Last fall, Jina Kim and two of her friends treated themselves to a two-day stay at Ananti at Busan Cove, a luxury resort in Busan, South Korea.
The resort, whose rooms start at $369 a night, features infinity pools, spas, eight restaurants, a private coastal hiking and beach area, and a 4,600-meter-long “water house” – an indoor pool and sauna filled with natural thermal water be fed.
“We just spent the whole day at the resort hotel, swimming, eating and drinking,” said Ms. Kim, a 32-year-old former teacher who is now a homemaker.
Ms. Kim and her friends weren’t worried about how they would pay for the trip because they had spent over a decade saving in a “gyemoim,” a Korean term for people who form financial planning groups to raise money for future expenses to save.
Forming Gyemoim groups can help friends or families split travel costs evenly so that everyone can participate, regardless of their personal budget.
“Honestly, if we hadn’t made the Gyemoim, it would have been too difficult for us to organize such a trip,” Ms. Kim said. “It would have cost too much and we didn’t want other members to feel pressured by it.”
Maintain relationships through saving
Collective financial planning has a long history in many parts of the world.
“This is actually not unique to South Korea,” said Euncheol Shin, an associate professor of economics at the KAIST College of Business in Seoul. “This practice arose because there was no financial market and if you wanted to borrow some money you had to finance yourself.”
Dr. Shin gave the example of a village 200 years ago that had to buy seeds to grow rice. The financial structures for taking out loans were not yet in place in many places, so the villages pooled their money, bought supplies and divided up the proceeds.
Over time, this practice evolved into a way to strengthen friendships and bind communities together.
Each member of a Gyemoim essentially contributes “club dues” – often between $10 and $50 per month, with the amount determined by the group. As the balance increases, members discuss how they can spend it together.
Ms Kim first started a Gyemoim with two friends after they met at a social club in 2014. The three attended different colleges and believed that the Gyemoim would allow them to meet regularly.
Initially, both agreed to contribute 15,000 won, or about $13, every month. Over the next decade, they saved more than 3,000,000 won, or about $2,200, before deciding to spend the money on a trip to Ananti, the resort. By this point, the three friends were already busy with their own careers and families, but they remained close, in part because of the Gyemoim.
“It allowed us to stay in touch and have quality time together without having to worry about the cost,” Ms Kim said.
Young-hoon Lee, 35, said his mother escorted the Gyemoim to their home.
Mr. Lee, a teaching assistant at an English language academy, is part of a gyemoim made up of two women and four men, all of whom contribute 50,000 Korean won, or about $36, each month.
“We became close friends in high school and remained friends into adulthood,” he said. “At first we just got together to have fun, but when everyone started working we started thinking more about the future. While it is important to maintain our friendship, we have also chosen to support each other during important life events such as weddings and funerals.”
Mr. Lee’s Gyemoim typically uses his shared resources to reconnect a few times a year, usually to enjoy a Korean barbecue meal or fried chicken and beer.
Ms. Kim also traveled to Vietnam with another Gyemoim in late April. The trip cost much less than her stay at Ananti, although she said her group of three women still stayed in a nice hotel and had a great time together.
Why Gyemoims Work in South Korea
Gyemoim groups are able to operate in South Korea due to the nature of social interactions and the country’s culture of trust.
For example, in South Korea, you could go to a cafe in Seoul and leave your bag, laptop, and wallet full of credit cards and cash unattended at your seat and go to the bathroom without worrying whether everything will be there when you come get back.
“Let’s say you and I are friends,” said Dr. Shin. “We grew up in a small town for a long time. We know everything about each other. If I borrow some money and don’t pay it back, then you’re going to say, ‘Hey, everyone, Euncheol borrowed some money from me, and he never paid me back.'” Due to the collective nature of social groups, explained Dr. Shin, he would be ostracized by the people in his community.
Forming a savings group is so common in South Korea that a bank adapts to this custom. KakaoBank, a branch of the country’s most popular communication app, KakaoTalk, now offers a Gyemoim group account product where friends can share a bank account managed by a specific account holder.
Mr. Lee and Ms. Kim founded their Gyemoim groups before KakaoBank existed and entrusted their funds to a member of their savings circle. Some groups, like Mr. Lee’s, still prefer this “old-fashioned” method of raising money. Mr Lee said one of his groups decided by majority vote who should be entrusted with the money.
Both of Ms. Kim’s Gyemoim groups now use the KakaoBank option as it allows all members to see their pooled money moving around their account, earning up to 2 percent interest. The account manager is the only person who has control over how the money is used, but everyone deposits. Users can set reminders to transfer their monthly contributions to the account and communicate using the app’s chat feature.
Gyemoim groups don’t last forever. Circumstances change, friends may come into conflict, someone no longer wants to participate, or a new person wants to participate. When that happens, it is up to the collective to decide how to deal with it.
“There are no specific rules for running a group, although in some groups other people have made their own rules,” Ms. Kim said. “But my groups never really had rules.”
Ms. Kim’s Gyemoim who visited Busan used to include another friend who decided to retire a few years ago for financial reasons.
“In our case,” she said, “we asked her what she wanted to do with her share of the money.” She decided to get her share refunded rather than use it. ”
While there was a peaceful farewell in Ms. Kim’s Gyemoim, disagreements are also not uncommon. Ms Kim said she had a friend who was part of a Gyemoim that disbanded when its members could not agree on planning a trip. For a group to be successful, members must share similar interests and values, she added.
Could Gyemoim groups work in the US?
No American bank offers a product comparable to the South Korean KakaoBank for Gyemoim groups. To ensure full transparency for all members of your group, the most obvious option is to open a shared checking or savings account so that everyone involved has equal access.
Depending on the size of your group and your proximity to each other, this may be difficult. Banks that don’t have traditional brick-and-mortar locations will most likely have the best options. For example, a representative from Ally Bank, which operates online, said the bank allows up to four co-owners on a spending account.
If you open an account with a bank that incurs fees, factor the costs into everyone’s combined contribution.
Opening a shared account also comes with disadvantages, such as what can happen if a friend wants to leave the group. Depending on the bank, it may be difficult or impossible to remove someone from a joint account without closing the account.
Additionally, unlike an individual account, a joint account grants each person equal legal ownership of the funds in it, regardless of whether the person has deposited all of the money or not. Despite co-ownership, you cannot force anyone to pay contributions into the account.
However, if you want to set up a gyemoim, you can do it the old-fashioned way by choosing a trusted person to be responsible for the pooled funds in a single savings account.
The cultural traditions that allow gyemoims to function well in Korean society are not as present in Western culture, so collective funding can be a bit of a gamble if you don’t know its members well.
Mr. Lee suggested involving at least “one or two trusted people” when forming a group. He also recommended that the group remain open to new members, as circumstances can change unexpectedly and new friends can energize a dormant group.
Mr. Lee also recommended forming groups for a specific purpose, such as meeting regularly to pursue a hobby. Friends who have known each other for a long time, like Ms. Kim and her friends, may easily save money without a specific purpose in mind. But new friends or acquaintances thrive when they have common interests.
“As a Korean who values the sense of community, I like the community culture and hope that more people strive for a culture where everyone gets along well,” said Mr. Lee.
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2024-06-18 04:00:06
www.nytimes.com
