How to Save Money Like an Immigrant

Start Your Own Savings Club

Whether they call them tandas, cundinas or sociedades, these group savings clubs are common among Latino immigrants—in one California study, almost half of immigrant women said they use them.

Here’s how they work: Fulana needs $1,000 to start her tamal business, so she gets 9 friends together, and they all agree to kick in $100 every Sunday, resulting in a $1,000 pot. Then, for the next 10 weeks, they take turns getting the group’s joint savings, until all 10 women have collected. For those who get paid first and then have to keep contributing, the tanda becomes a no-interest loan. For the last to collect, it’s just a simple way to save up for a big purchase. (The collection order depends on the tanda; most use a random, lottery-style system.)

What makes it work? The social pressure. “If I’m just saving on my own, it’s really hard to say I’m going to put this money away,” says Cristela Soto, a Chicana engineer in Shafter, Calif., who uses tandas to pay the taxes on her home. “But when you’re doing a tanda, you feel forced to save, because you don’t want to burn the other people and get a bad reputation.”

Sandra Rivera, a Colombian and Puerto Rican government worker in Washington, D.C., started a 21st century tanda. She and eight friends—all highly educated Latino professionals—have participated in the savings club for the past three years, complete with signed contracts, online banking and a Yahoo e-mail group. Through this method, more than half the members have now bought their first homes. As long as you do the tanda with people you know well and trust, “this is an old tradition that works,” Rivera says. “We don’t have to reinvent the wheel.”