You choose your top 10 friends ”“ the ones you trust with your life. You give them each a number, from one to 10. You add a certain amount of money, and then you have the ingredients to start a tanda.
Tandas ”“ also known as “rotating credit associations” ”“ can serve as a substitute for bank loans. Each member of a tanda puts in the same amount of money each week and then each member has a turn to receive the whole pot.
Tandas provide a way for people to come together as a community and hold each other accountable for saving money.
Many immigrants rely on tandas because of the difficulty of getting credit. Money from the tanda often is used to pay for big things: Quinceañeras, weddings or even for necessities like medical bills.
For Alfonso Estrada, a Boyle Heights resident, tandas are a way “to be able to save money.” Estrada participated in tandas even before he arrived here from Mexico 20 years ago.
Help for Business
Tandas help Alma Diaz, 36, a single mother, run her business and support her children.
“Tandas are a way to save money, and you can use it for what you want. In my case, it’s for my business, because I like to buy merchandise and pay for it all at once,” said Diaz, who owns a small jewelry business.
“Tandas are generally something that poor people do, especially what women do, to maintain a sense of community,” says Bill Maurer, a UC Irvine anthropology professor and director of the Institute for Money, Technology & Financial Inclusion. In Latino communities, the man usually is the main breadwinner, he says. Tandas, which are often led by women, offer a way for women to become financially independent, or at least to have a sense of power over family finances.
The number of members in a tanda determines the number of weeks the tanda lasts. Usually, no more than 10 members belong to a tanda. The member who receives the number one is usually the organizer of the tanda. Every number represents a week or month, and each member picks a number between 1 and 10.
Each week (or month), every participant puts in the same amount, say $25 or $100. Members take turns receiving all the collected donations for the week (or month) they’ve been assigned. Over time, no one puts in more or takes out less than he or she has contributed. In essence, a tanda takes away the temptation to spend money, which is often the hardest part of saving.
Nobody knows when or where tandas originated, but they have been around in Latin America for generations. “A lot of people whose grandmothers participated in a tanda are now themselves interested in how they work” says Maurer. He has observed an increase in tandas as the economy has made it tougher to get loans from banks.
Rosa Flores, who started a tanda after seeing her mother do something similar in Mexico, learned to use tandas to save money. Her mother called it a caja de ahorro or saving box. Her mother’s own struggle to make ends meet inspired Flores to work hard. Flores’ daughter continues the tradition of saving money by participating in tandas.
Risks and Benefits
Participating in tandas, however, can come with risks. In some circumstances, people have run away with the money after receiving their payout, and without paying their share for the other participants. Sisters can fight with each other; husbands can demand the money and family members can run away with the money.
The trick to a successful tanda is finding the right people. “I remember an uncle who never returned with the money from the tanda that he had to pay, and then I had to pay it,” said Estrada. “The good part was that I already had money saved up to continue with the tanda.”
Similar lending clubs show up in other cultures as well, with different names. Cundinas exist in the Caribbean, susus in West Africa, and hui in China. They all serve as a way for people to gather as a community and hold each other accountable for saving money. “The fact that it has been found all over the world is a real testament to its importance in people’s lives,” said Mauer.
Says Diaz: “The tandas certainly help me to avoid owing money to anyone. It gives me a great deal of pleasure to be able to maintain my household by myself and that my children don’t want for anything.”
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