By Marianne Graff
Published March 25, 2025
When I first heard about tandas, I thought it was a waste of time when you can just save up money on your own and wind up with the same amount.
But after participating in one, and setting one up, I see the advantages of this ‘community bank’ idea.
What is a tanda?
A Tanda is a kind of circular economy. Each participant in a tanda agrees to contribute a certain amount on a particular day each month, and then the participants take turns taking the whole ‘pot’. The tanda exists until everybody in the tanda has had a turn to take the ‘pot’. So imagine 10 people participate and each agrees to contribute $1000 on the 15th of each month. One person in the tanda is responsible for organizing this. It’s easily done by setting up a group in What’s App or Telegram where the participants can post messages and the person whose turn it is to receive the tanda money can post their bank transfer details or offer other ways to pay them.
I set up a tanda at the suggestion of a friend here in Mexico when I was desperate to generate some money to buy a new computer. I was amazed that by just saying ‘hey I ‘m starting a tanda’ that even people I only slightly knew agreed to participate and it’s gone like clockwork, with no one ever defaulting on their monthly payment.
I ran it again, with almost all the same people and a few more in year two to pay for a move to a new house.
It’s been surprisingly easy to form this little community of trust. I have had people invite their friends to participate, and vouch for their trustworthiness, and it all has worked out great.
From the original 8, we have expanded our group to 11 people. The ‘pot’ that the monthly recipient receives is a nice round number, $10,000 pesos. The tanda now lasts for 11 months of the year.
The only downside is if someone doesn’t pay as promised. Traditionally, the person organizing the tanda should pay the missing amount, which would be a hardship for sure. Luckily, that has never happened to me.
We don’t meet up in person, and only communicate by What’s App messages, and it has worked fine. Once in awhile we post photos of a cash hand-off to the recipient, and it feels like a party. It only takes about an hour a month to coordinate, if I add up the time spent sending messages and checking the messages to the group. I send one message at the beginning of the month to remind people whose turn it is to receive, and then send a reminder 3 days before, asking the recipient to post details about how they prefer to recieve the money from all the tanda participants. Then I follow up with a few messages sent personally to people in case someone forgot or got paid late. Then after the last person has paid and the recipient confirms they have received all the money due to them that month, I post a checklist to confirm our progress through the year.
It looks like this.
Easy Peasey!
What are the advantages of participating in a tanda?
The benefits are that it is a quick way to fundraise for a big purchase, or fund an annual vacation or pay for special gifts when it’s your birthday or Christmas.
It’s a windfall, and feels like winning the lottery.
This can be a good way to get something in advance of having all the cash to pay for it upfront, without using credit and paying interest.
The person organizing the tanda does not take a cut (at least, not the way I organized my tanda, although I am sure some people do that).
Many people in Mexico find it easier to come up with the money each month if someone is expecting them to pay them, compared to trying to saving money up by themselves. People find it easier not to honour agreements with themselves than with others.
Why do Tandas work so well?
This is in part because Mexicans don’t trust banks, due to some bad experiences in their collective past, and in part because they are terrible at saving up money.
Tandas tap into the great pride Mexicans place in maintaining a good reputation in their community. It’s easier for most Mexicans I know to participate in a tanda, and be honour-bound and motivated to pay the money they agreed to pay on a particular day each month, rather than try to save it up on their own.
Other Types of Tandas
In fact, I participated in a similar ‘circular economy’ in Canada years ago. It was called ‘birthday clubs’ since the order of receiving the ‘pot’ is decided by birth month instead of first come, first served as it tends to be in Mexico.
I also know clothing clubs in Canada that followed the same premise. I know of clothing clubs for recently graduated students who needed to buy work clothes and something nice to wear for job interviews. I know of similar clubs that started up to pay for lingerie.
I personally need a club like this to pay for a new computer or cell phone once a year!
I seem to break my cell phone or have a laptop meltdown annually, and I can’t function without it.
I think they would be a wonderful way for single moms in any country to gather together and support each other and generate a windfall of cash they could put to good use for something big, or an annual expense like insurance that is otherwise difficult to pay for in one lump sum.
Even better would be to set up a tanda where people met and shared a potluck dinner or coffee once a month, I think, with a personal delivery of the cash to the month’s recipient. I know this is often done in other types of Gifting Economites, also called ‘Collaborative Economies’, which I also have experience with, and will write about in another article soon.