A cundina or tanda is a money pool that forces individuals to save money, it is believed to be a global practice started by immigrants from Mexico to help them save more money than what they would have otherwise.
A cundina specifically describes a type of savings group among a group of people. Cundina are also known as tandas, cuchubales and juntas, among other names, depending on the region.
How Does Cundina Or La Tanda Work?
In a cundina, each person contributes a certain amount of money every due date to the group fund. So you may put your $1,000 in an envelope once a month and just hand it over.
For example, if 5 people are in the group and each contributes 1,000 pesos every month, each person would receive a 5,000 peso payment once during a five month period. So when it’s your turn in your cundina – let’s say you have slot #4, in the 4th month, you get a lump sum of cash (tanda money) that you might not be able to save otherwise.
At its core, a cundina is a way to force people to save and not be tempted to spend on impulse buys. The private money pool could be run weekly, monthly, seasonally etc.
Cundina – A Scam That Targets Women?
A cundina or tanda is a traditional lending circle within a community so trust is key. Overall, Latin Americans value trust and reciprocity in their relationships, and lending money is one way to build and strengthen these bonds. When someone lends money to a friend or neighbor, they are demonstrating their faith in that person’s ability to repay the loan.
A cundina is just an informal rotating savings and credit association that operates in areas all over the globe. Historically most participants have been men but in modern times, both men and women participate.
Cundina – Hope For The Unbanked
Unbanked is just what it sounds like, it means you do not have a bank account where your money is collecting interest with a specific institution. A cundina provides a savings type of structure for everyone, including those who are those who are unbanked.
According to studies, over 1.7 billion people worldwide remain unbanked for various reasons.
No Access – In many parts of the world, especially in rural areas, there is a lack of access to banking services. Many people do not have the necessary identification documents required to open a bank account. Sometimes you’ll find these cundina or money pools in areas where access to banking is limited, like parts of Africa or they’ll operate in neighborhoods around a huge urban city like Los Angeles, CA.
Low Income – Many banks require a minimum deposit or balance to be maintained, which can be difficult for people living on low incomes. Additionally, many banking services charge fees for transactions and other services, which can be unaffordable for people living in poverty.
No Trust – Some people do not trust banks due to past experiences or cultural reasons. For example, in some cultures, people prefer to keep their money in cash rather than in a bank account. Additionally, in some countries, there have been cases of banks engaging in unethical practices, which have eroded public trust in the banking system.
The origins of this type of forced saving pool in Mexico are said to have begun around the Gold Rush when Chinese contract workers used their own version of rotating credit association known as ‘hui’. It seemed like a good idea for those who were unbanked and it caught on.
Why Participate In A CUNDINA?
First, we in no way are saying the cundina you were asked to join is 100% legit. Don’t participate in anything that feels like a scam. Second, only participate in something like this if you are ready to 100% assume all the monetary risks. Meaning go into any investment believing you will NOT get your money back.
When you hear about the concept of a money pool run by someone’s aunt (tia), you might think, no way – but your money mindset might be different from your grandparents or even your parents. For example, your grandparents might be hesitant to use banking apps, while you can’t remember the last time you carried cash. It also depends on how you were raised dealing with money.
In Latin America, it’s not weird to lend someone money in an informal setting. For example, family is very important in Latin American culture, and it is not uncommon for family members to lend each other money. Whether it’s to help pay for a medical bill, cover unexpected expenses, or help with a down payment on a house, family members are often the first people Latin Americans turn to when they need financial assistance. So the process of just lending someone money in a ‘cundina’ or ‘tanda’ doesn’t seem risky.
Mexicans are usually raised to value the importance of family, community, and social responsibility. They also understand that the success of their community is directly linked to their individual progress.
Cundina participation is also a highly social event in Latin American culture, often with in person meetings and social elements. Organizers set a start and end date, set how much the buy in is and have clear rules on money distrubutition. Nowadays they could be using Zelle or it could be an all cash situation.
Participants seem to have positive things to say about these types of money pool experiences but there’s always a few bad apples. Safeguards are usually put into place by the host so the first person to receive the lump sum of cash doesn’t stop paying in for the remaining weeks – but realistically, anything can happen.
In Latin American culture, the cundina is all about the group and if you offend the group in some way (aka split with the cash in week 3 and not fulfill your money commitment) there will at least be social consequences, if not criminal.
On the positive side, a cundina offers financial accountability and hope. For example, your contribution could really be the make or break cash infusion someone needed. Maybe they’re struggling to make rent this month, or they need help covering unexpected medical expenses. In these situations, your money pool loan could be the difference between them staying afloat and falling behind on their bills. On the other hand, if you are getting that lump sum of cash it could mean securing a lease for your business at the right time, getting a much needed vehicle or paying for school sooner than you expected.
Overall, Latin Americans have a strong culture of lending and helping each other out. Whether it’s to support family, build trust and reciprocity, or demonstrate a sense of community, lending money is an important part of Latin American culture and values.