines for your social savings club, including contribution amounts, rotation schedule, and procedures for handling funds.
  3. Establish trust: trust is crucial in a social savings club. Ensure that all members are committed to the group’s goals and are reliable contributors.
  4. Stay organized: keep accurate records of contributions, rotations, and payouts to maintain transparency and accountability within the club.
  5. Enjoy the benefits: as your social savings club progresses, enjoy the sense of accomplishment as you work towards your financial goals together with your fellow members.

Social savings clubs offer young teens and young adults in Saudi Arabia a practical and communal approach to saving money. By joining or forming a club, young Saudis can cultivate important financial habits, access lump sums for their needs, and strengthen social connections within their communities. So why wait? Start your savings journey today and pave the way for a financially secure future!





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