As a salaried employee, you may find it tough to manage your monthly expenses, EMIs, and family needs with careful planning. But what if you had a simple way to save regularly and also access a large amount of money when you need it most. The best part is you get money without taking a costly loan? That’s exactly what a chit fund offers.
Chit funds are an ideal for employees who want to grow their savings, plan for big expenses, or stay ready for emergencies.
How a Chit Fund Works for Employees
A chit fund is a group of people (subscribers), often fellow professionals, who agree to contribute a fixed amount every month. The total amount collected from all members is called the chit value or pot.
Every month, this pot is given to one member through a simple auction system. The process continues until every member gets the pot once.
The Auction Process
The auction is a crucial part of the chit fund system. Let’s say you’re part of a 20-member chit group, and each person pays ₹5,000 per month. That makes the monthly pot ₹1,00,000.
If you urgently need funds — say for a home repair, medical expense, or your child’s fees — you can bid for the pot by offering to take slightly less than ₹1,00,000. For example, you may say, “I’ll take ₹90,000.” This ₹10,000 is called the discount.
From this discount, the chit fund company takes a small fee and the rest gets shared equally among the other 19 members as a bonus.
You get ₹90,000 when you need it, and others benefit too. In future months, someone else will win the auction when it’s their turn or need.
Why Employees Prefer Chit Funds
For employees, this system works very well:
- You save a fixed amount every month.
- If you need money early, you can bid and get the full chitpot.
- If you don’t need money now, you can wait and get your full share later, but you keep earning a bonus every month.
- You avoid bank loan interest, paperwork, and stress.
Instead of paying EMIs to banks, you are simply saving with your group and borrowing from your own savings network.
Turn Monthly Savings into Financial Support
Chit funds have helped many working professionals send their parents on international trips, pay school fees, handle unexpected medical costs, or even close their loans early.
If you’re a salaried employee looking to manage money wisely, stay ready for big expenses, and avoid high-interest loans, chit funds could be the right financial companion for you.