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• Mar. 18, 2019

Our attitude toward money is often influenced by our families and cultures. How we choose to invest, donate, save or spend can serve as valuable financial lessons and teach us important life lessons about how we understand finances.

The tanda is a form of savings between friends, neighbours or coworkers who contribute an agreed upon amount of money to a weekly or monthly pool. These savings are then rotated between individuals in the group who either save this money or use it to make a major purchase that exceeds what they could normally afford.

The tanda is common in Mexico and other Latin American cultures. Similar versions of the tanda using different names (for example, a "cudina") exist in other cultures as well.

How does a tanda work?

Each member gives a set amount of money (for example a portion of a weekly salary) for an agreed amount of time.

Every time the money is collected, someone in the group is given the entire pot either randomly or through a schedule until every person in the group has received a pool (arrangements can be made for those needing emergency funds). For example, a tanda with eight people contributing $200 dollars monthly will take eight months to complete. This means at some point each member would receive a $1,600 lump sum.

The purpose of a tanda

A tanda can occur anytime and is primarily used toward short-term savings goals. In Mexico, tandas are how millions of citizens pay for celebrations, emergencies or a way for people who may not have access to credit to meet their needs.

Making an impact

Growing up in Mexico, Maureen Paredes' watched her mother participate in tandas from a young age.

"The intimate, personal connection my mother had with her group meant that being a part of the tanda requires significant amount of honour and trust between friends."

Part of a family of five—Paredes said beyond paying expenses like bills and mortgage payments that it was challenging for her family to save. And while many people in Mexico don't access, or don't have access to traditional financial services and credit, Paredes' family put the money they collected from tandas into a savings account for different goals and needs.

"It was a great way to save for more immediate indulgences like family vacations, or for longer-term use for things like home renovations without having any guilt," she said.

The lesson learned

Now as an adult, Paredes has taken the habit of saving she learned from the tanda to ensure that both she and her husband are putting money away for short-term and long-term goals such as retirement.

"When I was younger, being able to save was a luxury," she said. "I now have this opportunity to take this knowledge and use savings as an investment in my future."

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