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Management Of Family Finances


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Islamic guidelines in managing family finances

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Management Of Family Finances

  2. 2. Noble peace prize winner’s book<br />
  3. 3. Some of the ideas presented in this book<br />Founder of Grameen Bank in Bangladesh, introduced microcredit.<br />Innovative banking program provides small loans to poor people specially women to start their own business<br />In the past 30 years, microcredit has spread to all the continents and has helped 100 million people and lifted them out of poverty<br />Now, he has pioneered the idea of social business<br />This idea takes vibrancy of business to tackle the problems of poverty, pollution, healthcare and lack of education.<br />
  4. 4. Causes of present financial crisis<br /> Greed, <br />Exploitation of society (by creating needs, advertisements, interest based loans etc)<br />Profit driven businesses regardless of its ill effects on the society ( alcohol, gambling, porn) <br />Inequality in opportunities <br />Unchecked individual liberties<br />Excessive indulgence in non affordable luxuries<br />
  5. 5. Islamic guidelines<br />A- Spiritual and devotional <br />B- Related to practical life<br />
  6. 6. Spiritual<br />1- Purpose of life is Ibadah.<br />2- Whatever you have is from and belongs to Allah (SWT) and is an amanah.<br />3- Whatever is in your hand is going to end and whatever is with Allah (SWT) is going to last for ever.<br />4- You are going to be tested in different circumstances ( poverty and affluence).<br />5- No one will die before getting the last part of sustenance destined for him/her.<br />6- So, do not have prioritize this material world neglecting your hereafter. <br />
  7. 7. Islamic Guidelines related to practical life <br />1) Macroeconomic System – the economics of states<br />2) Microeconomic System – the economics of individual households<br />
  8. 8. Guiding principles at state level<br />Macroeconomic System<br />(These guidelines also apply at family level since family is like a mini state)<br />
  9. 9. AIM #1Right of every person to have basic necessities<br />118 &quot;There is therein (enough provision) for thee not to go hungry nor to go naked&quot; 2642<br />&quot;Nor to suffer from thirst nor from the sun&apos;s heat. <br />SurahTaha 20:118-119<br />
  10. 10. Aim#2 Equal Opportunity<br />It is He who hath created for you all things that are on earth;<br />
  11. 11. Islamic Economic System <br />5 characteristics <br />
  12. 12. 1-Simple living and avoid excesses and spending beyond means<br />eat and drink: but waste not by excess for Allah loves not the wasters. Araaf 7:31<br />
  13. 13. Do not be spendthrift<br />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.<br />Verily spendthrifts are brothers of the Evil Ones; and the Evil One is to his Lord (Himself) ungrateful.<br />BaniIsarael 17:26-27<br />
  14. 14. Islamic Economic System<br />1) Simple Living<br />Prohibits luxuries and indulgences specially if these are beyond your means.<br />Do not get loans unless absolutely necessary<br />Rich will contribute surplus to relief of poor<br />Poor will not be tempted to imitate the rich<br />
  15. 15. 2) Forbids lending of money on interest<br />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: &quot;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). <br />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<br />
  16. 16. Riba or interest based transactions are like declaration of war against Allah (SWT) and His Prophet (SAW) <br />O ye who believe! fear Allah and give up what remains of your demand for usury/interest if ye are indeed believers.<br /> 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.<br />Al Baqarah 2:278-279<br />
  17. 17. Why is Riba/interest forbidden?<br />To prevent accumulation of wealth in few hands<br />To prevent gradual crippling of poor<br />To narrow the gap between haves and have not.<br />
  18. 18. 3- Zakat- Right of the poor <br />So establish regular Prayer and give regular Charity: and obey the Apostle; that ye may receive mercy. An Noor 24:56<br />
  19. 19. Purpose of Zakat<br />Secures circulation of wealth<br />Secures money for the poor<br />
  20. 20. 4- Islam discourages hoarding of money and Bukhal ( miserliness)<br />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. <br /> 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.<br />
  21. 21. 5) Encourages voluntary contributions to charity<br />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)<br />
  22. 22. Charity will bring expiation of your sins<br />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<br />Al Baqarah 2:271<br />
  23. 23. Islamic Economic System<br />5) Encourages voluntary contributions to charity<br />To provide relief for poor<br />Care for others<br />
  24. 24. FINANCIAL MANAGEMENT AT FAMILY LEVEL<br />2) Microeconomic System<br />
  25. 25. GUIDING PRINCIPLES FOR MANAGING FAMILY FINANCES<br />Men and Women are equal in Islam<br />Created from the same species:<br />“He has made for you mates of your own kind” (42:12)<br />E.g. spiritual capacity, reward in the hereafter, rights to education<br />
  26. 26. Economic Peace in the household<br />Islam recognizes men and women have been created differently, and their roles are different:<br />Financial burden of household falls on men<br />Women responsible for future generation of mankind<br />
  27. 27. Women in Islam<br /><ul><li>Honors women
  28. 28. Priority – husband and children
  29. 29. May work
  30. 30. Financial responsibility not her obligation
  31. 31. May contribute to upkeep of household
  32. 32. Example of Khadija (RA). </li></li></ul><li>Conclusion<br />To have peaceful and happy family life<br />To create harmony in the household<br />
  33. 33. Conclusion<br />What can we do?<br />Caring, not selfish, attitude<br />Husband and wife recognize their roles and responsibilities<br />Simple lifestyle and live within means. Avoid debt.<br />Give charity<br />Support Islamic organizations with charity work<br />