Category Archives: Personal Finance

Story #5: ‘Ali and Assem

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After the end of the battle of Jamal, Imam ‘Ali ibn Abi Talib arrived in Basrah. During his stay in Basrah, once he went to visit one of his companions named ‘Ala ibn Zaid Haressi’. This man owned a very big and luxurious residence with all comforts. ‘Ali, after traversing his eyes on such big and magnificent building, said: “What is the use of such big residence in this world while you are in more need of a vast abode in the hereafter? If you wish to make use of it as a means to attain a spacious residence in the hereafter, you must welcome and entertain guests, be friendly with your blood relatives, clarify the rights of Muslims, take an advantage to vitalize and reveal the rights of others and neglect your personal greedy monopoly and individuality in its use.”

‘Ala said: “O Leader of the believers! I complain to you of my brother, Assem.”

Imam ‘Ali: “What is the complaint?”

‘Ala: “He has started the life of a recluse, dressed himself in rags, isolated himself from this world, and deserted everything and everyone.”

Imam ‘Ali: “Bring him in front of me!”

Assem was brought before the Imam, who turned the face towards him and said: “O enemy of your own life! The devil has stolen your sense. Why don’t you have sympathy for your wife and children? Do you believe that Allah, Who made the pure bounties of life licit for you, will be displeased with you if you benefit them? You are smaller than that before Allah.”

Assem: “O Leader of the believers! You are also like me, imposing the difficulties on yourself! You do not cover your body with soft dresses, nor eat delicious meals. Therefore I am doing the same thing which you are doing, and I am following the same path which you have chosen.”

Imam ‘Ali: “You are making a mistake. There is difference between me and you. I shoulder responsibilities of Leadership of Government but you do not. The duties of a Leader and Governor are something else. Allah made incumbent on the just leaders to take the weakest social classes of people as an example of their own personal lives and live in the same manner as the most empty-handed ones survived so that poverty and indigency does not leave impression on them. Therefore, I am having responsibilities and you have another obligation.” (Nahj al-Balaghah, Sermon 208)

Source: Murtada Mutahhari, THE NARRATIVES OF THE VERACIOUS, Story 16.

Financial Lessons of the Story:

  1. To engage in worship cannot be an excuse to abandon one’s physical necessities and social obligations.
  2. Both attachment to material things and abandonment of the good things in this world are condemnable in Islam.
  3. The Leader is supposed to serve as a model and to consider the condition of the lowest class in society.

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On the Banking System and Financial Literacy in Mindanao

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MAKATI CITY (8 May) – As a financial literacy advocate and blogger, I was quite privileged to be invited last Friday (May 6) in the first forum on “The Flow of Deposits in the Mindanao Banking System: Exploring Alternatives” hosted by the Joint Ateneo Institute of Mindanao Economics (JAIME) held in Ateneo de Davao University, Davao City.

Covered by the British Broadcasting Corporation (BBC), the forum was attended by representatives from the Tokyo University, Department of Trade and Industry (DTI) – Region 11 Office, Mindanao Development Agency (MinDA), Mindanao Business Council, Landbank of the Philippines, Union Bank, Banco de Oro (BDO), Development Bank of the Philippines (DBP), Philippine National Bank (PNB), MMC, Davao City Chamber of Commerce and Industry, Ateneo de Manila University, Xavier University, various offices of Ateneo de Davao University (Academic Vice President Office, University Research Council, Finance Office, Al Qalam Institute for Islamic Identities and Dialogue in Southeast Asia, School of Business and Governance, and the Economics Department), rural banks, and microfinance institutions, among others.

Focused mainly on the constituents of Mindanao’s dualistic banking system, viz. (1) branches of the universal and commercial banks (UCBs) with head offices in the National Capital Region (NCR) and (2) branches and head offices of the locally-oriented thrift banks and rural and cooperative banks (TB-RCBs), the research presentation by JAIME Director, Dr. Germelino M. Bautista, attempted to answer the following questions:

(1) What is the overall performance of the dualistic banking system in Mindanao, and what are its trajectories?

(2) How different are the deposit mobilization capacities and loan provisioning roles of these banks and what do these differences imply for the banking system and economic development of Mindanao?

(3) What options are available to address the limitations in capacities and roles of the UCBs and TB-RCBs?

As Prof. Bautista argued, a vision or alternative future for the TB-RCBs of Mindanao might entail the following conditions:

(3.1) Improve the capacities of existing TB-RCBs, strengthen their local community orientations, and determine what can further promote the growth of rural and cooperative banks;

(3.2) Tap the currently underserved and unbanked population, and further expand the community-based microfinance operations of TB-RCBs to promote the livelihood of the self-employed and small businesses and eventually generate and mobilize savings from new client depositors;

(3.3) Establish more Islamic finance intermediaries and apply shari‘ah financial instruments that aim to generate higher incomes and mobilize savings in poor Muslim communities; and

(3.4) Mobilize deposits from both Muslim and non-Muslim cooperatives for their own rural cooperative and Islamic banks.

In the Q & A session, the following points came to the fore:

* There has been available money for loan in the banks and microfinance institutions, but the usual problem has been the failure of most borrowers to repay their respective loans.

* The local government units (LGUs) could do a lot in improving the flow of deposits in the banking system.

* Any success in encouraging the potential depositors to deposit their money to a commercial bank or a rural bank, as the case may be, is also reflective of our success in encouraging them to develop the habit of saving and later on, investing, as well as to cultivate their entrepreneurial mindset. In other words, financial literacy of the individual – the potential depositor and loan applicant – is a preliminary step in banking.

* There is considerable interest in knowing more about shari‘ah-compliant instruments for generating higher incomes and mobilizing savings.

As such, these points could be viable candidates as the next research agenda of the nascent Joint Ateneo Institute of Mindanao Economics or JAIME.

Financial Story #3: A Companion of Hajj Pilgrimage

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On returning from journey of Hajj “pilgrimage”, a man related his and his Companions’ experience who accompanied him, to Imam Sadiq (‘a). He stirred and admired them, particularly one of his fellow-travelers: “How noble was he. We are proud of accompanying such an honorable man. He was praying continuously. No sooner did we stop at a place immediately than he would part from us, seek a corner, spread his prayer mat, and engage himself in prayer and worship.

The Imam (‘a) asked: “Then, who was looking after his affairs? And who was tending his animal?

He replied: “Of course, we were. We had the honour to be at his service. He had nothing to worry about; he used to engage himself in his holy affairs.”

The Imam (a’) replied: “Therefore all of you were better than him.”

—–
Financial Lesson of the Story:
1. Not to rely on others even for a small thing.

 

(Source: Murtada Mutahhari, THE NARRATIVES OF THE VERACIOUS)

(Photo via wikihow.com)

 

Newlywed Couple and Personal Finance

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MAKATI CITY (MindaNews / 13 March) – (A message delivered at the wedding reception of the writer’s high school batchmates on March 12, 2016.)

The first time I read your wedding announcement on Facebook, this was the first thing that came to my mind: contrary to the clichés that it is an avenue to do the wildest things undone before and having the tendency to disrupt family ties, high school batch reunion is meant to strengthen family ties, foster cooperation among old friends and render services to the community.

Akmad and Albeah, you are a living proof that high school reunion is indeed meant to build families.

Let me take this rare opportunity to share some thoughts on this new stage of your life journey. I shall not touch on the philosophical, religious and legal aspects of marriage as these are expected to have been tackled in the khutbat al-nikah (wedding sermon) and marriage counseling sessions you were supposed to attend.

Instead, let me focus on an aspect which is hardly given attention, yet a daily affair; that is, personal finance or money management.

On a daily basis, we handle money yet we hardly think of the need to manage it. Or, we assume that using it is identical with managing it. Or, to think of managing it is tantamount to becoming materialistic. We always say, “Bahala saging basta loving,” yet many marital conflicts and splits are money-related; either the lack of it or the improper use of it.

Formula

Personal finance experts give this formula: Income minus Savings equals Expenses. This means that as soon as we get our income, we immediately allocate a certain amount for savings before spending what we earn for the (other) expenses.

This is the opposite of the formula we usually follow: Income minus Expenses equals Savings. What usually happens is that since the amount of our expenses is equal to, if not more than, that of our income, nothing remains as savings. In fact, we often incur debts because our income is not enough for our expenses.

But by following the experts’ formula, the amount for savings is automatically allocated by considering it to be part of the expenses, nay the most priority. And after allocating the amount for savings, we adjust our expenses (lifestyle) by following the corollary precept of “spending below your means.”

Income

The first element in the above formula is ‘income’. No doubt, multiplying the streams of income is the primary recipe for financial self-sufficiency. The key is just to identify your passions – the things that you enjoy doing – and then look for the ways to monetize them.

Just give real value or love to the product or service you want to offer, and then profit will follow. Simply put, ‘passion’ plus ‘value’ equals ‘profit’.

Savings

The second element in our formula is ‘savings’. Saving is to set aside money to be spent later, and we do and must save for many reasons, viz. unforeseen (emergency) and future (retirement) expenses. But letting our money sleep for a while (saving) is not smart enough because of inflation. If the annual inflation rate is 4 percent, it means that the purchasing power of our P100 today is just P96 tomorrow.

So, we need to invest our saved money. Investing is to let our saved money grow and not just sleep. It is to let our money work for us while we are sleeping.

There are many available shari‘ah-compliant investment instruments you can choose: business venture, real estate, mutual fund, stock market, etc. Be that as it may, don’t forget the primary investment: to invest in yourselves; to invest in the enhancement of your knowledge and skills in everything you are passionate of.

Expenses

The last of the three elements in the formula is ‘expenses’ but it does not mean that it is the least important. In fact, managing it is as important as managing ‘income’ and ‘savings’ to ensure a financially successful marriage life. Multiplying streams of income must always be coupled with keeping one’s lifestyle below the income level.

Among the tips in managing one’s expenses are to distinguish ‘needs’ from ‘wants’ and to give priority to the former in matters of spending, to look for ways to save in spending, to separate ‘shopping day’ from ‘buying day,’ and to list what you must buy before buying, among others.

The details of each of these elements in the formula will be given in the book I’m currently writing – “Muslim Couple and Money: Personal Finance for Newlywed Muslim Couple.”

In closing, we, your batchmates, wish you financial success in the new stage of your life journey!

(Source: http://www.mindanews.com/mindaviews/2016/03/13/marginalia-newlywed-couple-and-personal-finance)

Short Supplication – Ya ‘Aziz

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Short Supplication – Azīz

Al-Azīz

The Mighty and Unconquerable

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He who repeats this Name 40 times after fajr (morning) prayers for 40 days will be independent of need from others.

Qur’anic Paradigm of Personal Finance

Qur'anic Paradigm of Personal Finance

“By the means of what Allah has given you, seek the abode of the Hereafter, while not forgetting your share of this world. Be good [to others] just as Allah has been good to you, and do not try to cause corruption in the land. Indeed Allah does not like the agents of corruption.” (Qur’an 28:77)

Elements of the Qur’anic Paradigm of Personal Finance:

1. Seeking the abode of the Hereafter as the primary goal in life;

2. Utilizing all the means provided by God for the pursuit of that goal while not forgetting one’s share of this world;

3. Rendering service to fellow creatures;

4. Avoiding the transgression of bounds or “causing corruption in the land.”

Supplication after ‘Isha’ Prayer

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“In the Name of Allah, the All-beneficent, the All-merciful. O Allah! Verily, I lack acquaintance with the place of my sustenance; rather, I am seeking it owing to ideas that come upon my mind. I consequently wander in places searching for it. By doing such, I am as confused as the confounded, since I do not know whether my sustenance lies in a plain, on a mountain, on the ground, in the air, on lands, in seas, at whose hands, or who the source of it is. I have full knowledge that You know all these, the causes of them are in Your Hands, and it is You Who distribute it out of Your compassion and cause it out of Your mercy. O Allah, please send blessings to Muhammad and his Household and make, O Lord, Your sustenance that is provided (by You) to me expansive, my seeking for it easy for me, and its source close to me. Please, do not fatigue me by seeking that which You have not decided for me to take, because You are certainly in no need for tormenting me while I am in full need for Your mercy. [Please] send blessings upon Muhammad and his Household and confer liberally upon me, Your slave, out of Your graciousness. You are surely the Lord of great favor.”

This supplication after  the daily ‘Isha’ (night) prayer teaches many things about personal finance:

(1) Seeking sustenance is not merely raising your hands in supplication, but rather a combination of action and prayer.

(2) True knowledge (in personal finance or any field of endeavor) is the acknowledgment of one’s ignorance and affirmation of the All-encompassing knowledge and cognizance of the Self-sufficient Lord and Sustainer.

(3) Your hard work does not necessarily turn into massive income because, after all, the Ultimate Source of sustenance is not your hard work but the Self-sufficient Lord and Sustainer.

(4) The habit of supplication nurtures positive attitude toward earning for a living, which in the parlance of the Law of Attraction, inevitably invites ‘good vibration’.

Hadith on Debt as Grief and Humiliation

Hadith on Debt as Grief and Humiliation

“Beware of debt, for surely it causes grief during the night and humiliation during the day.”

(Mizan al-Hikmah, vol. 2, p. 958)

Financial Story #3: Tying the Knees of Camel

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The caravan being tramped for hours, tiredness overwhelmed the riders and the animals. As soon as they reached an oasis where there was water, they had their camels kneel down. The Holy Prophet (s), accompanying the caravan, made his camel kneel down and dismounted from it. All were rushing to reach the water to prepare for the preliminaries of prayer, dismounting from the camel, the Holy Prophet (s) also made his way towards the water.

After covering a certain distance, without speaking to anyone, he (s) returned back to his camel. To the surprise of his Companions, they thought he (s) was not pleased with this place and will order them to set out?! Lending the ears to him, in full attention, they looked forward to hear his order. The Companions were astonished and amazed when they saw the Holy Prophet (s) reach his camel, pick up tie and bind the knees of it; then he (s) returned back towards his first destination.

The exclamation rose up in between the Companions: “O Messenger of Allah! Why did you not command us to do that, and you bothered yourself while we are all proud of being at your service?”

The Holy Prophet (s) replied: “Do not ever ask for help from others for your own affairs and do not count upon others even if it would be a toothpick.” (Kahl al-Bassar, p. 69)

Source: Murtada Mutahhari, THE NARRATIVES OF THE VERACIOUS, Story 4.

Financial Lessons of the Story:

  1. Not to rely on others even for a small thing.

Financial Story #2: A Man Who Asked for Help

Story #1: A Man Who Asked for Help

Reviewing his own painful past full of afflictions, he recalled how the bitter days slipped away, the days he was not even in a position to provide the daily meals for his wife and innocent children. He laid musingly on how a few words, which had pricked up his ears for three times and animated his spirit, deviated the course of his life, and rescued his whole family from poverty and calamity overwhelming them.

He was one of the Holy Prophet’s Companions; poverty and indigence had upper hand on him.

One day amicably reaching the dead end, after consulting with his family, he decided to go to the Holy Prophet (s), what his wife had suggested, to expose his situation and ask him for financial assistance. With this intention he came out of his house, yet did he not offer his request, the following words fell upon his ears:

“We help whoever demands us for assistance, but Allah preserves the needs of those who feel enriched and refrained from stretching out their hands before someone else.”

He returned back home without uttering a single word. He found himself again to face the awful silhouette of the poverty overshadowing his dwelling place. The next day, he rejoined compulsively the assembly of the Holy Prophet (s) with the same intention. He heard the same words from the Holy Prophet (s):

“We help whoever demands us for assistance, but Allah preserves the needs of those who feel enriched and refrained from stretching out their hands before someone else.”

He returned home once again without putting forward his request. For the third time, he saw himself indulging in the jungle of poverty, debility, misery, and helplessness; he decided to go to the assembly of the Holy Prophet (s) in order to put forward his intention. Once again the lips of the Prophet (s) moved and the same words were repeated, invigorating the heart and giving the certainty to the spirit.

This time, by hearing those words, the man felt more confidence and perceived that he had found the key of his problem. He went out with more assured steps, thinking: “I will never ask for someone’s help. I will rely on Allah and take advantage of the energy and the capacity which exists in my own self, and I will pray to Him to make me succeed in what I will undertake to do and enrich me.”

He thought what kind of job would be suitable for him to look for. In such circumstances, he decided to go to the desert, gather some firewood and sell them. He went and borrowed an ax, then he left for desert. By gathering the firewood and selling it, he relished the result of his own toil. He continued working hard for the following days until he managed to buy an ax, a beast of burden, and the other means of work with the gained money. He continued working till he gained a capital and owned the servants. One day the Holy Prophet (s) met him. While having the smile on his lips, he (s) said:

“We will help whoever demands us, but Allah preserves the needs of those who feel free from want.” (Usul al-Kafi, vol. 2, p. 139 (Al-Qina’a); Safinat al-Bihar (Qana’a).)

Source: Murtada Mutahhari, THE NARRATIVES OF THE VERACIOUS, Story 2.

Financial Lessons of the Story:

1. Trust in God (tawakkal ‘alallah);

2. Preservation of one’s self-esteem and personal integrity;

3. Utilization of one’s energy and talent to earn for a living;

4. Identification of one’s niche – what one can do best and passionate of;

5. Investing in things that would further earn income – “an ax, a beast of burden and the other means of work.”