What Financial Freedom Means to Muslims and 7 Basic Rules for Financial Success
The month of August is a special month to Indonesians. In this month, we celebrate the Indonesian Independence Day that falls on August 17. As we take a moment to reflect on the freedom for which our forefathers have fought, we must also realize that we have our own struggles and goals that we aim to achieve. To many people in this day and age, financial freedom is something they are fighting for.
How can we achieve financial freedom, and what is the Islamic stance on this issue? Read this article to learn more!
What is Financial Freedom?
Before we dive deeper into the issue of financial freedom, first, we must understand the definition of financial freedom. In short, financial freedom is about having sufficient wealth that enables you to get all of your needs met for the rest of your life without having to be employed or dependent on others. Such a freedom allows you to retire or pursue any career of your choice without worrying about the need to make money.
Does this sound appealing? Yes. But for us Muslims, there is another point to note. Islam teaches us not to lead an austere, monastic life by turning our back on this world. However, we are told to live our life to worship Allah and to be the stewards (khalifah) of Allah on this earth. Because of this, we have to adjust our goals with the values which Allah has taught us. In terms of achieving financial independence, we must use Islamic values as a compass to guide us to reach our aims.
Should our peace of mind depend on abundant wealth?
As Robert T. Kiyosaki explained, financial freedom is freedom from fear. But do we really need to base our peace of mind on our abundant wealth? No. In fact, Prophet Muhammad ﷺ said in a hadith that our peace of mind can only be achieved by setting our goal for the hereafter. In a hadith narrated by Anas bin Malik, the Prophet ﷺ said:
“Whoever makes the Hereafter his goal, Allah makes his heart rich, and organizes his affairs, and the world comes to him whether it wants to or not. And whoever makes the world his goal, Allah puts his poverty right before his eyes, and disorganizes his affairs, and the world does not come to him, except what has been decreed for him.” (Tirmidhi).
Does this mean that Islam discourage seeking money and riches? Not at all. What we should avoid is making money or wealth the center of our attention. Instead, we must make the correct intention by making Allah’s pleasure the ultimate goal.
How can we do this? The Prophet (ﷺ)’s Companions have exemplified how the abundant wealth they had never distracted them from a life of worship and obedience to Allah. The Prophet ﷺ’s Companion and son-in-law Uthman bin Affan, for instance, was among the companions that were wealthy. In addition, he was also known for his generosity.
One of the examples of his generosity is when he bought a water well, known as the Well of Roumah, from a Jew to provide clean water for the Prophet’s Companions. In addition, he was also known to have donated his wealth to support the Prophet’s military expedition and gave away his goods to the people of Madinah who were famine-stricken.
From this example, we can learn that the purpose of wealth in Islam is to facilitate us in our worship and in helping others. This does not mean that we have to wait until we are extremely wealthy to do acts of worship and kindness. Instead, when we work for financial freedom, make a firm and clear intention that we do it solely to increase our good deeds and to seek means for Allah’s pleasure.
7 Basic Rules You Can Apply for Financial Success
There are many tips that you can follow in order to help you achieve financial freedom. You can do it by creating saving accounts, investing, getting a financial advisor, etc. However, there are several basic principles that we can adopt as we work to achieve financial freedom and success. These rules are compiled by Joe Bradford, an American Muslim scholar who graduated from the Islamic University of Madinah and specializes on Islamic finance. These basic rules are as follows:
Memorialize Your Values
Part of having financial success is to understand the reasons, the why behind our efforts. To walk down the path to financial success, we first need to think about what our values are. These values will help us make conscious decisions regarding our financial and career choices.
To help you understand this concept, jot down three values that are important to you and ask yourself what it is that makes these three values important to you, why, and how you would describe them to others.
Do not gamble with your wealth
At times, you might meet people who come to you with their latest business proposition, promising that you can’t lose. Well, this might be a scam because no business is without risks. Loss is one of the probabilities that you will face when you decide to invest your money.
Therefore, make sure you have plans and you understand the investments well. Do not gamble with your money even if they promise you a big yield.
Invest in Yourself
Building wealth takes time, while every second that has passed can never return. For this reason, put your time into essential things that will help you grow your wealth. Learn, talk with the experts, join classes. The knowledge you accumulate will eventually come in handy.
Make a Budget
Some of the common mistakes that people make are not knowing how much they have and how much they earn. In addition, they often unknowingly spend more than they make. To avoid this, you can make a rudimentary budget by writing down how much you earn, how much you spend, and how much debt you are in. You can also break out your income streams and divide your spending into essential and non-essential ones.
Pay Off Your Debts
Once you have made your budget, the first thing you can do to manage your money is to pay off your debts. No matter how much money you make, if you have bigger debts, especially the interest-bearing ones, you will only end up penniless. By paying off your debts, you will end up paying yourself. When you have zero debts, it will be easier for you to make a surplus in money.
Don’t Forget to Give
Like a plant that sheds some of its leaves in order to grow, we also need to give away some of our financial weight in charity in order to grow. The Prophet ﷺ said in a hadith that charity does not decrease wealth (Muslim), and, in Islam, zakat and voluntary charities help us understand what it is like to be needy. In addition, it will also purify our wealth and help us grow spiritually.
You read this right. There’s no secret pill to success. After you make sure of your why, you must also figure out your how. If, for example, you want to start a business, you have to understand supply and demand, budgeting, expenses, marketing, etc. If you want to trade shares, you need to understand the markets, micro and macroeconomic factors, and how the mechanics of the markets work.
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