With the current high-interest rates being charged by banks, many Kenyans have been forced turn to chamas and saccos for their financial needs.
Merry-go rounds and chamas are becoming a way of life for many and for the low cadre of employees and small-scale business people, subscribing to a chama is more a rule than an exception.
Chamas or informal financial groups, which for some reason tend to constitute mostly women, are used as investment vehicles in Kenya.
Most Chamas at the beginning, start as merry-go-rounds where individuals contribute and they later morph into a financial institution if they are successful enough.
It’s not a secret that Chamas can be a life saver when it comes to paying such things as school fees, pressing bills, and emergencies among others.
But just as they have the advantages, they can also be poisonous when in the wrong group.
People need to exercise sobriety when subscribing to a chama because the members can come with different agendas, some of which are not even related to financial growth.
Some chamas operate on a two tier system where, besides contributing your investment subscriptions, you may be contributing other finances that go into buying gifts for members or is kept separately and doled out as bonus at the end of the year.
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Also, being a member of too many chamas can affect one’s financial commitments. As much as these institutions are good, there are people who are known to have so many of them that at the end of the month, they are left with nothing after contributing money to the various chamas.
Outside finances, chamas can also come with a lot of bad influence which may lead to family splitting or necessary pressures while trying to keep up with the Joneses.
Not forgetting the bad advice women get in some of the meetings.
Some of the bad advice in chamas include: Being told to hide your investments from spouses and family, pressure to go for group retreats that might be expensive and disastrous to relationships, wrong investment information, and misleading agendas from dominant members among others.
A chama that fits your income priorities and is in line with your financial aspirations would be the one to go for.
Yes, Chamas are a great informal way of harnessing capital to bring about self-improvement and achieve financial success. But be careful not to be trapped into someone’s else grand vision or wasting all the lumpsum you have saved on liabilities.