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Money clubs making a comeback

Part support group, part savings tips, part confessional, part feast

By Dana Dratch

Resolving to do better with money? If you're one of those people who finds that a little group support never hurts, you may want to organize a money club.

Savings clubs making a comeback

The reason why most New Year's resolutions fail "is that you're not accountable to anybody but yourself," says Ginita Wall, a CPA, financial planner and director of the Women's Institute for Financial Education (WIFE.org). But with a money club, the group knows about your financial goals, supplements your knowledge and cares about your progress. "It's people helping people," says Wall, who is also co-author of "It's More Than Money -- It's Your Life: the New Money Club for Women." 

The idea has been around for years. A small group of friends, co-workers or, in some cases, complete strangers meet regularly to polish money skills, discuss money challenges and set concrete goals. Don't confuse money clubs with investment clubs, in which members focus on investing skills and may even make investing decisions as a group or pool their money.

Assembling a money club that will get enough traction to help the members stay together long enough to make progress takes more than finding willing participants, setting a date and rustling up hors d'oeuvres.

"You don't have to know about starting a club," says Wall. "You just have to be interested in learning about money." Wall is a big believer in the power of money clubs. One of her websites, TheMoneyClub.org, offers a free "Leader's Guide" to individuals interested in starting a club, and a menu of lesson plans for meetings.

Before forming a money club last fall, one club leader, Trisha, had already whittled down a pile of credit card debt and was living a cash-only lifestyle. The sense of accomplishment and a craving to learn even more pushed her to set up a club.

"I wanted people to start thinking about their money and the control they had," Trisha says. Her personal goals: save for retirement and start an emergency fund.

"I still haven't got it," Trisha admits. But the club is helping, she says. Every day, she finds herself looking hard at her financial choices and buying decisions. "It keeps it at the forefront of your mind," she says.

Money club basics: Who? When? How many? Where?
Who's a good candidate for your money club depends on how you envision the club. Do you want a money club for couples? For women? A mixed group? Next, decide if you want a gathering or friends and neighbors, co-workers, total strangers or a mix of all three.

Some experts tout the benefits of a co-workers club, saying it can build team spirit on the job and will allow already-busy professionals to attend meetings on a lunch break or after work. In some cases, the company may be willing to sponsor the group by providing meeting space, refreshments or access to experts.

Others worry a work-based group may give gossipy co-workers too much private information or that the fear of that would hold members back from having open, honest discussions.

One club rule that's especially important in work-related groups is confidentiality. "Confidentiality must be guaranteed, and people must be willing to be open," says Barbara Stanny, author of  "Overcoming Underearning: A Five-Step Plan to a Richer Life."

We're all broke and we have money issues.

-- Trisha
Money club organizer

Groups may eventually become closed to new members. "We have shared some things and some confidences," says Denisa Tova, a financial planner and business owner who started a money club several years ago. Taking in a new member at this point "wouldn't be fair to the person or the group," she says.

What's the ideal number of members? "More than two, less than 10," says Wall.

Loretta, another group leader, started her club a few weeks ago with a handful of members. "I don't think I want more than 10," she says. "Money is so personal in so many different ways. I'm not going to want 30 people to know these things."

Trisha's club formed around a small group of co-workers. "We're all broke and we have money issues," she says. The two problems that kept coming up repeatedly: debt and savings. "Different people had different issues, but those seemed to be the two major ones," she says.

Loretta's roster consists of a handful of  professional women ages 35 to 50. "We all have common needs and goals," she says.Her personal goal is shedding credit card debt. While her credit score is "really good," and her cards carry super-low rates, she really wants to eliminate those balances and build some financial security. "If we live paycheck to paycheck, that's not going to happen," she says.

Even more important to your money club's success is you want people who are really motivated. "I think you want people involved who are the type who will stick with it," says Wall.

Also consider the skills and experience of each potential member. "Where is this person in life?" says Tova. "What could they contribute to the group?"

Savings clubs' short lives
Recognize that even the most successful groups don't last forever. For the most part, a good one will last about four years, says Wall. "Times change. People get married, move away, or get involved with business," she says. "But anything you can get out of it is great."

One thing you don't want is members who hijack the meetings to generate leads or sell their own products or services. For the club to work, members need to feel free to talk, without worrying that they could end up on a marketing list, get a phone call or be strong-armed by another member to listen to a sales pitch.

This is not a business networking session, says Tova. "I didn't want it to turn into a meat market," she says.

The best way to avoid those situations is to explain the rules upfront -- no soliciting, no breaches of strict confidentiality, no using the meetings for business purposes -- and stick to them.

Meeting strategies
At a money club, members may study a series of books, invite speakers, use one of several free online curricula or a combination of the three.

These strategies, and various mixes of them, seem to work. The real key to building a successful club seems to be matching the material to the group's needs. As a club leader, the one thing you don't want to do is "take everything on -- snacks, experts, topics," says Wall. "You may burn yourself out, and it may strike the others that it's your group and it doesn't matter if they show up or not."

Divide the duties. Alternate responsibilities for hosting, providing food and securing experts or study materials. With food, you can have a different member bring snacks for every meeting, opt for a covered-dish arrangement or meet at a place where everyone can order what they like.

Think about the way you want the group to operate. While you initiated the group, do you want to lead every meeting or alternate? Do you want to elect a leader -- it may not be you -- or have a more informal arrangement?

"Give everyone a role," says Frankel. "That's how you get buy-in."

It's also vital to hit the topics that all of your members want to cover.

It's going to be successful if people are moving forward and reaching their goals.

-- Barbara Stanny    
Personal finance author    

"It's going to be successful if people are moving forward and reaching their goals," says Loretta. "Otherwise, it's just going to turn into a money gripe session."

One tactic that works for a lot of groups is to have members set goals at the first meeting. "Look at your own issues," says Stanny. "Which are keeping you from becoming financially successful?"

What are the topics members want to study? What has to happen in the group for them to consider it a personal success? Then share those lists and use them to select meeting topics.

Balance finances, food, fun
If you want people to come back every week, meetings not only have to be productive. they also have to be fun. One thing that helps keep meetings (and clubs) successful is to have a set time to begin and end, and build in some time to socialize. "The biggest secret is to get to know the people on a social level first," Tova says.

Toward that end, on occasion, her club has hosted several guest speakers -- such as a shaman and a mental health professional -- who spoke on topics that have little to do with finance. Recently, they even went on a group ski weekend.

"Over time, we realized it was about interactions," says Tova, whose club now meets four to six times a year. Initially, the group had "an active agenda" for the meetings, but they also allowed time to chat socially. Over time, the agenda has become much less formal. And when they talk about money, "we blend it with having conversations about life," she says.

One advantage of a money club is that members can help you fill in the blanks between theory and real-world application. It's one thing to study what you should do with your dollars. It's another to figure out how to integrate those written instructions with your own life.

Those bonding experiences are "what keeps people together," she says.

And don't forget the food.

"There has to be food, and it has to be fun," Tova says. "You have to feel conformable with one another. Then you can cover the gamut of just about anything."

See related: 6 tips for choosing a money club , Credit to their generations, How the Amish deal with credit cards and the credit crunch

Published: January 26, 2009


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