management of family finances

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MANAGEMENT OF FAMILY FINANCES WITH SHRINKING INCOME

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MANAGEMENT OF FAMILY

FINANCESWITH SHRINKING INCOME

NOBLE PEACE PRIZE WINNER’S BOOK

SOME OF THE IDEAS PRESENTED IN THIS

BOOK

Founder of Grameen Bank in

Bangladesh, introduced microcredit.

Innovative banking program provides small loans to

poor people specially women to start their own

business

In the past 30 years, microcredit has spread to all

the continents and has helped 100 million people

and lifted them out of poverty

Now, he has pioneered the idea of social business

This idea takes vibrancy of business to tackle the

problems of poverty, pollution, healthcare and lack

of education.

CAUSES OF PRESENT FINANCIAL CRISIS

Greed,

Exploitation of society (by creating

needs, advertisements, interest based loans etc)

Profit driven businesses regardless of its ill effects

on the society ( alcohol, gambling, porn)

Inequality in opportunities

Unchecked individual liberties

Excessive indulgence in non affordable luxuries

ISLAMIC GUIDELINES

A- Spiritual and devotional

B- Related to practical life

SPIRITUAL

1- Purpose of life is Ibadah.

2- Whatever you have is from and belongs to Allah (SWT) and is an amanah.

3- Whatever is in your hand is going to end and whatever is with Allah (SWT) is going to last for ever.

4- You are going to be tested in different circumstances ( poverty and affluence).

5- No one will die before getting the last part of sustenance destined for him/her.

6- So, do not have prioritize this material world neglecting your hereafter.

ISLAMIC GUIDELINES RELATED TO PRACTICAL

LIFE

1) Macroeconomic System – the

economics of states

2) Microeconomic System – the

economics of individual households

GUIDING PRINCIPLES AT STATE LEVEL

1) Macroeconomic

System

(These guidelines also apply at

family level since family is like a

mini state)

AIM #1

RIGHT OF EVERY PERSON TO HAVE BASIC

NECESSITIES

118 "There is therein (enough provision) for

thee not to go hungry nor to go naked" 2642

119"Nor to suffer from thirst nor from the sun's

heat.

Surah Taha 20:118-119

AIM#2 EQUAL OPPORTUNITY

It is He who hath created for you all things that

are on earth;

ISLAMIC ECONOMIC SYSTEM

5 characteristics

1-SIMPLE LIVING AND AVOID EXCESSES AND

SPENDING BEYOND MEANS

eat and drink: but waste not by excess for

Allah loves not the wasters. Araaf 7:31

DO NOT BE SPENDTHRIFT

And render to the kindred their due rights as (also) to

those in want and to the wayfarer: but squander not

(your wealth) in the manner of a spendthrift.

Verily spendthrifts are brothers of the Evil Ones; and the

Evil One is to his Lord (Himself) ungrateful.

Bani Isarael 17:26-27

ISLAMIC ECONOMIC SYSTEM

1) Simple LivingProhibits luxuries and indulgences specially if these

are beyond your means.

Do not get loans unless absolutely necessary

Rich will contribute surplus to relief of poor

Poor will not be tempted to imitate the rich

2) FORBIDS LENDING OF MONEY ON INTEREST

Those who devour usury will not stand except as stands one whom the

Evil One by his touch hath driven to madness. That is because they say:

"Trade is like usury but Allah hath permitted trade and forbidden usury.

Those who after receiving direction from their Lord desist shall be

pardoned for the past; their case is for Allah (to judge); but those who

repeat (the offence) are companions of the fire: they will abide therein (for

ever).

276 Allah will deprive usury of all blessing but will give increase for

deeds of charity: for He loves not creatures ungrateful and wicked. Al

Baqarah 2:275-276

RIBA OR INTEREST BASED TRANSACTIONS ARE LIKE

DECLARATION OF WAR AGAINST ALLAH (SWT) AND

HIS PROPHET (SAW)

O ye who believe! fear Allah and give up what remains of

your demand for usury/interest if ye are indeed believers.

If ye do it not take notice of war from Allah and his

Apostle: but if ye turn back ye shall have your capital sums;

deal not unjustly and ye shall not be dealt with unjustly.

Al Baqarah 2:278-279

WHY IS RIBA/INTEREST FORBIDDEN?

To prevent accumulation of wealth in few hands

To prevent gradual crippling of poor

To narrow the gap between haves and have not.

3- ZAKAT- RIGHT OF THE POOR

So establish regular Prayer and give regular Charity: and

obey the Apostle; that ye may receive mercy. An Noor 24:56

PURPOSE OF ZAKAT

Secures circulation of wealth

Secures money for the poor

4- ISLAM DISCOURAGES HOARDING OF MONEY

AND BUKHAL ( MISERLINESS)

Make not thy hand tied (like a miserly person) to thy neck nor

stretch it forth to its utmost reach so that thou become

blameworthy and destitute.

Verily thy Lord doth provide sustenance in abundance

for whom He pleases and He provides in a just measure: for He

does know and regard all His servants.

5) ENCOURAGES VOLUNTARY CONTRIBUTIONS

TO CHARITY

It is not thy responsibility to make them follow the right path;

But Allah guides whomsoever He pleases. And whatever of

wealth you spend, the benefit of it will be for yourselves, for,

you spend not but to seek the favor of Allah. And whatever of

wealth you spend, it shall be paid back to you in full and you

shall not be wronged (2:272)

CHARITY WILL BRING EXPIATION OF YOUR

SINS

If ye disclose (acts of) charity even so it is well but if ye conceal

them and make them reach those (really) in need that is best for

you: it will remove from you some of your (stains of) evil. And

Allah is well acquainted with what ye do

Al Baqarah 2:271

ISLAMIC ECONOMIC SYSTEM

5) Encourages voluntary

contributions to charity

To provide relief for poor

Care for others

FINANCIAL MANAGEMENT AT FAMILY

LEVEL

2) Microeconomic

System

GUIDING PRINCIPLES FOR MANAGING

FAMILY FINANCES

Men and Women are equal in Islam

Created from the same species:

“He has made for you mates of your own kind” (42:12)

E.g. spiritual capacity, reward in the hereafter, rights to education

ECONOMIC PEACE IN THE HOUSEHOLD

Islam recognizes men and women have been created differently, and their roles are different:

Financial burden of household falls on men

Women responsible for future generation of mankind

WOMEN IN ISLAM

Honors women Priority – husband and children May work Financial responsibility not her

obligation May contribute to upkeep of

household Example of Khadija (RA).

CONCLUSION

To have peaceful and happy

family life

To create harmony in the

household

CONCLUSION

What can we do?

Caring, not selfish, attitudeHusband and wife recognize their

roles and responsibilitiesSimple lifestyle and live within

means. Avoid debt.Give charitySupport Islamic organizations with

charity work