4 Ways Islam Teaches Us To Manage Money Wisely

October 18, 2022
Islamic Finance

Here are the four ways Islam teaches us to manage money and wealth wisely.

It is widely known that money comes without instructions, therefore prioritising our spending is worth some daily reflection. In the current recession and inflation due to wars and pandemic, living within our means has become more crucial than ever. Although, it doesn’t have to mean giving up things that make life enjoyable and things you’re passionate about.

It is only natural that many have seen this as a call to cut back on wants and focus on needs in an effort to resolve financial problems. Today bankruptcies, asset repossessions and job losses have hit historic highs nationwide.

That is why Islam encourages to live within one’s means and discourages living beyond one’s means, because it can lead to excessive borrowing. In an ideal world, financial systems would be based on values such as honesty, credibility and transparency rather than excess and greed.

Being aware of how we live, making good use of our resources and expressing concern for those less fortunate is paramount today as we work to rebuild our nation and give meaning and purpose to our lives. As Muslims we know that wealth, and everything else in the Universe, belongs to and comes from Allah.

Thus, how do we deal with our wealth accordingly?

Table of Contents

1. Wealth is supposed to empower you and everyone around you.

We must admit that wealth can give us pleasure in life, but it can also be a distraction from what is truly important, if it is not handled responsibly. The true believer understands that wealth is part of the worldly matter and they remember that material possessions are left behind when we leave the world. A believer should not save and hoard great sums of money and wealth but best to share and distribute them to those who are in need of it.

As narrated by Abu Aiyub:

A man said to the Prophet (ﷺ) “Tell me of such a deed as will make me enter Paradise.” The people said, “What is the matter with him? What is the matter with him?” The Prophet (ﷺ) said, “He has something to ask. (What he needs greatly) The Prophet (ﷺ) said: (In order to enter Paradise) you should worship Allah and do not ascribe any partners to Him, offer prayer perfectly, pay the Zakat and keep good relations with your Kith and kin.

2. God will provide as He is the All-Provider.

Back in the days before Islam, the pagans would kill their children in fear of poverty. After Islam was introduced, the companions who used to practice this tradition began to abstain from it. As mentioned in our beloved Quran:

“..and be good to parents, and do not kill your children because of poverty – We will give provision to you, and to them,” [Quran 6:151].

God is the provider of all. A true believer does not fear poverty because they trust that God will provide for them. Some believers say that fearing poverty is the same as not trusting in God.

3. Earn a living by doing halal and lawful ways.

Muslims must earn their wealth in a lawful, or halal, way and they are blessed by Allah. Wealth shall not be earned by selling or buying things that God forbids us, such as alcohol or pork, or by engaging in illegal activities such as gambling, non-shariah compliant trading and more. God advises them against this:

“O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent.” [Quran 4:29]

God forbids but if you happen to have money invested in impermissible investments like non-shariah compliant tradings, or bonds or stocks in companies that sell haram products, then the best course of action is to dispose of those investments and give the earnings away as sadaqah, which brings us to the next point.

But before going to the next point, it is important to find companies that offer shariah compliant investment products and as such you will find Ethis as one of the global fintech companies focused on ethical crowd-investments and social finance/ charity. Ethis operates impact-driven and Shariah-compliant/ Islamic investment platforms.

4. Give back, and your wealth will increase

The faith of Muslims is built on the five pillars of Islam and one of those pillars is giving wealth to charity, or zakat. In fact, in the Quran charity is often mentioned as going along with prayer.

“[True] righteousness is [in] one who believes in God, the Last Day, the Angels, the Book, the Prophets and gives of their wealth, in spite of love for it, to relatives, orphans, the needy, the traveler, those who ask [for help], and for freeing slaves; [and who] establishes Prayer and practices regular charity.” [Quran 2:177]

The Prophet (ﷺ) provided the ultimate example of a Muslim who spent his wealth in charity. He provided for others before taking for himself. He was a simple man and was never greedy. He himself was an orphan and Muslims are taught in the Quran that their wealth should be spent towards orphans and those who cannot provide for themselves. Even without abundant wealth, you can still give in the cause of God because even the smallest amount is an act of charity.

When one spends his wealth in the way of God there is no decrease in wealth. Charity increases wealth because God replaces it with something better and greater.

Above are four of the many ways Muslims are taught to think about and handle their wealth. The Creator has blessed us with everything we have, so we are obligated to be intelligent and responsible in using these resources sensibly. Remember this important lesson : Happiness is not just about money and possessions, it’s more about being responsible and accountable while living a righteous life.