Susu is a community based savings practice where family and friends come together in order to borrow and lend money to each other. This is a popular way to save in a lot of countries around the world. Susu is known by different names in different communities like Sou Sou in the Caribbean, Tanda in Mexico, Committee in South Asia, and so on.
How does a Susu work?
A group of people get together and contribute a set amount towards the financial goal of one person in the group. This happens every week or month where the money is distributed to a different member in rotation, until everyone has received a payout towards their financial goals.
The payout can range from a few dollars to hundreds of dollars based on the economic capability of the group. Users start groups with friends and family to achieve short term financial goals like starting a business, paying medical bills, tuition fees, a down payment for a home and more.
Members are put in a queue based on need, in order to get their payout, but a lottery system could ascertain who gets a payout when as well. An organizer collects these payments and distributes them. The group is usually family and friends who are trustworthy.
What is the history of Susu?
Susu or Sou-sou, comes from the Yoruba term “esusu,” originated in West Africa, but is practiced in many African and Caribbean countries. Esusu describes traditional forms of cooperation in African societies whereby groups of individuals contribute to informal savings and credit associations for their mutual benefit.
This type of savings is practiced in over 200 countries all around the world. Poor financial structures or red tap-ism could be a reason to use this savings mechanism which relies on community instead of formal banking institutions. Such methods of savings also thrive in places and times of economic and political unrest when communities band together to help each other out. Many immigrants from such countries bring this practice with them to the United States. Popular groups of people practicing informal savings include Caribbeans, Latin Americans, Africans and Asians.
Why do people do Susus?
For those jeering at this type of savings as regressive and old school, saving groups have been instrumental in launching many immigrant businesses in the US. Immigrants with no credit or savings tend to rely on their friends and family in their new home country versus formal banking institutions or credit card companies, which won’t lend to them in the first place. Pooling resources in the time of need has helped minority groups build collective and individual wealth.
The success of Asian and West Indian small-business owners can be attributable to the existence of similar savings groups, which can serve as a source of start-up capital according to a white paper by the Federal Reserve Bank of Philadelphia on Alternative Financial Vehicles.
Immigrant incomes can vary week to week and season to season and expenses can be just as unpredictable: health care, car repairs, rent, or a death or an illness will almost certainly occur, but without financial buffers in place, these costs set families back substantially. Immigrant households save up in groups to transform income that is irregular, uncertain, and low into regular, predictable, and meaningful sums of cash according to a white paper called How to Achieve the American Dream on an Immigrant’s income by Jeffery Ashe and Kim Wilson.
Why are Susus important in day and age?
Economic cooperative structures like Susu are important in today's day and age given the increasingly hostile political and economic climate that immigrants are facing. Gordon Nembhard, political economist specializing in community economics, traces self-help groups of African Americans to the 1700's, when people created cooperatives as a way to resist racism. The book Susu and Susunomics states how communities such as refugees from World War II Europe and Afro-Caribbean people have used susu and economic nationalism to build up collective and individual wealth through unity, cooperation and the pooling of their resources.
What are some Susu success stories?
Alicia Villanueva came to the U.S. a few years ago, looking to make a better life for her three kids. She started out cleaning houses and taking care of disabled people, but Villanueva really wanted to start her own business selling tamales. Read her story on NPR.
Trustworthy friends in Alejandrina Gil’s sociedade use their $16,000 pots to build homes, start businesses and accumulate nest eggs. Read her story on the Daily News.
Marie Lumen Clersaint runs the largest and most consistent sou-sous in her community in Brooklyn. She’s also known for deciding the order of the recipients’ payout based on specific requests from people who know they will need the money by a certain date. Read her story on the Grio.
What is next for Susus?
Susu’s are a great way to save money fast because your savings are literally powered by the savings of others and vice versa. You can have access to $1000 by having just saved $100 because the $900 comes from your other nine friends who want you to reach your financial goal.
One of the best uses of a Susu is to pay off a loan or a credit card balance that is accruing interest. If you are waiting for the day when you have enough saved to pay off that credit card balance, you will also be paying a fat interest on that money. So firing up a susu where you get one of the first few payouts to pay off a short term loan or a credit card is smart.
A Susu can also act as a payment plan where you get to pay off a big purchase in installments. For example if you want to buy a piece of furniture that costs you $800. You can get the money as a lump sum from your susu and buy your couch and while continuing to pay $100 into your susu.
According to the research paper by the US Financial Diaries, people often save in groups because of the commitment feature and social support that savings groups provide. These are the attributes that a research participant Melinda Perez, a 51 year old Colombian woman living in NYC values in her savings group, and they are core reasons why she has stayed in the group for five years. Contributing to the group is a responsibility; she is forced to save on a regular basis—and the money remains stashed away until it’s her turn to receive a payout.
Commitment to saving for yourself and helping others also reach their financial goal is what makes Susus and other similar saving groups practices so effective. One could say that a newer automated version of this ancient way of saving can clear the path for the future of saving.