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Changing the Discourse on Islamic Personal Finance

Published

February 18, 2013

Omar Usman

There is no discourse in our communities about Islamic personal finance. None.

When we discuss Islamic finance at conferences, classes, dinner parties, and gatherings with friends, it’s always the same. Which company did you use to buy your house? Is buying a car on 0% halal or not?

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The problem with those discussions is that they ignore the stark reality of personal finance faced by many families and individuals. Before I get to the point of even buying a house, how much should I have saved? What percentage of my monthly income is reasonable for a house payment?

Before even that step, there should be consideration for things like how to make a budget for your household. How do you get out of debt?

As I’ve personally delved into reading about personal finance, I’ve come to realize this aspect of education is missing from our communities. We’re content to discuss terms like “musharakah” and “murabahah” and “ijaara” but we have yet to figure out a way to make higher education without student loans a reality for the majority of our ummah.

What is the point of a husband and wife buying a house through a halal mortgage, if they’re going to fight every month about how to spend the money they make?

While we educate ourselves on the fiqh of things such as a woman’s right to her own wealth, the responsibility of a husband to provide, and so on – we overlook the nuts and bolts that are required to run a household. How do a husband and wife figure out where their money is going? How do they resolve disagreements about what to spend money on? How do they prioritize their spending? How do they make sure they have a realistic plan to save for things like hajj?

How does an individual plan ahead for expenses such as buying a car, or dealing with home repairs without having to rely on a credit card as their emergency fund?

The reality is, while we are an educated ummah – both secularly and religiously – we tend to have a false sense of confidence when it comes to finances. Many households are struggling with debts – student loans, car payments, credit card payments, furniture purchases, computer purchases, and sometimes even a mattress payment of $10 a month stretched out over a few years.

It’s time we reassess our attitudes toward finance and gain control of our wealth. Changing the discourse on finance allows us to learn how to budget – which tells us both how we earn our money, and where we spend our money. We cannot account for this in the Hereafter if we have no idea where our money goes now.

Our community also needs to change the discourse when it comes to debt. We’ve let society make us think that debt is a tool, something we leverage. If the recession and collapse of the banking industry haven’t taught us that this is playing with fire, at the least we should heed the warnings in our own sacred texts about staying away from debt. Our communities need proper financial counseling and help to get individuals and families out of debt.

As we work to change this discourse, we’d like to hear your stories.

Have you ever been in debt? How much debt?

What did it feel like to be in debt?

Have you been in debt and gotten out of it? How much debt did you have, and how did you pay it off?

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Omar Usman

Omar Usman is a founding member of MuslimMatters and Qalam Institute. He teaches Islamic seminars across the US including Khateeb Workshop and Fiqh of Social Media. He has served in varying administrative capacities for multiple national and local Islamic organizations. You can follow his work at ibnabeeomar.com.

7 Comments

Alhamdulillah, recovered

February 18, 2013 at 12:05 PM

I’ve been in credit card debt before- felt like a huge weight was always on my back and definitely was a source of depression.

Alhamdulillah I was able to get it paid off and haven’t used credit cards since (and definitely don’t intend to do so in the future). I only use my debit card now.

Reply
- a sister
  
  February 19, 2013 at 3:06 PM
  
  MashaAllah that’s great that you’ve recovered.
  
  I’m young, and have barely entered the “real world” (so my opinions may be rubbish) but I don’t understand why so many people do use credit cards, for me it’s pretty easy to stay away from since I’ve never used it – so I think every young person should be encouraged the same. I mean it’s much better to use what you have! If you can’t afford something without it, then it’s just not mean to be (and you should make dua to Allah for more wealth, better job etc)
  
  I find the thought of using a credit card kinda scary and just wrong – which is why inshaAllah I won’t use one.
  
  Reply
- B
  
  August 31, 2015 at 12:55 AM
  
  Salam,
  If you use it wisely and living in your budget, you will just fine. Use credit card to buy thing you use to buy in cash, so you know you can afford to paying back, full each month. Build a saving and emergency fund, so you not rely on credit card. Even in the emergency situation and you use your credit card to paid them, that emergency bill through credit card must be paid right away. So be wise, keep you open mind, build your saving, don’t forget to give back and you will be on track.
  
  Alhamdulillah for your accomplisment to be debt free. Delighted to hear that.
  
  Reply
Your brother in Faith

February 18, 2013 at 5:28 PM

To my dear brothers and sisters,

The issue of personal finance has destroyed many homes. We all need to be realistic when it comes to money.

To the youth, I urge you to find low-cost universities and colleges. Please stay away from student debt, as much as you can, because you can never have it discharged. Be creative in saving money, if you can. Stay with muslim room mates. Stay with your parents, if you can.

To all muslims, stay away from credit card debt. It is a predatory institution.

We need to seriously come together and create Islamic banks to support each other. These “Too-Big-To -Fail” banks have nearly bankrupted the world economy. Following the Sunnah is the path of success.

Reply
abu suhaib

February 19, 2013 at 3:23 PM

Salam
AH, great video! If we were to just stop our frivolous spending we wouldn’t be in so much debt. For the past 8 years I’ve been making less than 32k and I was able to stay out of debt and take care of a family of 10.We would go out to eat once a week, have a vacation once a year and I was able to pay for my college classes as well. People it can be done!
This is only from the blessings of Allah but Allah swt opens the way.

Reply
Abdul-Qadir

February 20, 2013 at 2:27 PM

Assalamualaikum,

This is something I have also been thinking about. One thing you mentioned in your video I would like to correct. Correct me if I am wrong, but you mentioned that the ones who endorse loans do not ever mention things like work-study, finishing in 4 years, etc. If you read the AMJA fatwa concerning student loans, it states there that loans are to be the final thing, after you have exhausted all other resources (work-study, loans from relatives, etc.). Only then can you take these out, and even so, you need to still constantly look for a halal alternative at the same time you utilize them. So there are in fact those who have addressed those issues as far as I know.

One story:

I have a co worker that told me ever since they were a kid, their parents told them they were going to college, and whenever they would get a gift, it would always be money to put in the college fund. Christmas and birthdays included. When they got to college, the parents told them that is all they money they would get, and they managed it properly and got a 4-year degree, debt free. Where there is a will, there is a way.

Reply
Umme Hadi

February 21, 2013 at 9:05 AM

Masha Allah well written. May Allah accept from all of us.

Reply