In one of his recent speeches by His Majesty Sultan Haji Hassanal Bolkiah Mu’izzadin Waddaulah, the Sultan dan Yang Di-Pertuan of Brunei, he has touched upon the importance of sound personal financial management and to avoid the habits of excessive spending and being in debt but instead to instill the habit of gratefulness & appreciation in us. This speech was made in conjunction with the new month of Syawal 1427 or more commonly known as Hari Raya Aidilfitri.
On the topic of debts, His Majesty mentioned briefly the effects and difficulties of a person in debt not only for this world but also in the afterlife. Therefore, it would be appropriate to elaborate more on this topic especially to find out what the Islamic perspectives are regarding debt.
When it comes to the topic of spending, moderation has always been the key in Islam. To spend one’s wealth excessively especially wasting it on unnecessary items just to satisfy “wants” and “temptations” is disapproved of. Allah even said that those who are extravagant are actually related to the devils. This can be proven from the excerpt from the Quran below:
“Verily, spendthrifts are brothers of the Syaitan (devils), and the Syaitan (devils) are ever ungrateful to his Lord”
(Surah Al-Israa: 27)
From the above, we can see that extravagance is one of the characteristics despise by Allah. We are encouraged to spend only on what we can really afford and to avoid giving in into every temptation.
Maybe from appearance alone cannot tell if someone is in debt but red warning signs should clearly go off when you find your savings diminishing or almost gone to pay off others instead of yourself or when the main proportion of your income goes to your revolving debts. One of the key known areas where people easily fall into debt is via the use of credit cards, simply because credit cards are one of the easiest sources of credit. Through their advertisements, spending via credit cards can also represent a “style” or “status” therefore sometimes tempts the holder to use it on an unnecessary basis. However, without proper financial management and understanding of your credit card spending, one can easily find themselves digging their own hole of financial burden.
I’m sure most of us know that being in debt is not encouraged, whether you’re a Muslim or not. We’ve seen from television series or movies or even from reading books or newspapers, being in debt is an ugly situation and one which all of us rather avoid. However I know there are some situations which sometimes cannot be helped where we have to borrow, for example financing for your new home. Again, here is where moderation comes into place. Try to avoid the temptation of excessive borrowing and borrowing more than your financial capability.
Nevertheless, in any situation concerning debt, there are conditions set out by Islam and one of them is to pay off these debts as soon as possible. If we have the means to pay our debt, it should not be prolonged and procrastinated. Paying off your debt is a responsibility and failure to carry out the responsibility is frowned upon. This does not just relate to our financial debts but also encompasses our religious practices. For example repaying the obligatory prayers if we missed any, repaying any “puasa” we missed during Ramadan, any Zakat we have not paid and Haj for those who have left us and did not get the chance to do perform it. In a way, Allah has been teaching us indirectly to always pay our debts, be it to Him, to the society or to others.
In addition, anyone who deliberately delays the payment for their debt will not benefit from “keredhaan Allah” and their good deeds will not receive the blessings from Allah either. The burden does not just stop when they’re no longer alive. It continues even after their death as can be seen from these hadiths below:
“The soul of the believer is hanged by his debt until it is paid out”
(Narrated by At-Tarmizi, Ahmad and Hibban)
"Whoever dies owing a Dinar or a Dirham, it will be paid from his Hasanaat, for then there will be no Dinars or Dirhams”
(Stated by Ibn Umar as narrated by Ibn Majah)
From the hadiths above, we can see that leaving this world with debts will cost us much more dearly in the Hereafter. Our souls will be left hanging and hindered from entering a noble place as well as our good deeds will be taken away to “pay off” the debts. This is one of the things meant by His Majesty when referring to the difficulties in the afterlife. Therefore try to avoid bringing your debts to your death bed as it may also bring hardship to your loved ones. Imagine if you passed away leaving many debts behind. Imagine the burden you’re placing on them to settle your debts. According to Islam, if a person passed away, any debts left behind will need to be settled before his/her assets can be distributed to his/her heirs. So imagine if you left behind little or no assets at all, how will your loved ones ever cope with their daily life as well as the struggle to pay your outstanding dues?
Another thing to remember is if we do have to borrow set the “niat” or intention in our hearts that we will pay off our debts. Insyallah, Allah will make it easier for us to be able to repay our debts.
The Prophet said, "Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him."
(Narrated by Abu Hurairah)
With the “niat” or intention, pray and make “doa” to Allah so you will soon be free from debt. Even if you do not own any debts, still pray and make the “doa” so you can avoid from being in debt. This was what our Prophet Muhammad practiced during his time. As The Prophet had done, pray to Allah for protection from the burden of debts and from being dominated by other people.
So as you can see, debt is a major responsibility. Being huge in debt might also affect you and your loved ones in all aspects – financially, emotionally and physically. It can affect you emotionally due to the stress and worry. Think what all those stress and worry can also lead to in terms of your health. Also, just because you may have succeeded in avoiding paying off your debt in this world does not mean that the debt will not be claimed in the Hereafter. So if you’re one of the people who has a list of things to do before you die, be sure to include “repay all debts” as one of the top things to do!
By Suhaila Kani
Since my last article on financial planning, I have had people relating to me stories of how a 20-year-old is able to make payment in cash for a newly purchased car, or how an individual gets $30,000 from his parents.
I have also had parents telling me how their children (aged below 15 years) already have $10,000 or more nicely tucked into their savings.
You readers may likely respond by saying, "Yeah, that's easy for them because their parents are rich."
However, I would like to point out to you that these stories actually come from ordinary people like you and me. The truth is we can all become rich, given we possess both the right attitude and techniques.
In the last few articles we touched on the basics of financial planning - planning your money to achieve your dreams and, most importantly, your deepest desires in life.
Now I can already hear you asking, "So how exactly were these 20-year-olds able to purchase their cars in cash, or get such a lump sum from their parents?"
How can a normal regular earning income person afford to give their child that much money?
Did they invest in the stock market, reaping the rewards in a short period of time?
Did they take on a certain kind of business that spelt instant wealth?
You will be surprised to know that it is in fact none of the above. There are many examples I can offer towards achieving such wealth, however, I will only limit it to two.
Curious are you? Then read on
In life, some may not be as lucky as others. Not many people win big money everyday. We are ordinary people living ordinary lives, working hard to make ends meet.
However, you'll be surprise to know that saving as little as $1 a day can bring you a long way.
The people to be credited are the parents. Their dedication towards saving - everyday, every month or every year - a small fraction of their salaries for their offspring (ever since they were young) made it possible for them to cough up a lump sum for their children.
Some saved as little as $1 a day, while others saved as much as $100 a day. The moral of the story here is that you don't have to be rich to have the large sum of money given to you. All you have to do is to commit yourself to saving $1, $5 or even $10 a day.
If you are already in your 20s and your parents haven't saved enough for you, don't fret. It really isn't the end of the world.
At this tender age, you still have plenty of time to save either for your family, children or retirement. Five, 10 or 20 years down the road, you would probably be glad you did. So go on, plan now to save for you and your family.
If you are still wondering if it is possible to save as little as $1 a day and receive a large sum later on in life, allow me to clear your doubts.
Let's say you save $1 a day for your newborn, putting it into a savings account which offers a four per cent annual return. By referring to Diagram A, you will be able to see how the savings would mature over the years.
By the time your child is 25, you as a parent will be able to give your child about $15,000.
Assuming parents save $3 a day instead, they will be able to provide their child $46,000 by the time that child turns 25. (Refer to Diagram B)
This indeed is achievable for ordinary people drawing ordinary incomes.
Note the difference in figures by merely throwing in an additional $2 daily over the 25-year period. The difference of $31,000 is significant.
It just goes to show how if you are able to save more than $2 or $3 a day, your wealth will grow more exponentially. This is due to the compounding effect of the interest earned.
Let's throw in another example to the mix. By consistently saving $5 everyday, in 20 years time you should be fairly proud of your savings. (Refer to Diagram C)
Here is a tabulate of the difference:
$1 a day ---------------- $15,423.89
$3 a day ---------------- $46,271.66
$5 a day ---------------- $77,119.43
Can you see the difference now? Imagine cutting down on the daily 'nasi katoks' and putting that money aside for the future. Note: Over 25 years, those nasi katoks would cost you $15,000.
This is only a metaphor but you can relate this to other things like smoking. Cut down on your cigarettes or kick the habit and instead channel the spending towards getting your wealth intact. That $3 price tag will cost $46,000 over 25 years, which you could instead put into your child's education fund or even as down payment for your home.
So decide now to improve your financial future. Many people may say that saving a dollar a day will get them nowhere, but the truth is, it sure is better than nothing. It will be a good starting point for you to save. If you can afford to save more, then do so.
Either ways, you will later see the difference. Change your daily spending habits, choose now to be time to take better care of your financial future.
Remember, the sooner you start saving, the sooner you will reap your rewards.
Courtesy of Borneo Bulletin