Money Pooling between friends

ittunni

Hello everyone,
I am looking for some advice here.
A friend of mine has suggested money pooling as a brilliant idea among us, a small group of friends. I have heard about the scheme, but never got involved in anything like this myself. He suggests that we all contribute a small amount of money every month into a pot and one of the selected members (either random lucky dip or the one who needs money) can get the sum when needed. It appears to be an effective way to fund emergencies. I do understand that the scheme does not offer any savings (interest etc), but I am curious to know more about the legalities and the formal T&Cs that should govern the scheme. Should I agree and what are the risks and implications?
Many thanks in advance.

R_P_W

Ok so you all put some money in for 3 months and lets say for example you have £1k sat there, one of the group says I need the money to fix my car so he takes it. Then next month you say you need some money to fix your boiler.....oh oh - no money in there.

Don't do it, I can't see any real reason why you would want to be part of such a scheme. I think the risks are pretty obvious!

Start your own emergency fund!

jimjames

As above, I really can't understand what the point of a scheme like this is.

Save the money yourself and avoid all the hassle.

BJV

Be very very careful, a little bit of money changes relationships. Really don't want to say why but if possible do not do it. Keep your friends as friends and don't mix finances.

HappyMJ

What would you need emergency money for? If it's for the boiler then get insurance. If it's for the car then get insurance. If it's for the pet dog then get insurance. etc etc etc.... Save up the excess then use it when you make a claim. If you have enough savings you could then choose to self insure some things such as loss or damage to your mobile phone.

nilrem_2

ittunni wrote: »

Should I agree and what are the risks and implications?

Simple answer; Don't! :eek:

oldvicar

HappyMJ wrote: »

What would you need emergency money for? If it's for the boiler then get insurance. If it's for the car then get insurance. If it's for the pet dog then get insurance. etc etc etc.... Save up the excess then use it when you make a claim. If you have enough savings you could then choose to self insure some things such as loss or damage to your mobile phone.

Very expensive all this insurance. And a lot of unecessary paperwork and hassle in claiming. Better IMO to do without the insurance altogether and try to save a little for such 'emergencies'.

jimjames

HappyMJ wrote: »

What would you need emergency money for? If it's for the boiler then get insurance. If it's for the car then get insurance. If it's for the pet dog then get insurance. etc etc etc.... Save up the excess then use it when you make a claim. If you have enough savings you could then choose to self insure some things such as loss or damage to your mobile phone.

Or save up the money you would have paid for insurance and keep it in a savings account to pay for it yourself should a problem arise.

dzug1

Sounds like someone I wouldn't want as a friend. maybe he's short of cash and thinks this is an easy way to get it.

Saturnalia

I'd steer well clear. Don't credit unions work in a similar kind of way but all-legally-binding-and-above-the-table?

missile

Credit union would be a better option. They accept your savings, give you dividend at the year end. Provide you with preferential interest rate loan if and when the need arrises.