Sou-sou

A sou-sou is a type of informal savings club that friends, family or community members might form together.

(Isn’t it strange that the term “savings club” conjures images of gimmicky supermarket rewards programs instead of an actual, social, human-to-human club?)

From the wiki:

The basic principle is that each member of the group makes a standard contribution to a common fund once per time period. Then each period the total contributions are disbursed to a single member of the group. The recipient changes each period in a rotating fashion such that all the members of the group are eventually recipients.

There is so much brilliance packed into this simple setup. Anthony Noto’s startup “social finance” is behind the ball here. We have elements of:

  • Automated savings

  • Certificates of deposit

  • Social credit

  • Communal responsibility

Off the top of my head, I know a dozen people who could immediately benefit from this setup to supercharge their savings. If you didn’t know by now I’ll tell you — your savings rate is arguably the most critical factor to financial success. It’s a big deal!

That said, it’s not insured, pays no interest, and is entirely dependent on the treasurer to get the program administered. I imagine in smaller communities it was less of a consideration that someone would misappropriate the sou-sou pot.

Robinhood, Acorns, and new digital banks are paying top dollar to get new customer deposits, even with instant liquidity outbound 24/7.

Is a sou-sou style shared social savings app coming? I wouldn’t count it out.

Robinson Crawford