Setting Up A Rotating Money Club In The UK: Everything You Need To Know
Setting up a money club relies on community and tradition. That’s why rotating money clubs are popular in cultures all over the world — from Bangladeshi committee to Nigerian ajo.
When you move to the UK, it can be difficult to strike a balance between your traditions and local customs. But by setting up a rotating money club, you and your community can share funds the way you always have.
Follow this guide to find out everything you need to know about setting up a money clubin the UK.
- What is a money club and how do they work?
- Why are money clubs used?
- How can I set up a money club in the UK?
- Who should I invite to be part of my money club?
- Is it easy to set up a money club in the UK?
- What are the risks of setting up a money club?
- Spotting fake money clubs
- Is a pardna scheme the same as a money club?
- How technology can help you create a rotating money club
What is a rotating money club and how do they work?
A money club is the academic name for any kind of informal group pooling club. Money clubs are widely used around the world, and are often more commonly known by their local names, such as pardna, gameeya, committees, ayuuto, ajo, susu, tandas, or hagbad.
Each club consists of a group of people known to one another — usually family and friends — who commit to paying a certain amount of money into the group pot each month (or another agreed time period). It's different from other family clubs like Christmas savings clubs at your local butchers or post office.
Every month, one person from the group receives a payout from the pot. Those who receive the money early pay it back over the course of the scheme. People who receive the money later will have contributed enough that they will have built up their funds to be used as they wish.
Why are money clubs used?
Money clubs are a popular alternative to bank loans and other money lending schemes. This is particularly true in Muslim countries, where Islamic law prohibits receiving or paying interest. But communities in dozens of other regions are also known to use money clubs and pardna schemes.
From community support to social networking, there are many benefits to joining or starting a money club:
- Contributing to causes that are important to you and others in your community
- Pooling money without needing a UK bank account
- Receiving money from trusted friends and family, without a defined credit score
- Receiving money from your community without paying interest
At their heart, money clubs are designed to help people build up their funds while building wealth across the entire community. Bloom’s technology enables you to manage your money club from a single central app, creating a safer, easier way to support your friends and family.
How can I set up a money club in the UK?
Money clubs are usually organised by one person. It is the organiser’s responsibility to:
- Collect the details of the club contributors
- Determine how much each person will pay in
- Establish how much money will be contributed and paid out each month
- The order people receive the payout.
The organiser must then track the incoming and outgoing payments to make sure there is always enough money in the pot. They may also need to travel to collect and deliver cash for contributors.
Contributors often pay a token gratitude fee to the organiser, known as tipping or throwing a hand.
Who should I invite to be part of my money club?
Most money clubs consist of family and friendship groups. Some people form money clubs with fellow churchgoers or friends from mosques. They're also popular among work colleagues. That’s because the system relies on trust and community to work effectively.
There’s no limit to how many people you can invite to become part of a money club. The more people you invite, the more money each person will get — but it may also be more difficult to manage.
Is it easy to set up a money club in the UK?
Setting up a money club isn’t always easy, especially if you have a large group of contributors. You need to be very organised, and it helps if you’re a well-known member of the group, so contributors trust you with their money.
You’ll also need to ensure each member pays into the club promptly each month, so the other members can receive their money on time. This sometimes involves collecting and delivering large sums of money from around the country.
However, with the right technology, it can be easy and secure to set up a money club for you, your friends, and your family.
What are the risks of setting up a money club?
There are some risks involved in setting up and being part of an informal money club. For example:
- Carrying cash can make you a target for criminals
- It can be expensive and inconvenient to send or deliver money around the country (or even to the other side of town)
- Organisers will spend a lot of time collecting, withdrawing, and delivering cash
- Organisers must carefully track and send incoming and outgoing money
- If someone stops paying in, it can cause problems for the rest of the club.
Spotting fake money clubs
Money clubs can be the subject of scams. Profiteers and scam artists have been known to set up money clubs with the promise of making money, only to disappear with your cash once you’ve paid into the club.
Money clubs should be built around people you know and trust. To avoid losing money to a fake money club, never transfer money to someone you don’t know, and be wary of schemes that promise big profits.
Is a pardna scheme the same as a money club?
Yes! Money clubs have dozens of names, depending on the community using them. This includes pardna, gameeya, ajo, esusu, committee, and more.
How technology can help you create a money club
Money clubs are steeped in tradition — but that doesn’t mean you can’t use technology to make them easier to manage. Using a purpose-built app like Bloom, you can set up and manage your money club online, while minimising the risk of fake scams, theft, and inconvenient cash delivery.
Bloom offers a trustworthy way to set up and manage your club. It’s also designed to be ethical and Sharia-safe, so people across all communities can benefit from our technology.
Learn more about what Bloom does and who it’s for.