Have you ever heard about Cash Paluwagan before? Paluwagan is an old financial system in the Philippines. It consists of a group of people who will pool their contributions into a common fund. There will be a pay-out done weekly, twice a month or monthly. It is like a saving program where everyone will get paid based on their contributions to the community. If you have a higher contribution then you will yield a higher payment.

It's a decades old since the cash Paluwagan started in the Philippines. Several Filipinos love to join Cash Paluwagan to start saving a money and to be able to have an easier access to borrowing a money as well. Joining this doesn't takes too much of your time since you don't need to submit a lot of requirements. Most of the people who have formed cash paluwagan are just relatives, neighborhood or acquaintances.

The purpose of other Filipinos why they chose to join this informal financial institution is,

• The access to loan money

When one of your family suddenly got an accident and you need an emergency money, Paluwagan might be a big help for you. You can instantly borrow a fund without filling a lot of papers.

• The easier way to start saving

Some Filipinos doesn't own a bank account and they find it hard to save their own money. In order to cut off the bad habits of too much spending, joining a Paluwagan turns into a financial access to reach their goals.

The Paluwagan is said to be a pyramiding scheme

The Filipino cash Paluwagan is said to be a kind of pyramiding scheme. It is because the people who will receive a lot are those early contributors from the community. So the people on top of the Paluwagan system will get the most while the last members will receive a minimum share only especially when the other members will refuse to share their contributions after they have received their pay out.

If you would ask me, the cash Paluwagan is really prone to scams and fraud. Sometimes trust is not enough. This is a risky way to grow your money since they are unregistered and there's no legitimate background or credentials. There's even no guarantee that you would be paid. Cash Paluwagan is a traditional way of investing our money and today there are so many modern ways where we can put our money safely. Money can easily attracts a person and there are possible chances that they will run it away even you have known that person for a long time. Though I know so many people who have been save by joining cash paluwagan as they were able to pay bills, emergency funds and other expenses but I still discourage this method of saving your money. Better put it in a reliable institution.

Open a savings account

The easiest way for you to keep your money is by opening a savings account. There are many reputable banks where you can securely keep your money while you don't need them yet. You can also grow your money by investing in different index funds though you need to be aware that they are also risky and volatile just like the crypto market.

The cash Paluwagan symbolizes the culture and cooperativeness in Philippines. People help each other to grow their money and to help the fellow members in times of financial difficulties. It is really a big help to every Filipinos who have no time to apply for financial loans. However we need to change the old ways in order to protect our hard earned money. We must not settle for something that lacks proper credentials and legitimacy. You can talk and consult to financial advisors or financial experts if you have no knowledge about managing your finances, in that way you will figure out the best way to do with your money.

May 18, 2022

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