Not Just Frugality, These Are the Rules for Managing Money in Islam

Islamic economics classifies human consumption needs into a strict hierarchical structure to filter and control spending decisions. The first level, Daruriyat, covers obligatory needs such as staple foods, protective clothing, medical treatment, and basic housing costs; neglecting these disrupts religious life and personal safety. The second level, Hajiyat, includes needs that remove difficulty and provide ease, such as children’s education, standard work devices, productive internet quotas, and family transport, the absence of which is not life-threatening. The third level, Tahsiniat, consists of complementary needs like overseas holidays, branded clothing, aesthetic home renovations, and dining at luxury restaurants, which provide comfort and beauty.

Deviation occurs when these boundaries are ignored. A fundamental principle in Islamic finance is that debt is only permissible for two purposes: urgent basic needs and essential productive needs, such as a motorcycle or laptop for work. Beyond these, incurring debt is strongly discouraged. Practically, family budgets should be reorganised based on the objectives of Sharia. The first allocation, 10% of income, goes to ZISWAF (zakat, infaq, sadaqah, and waqf) as a means to detach from materialism and invite blessings. A 20% allocation for future protection serves as an emergency fund and long-term Sharia-compliant investment, acting as a fortress against resorting to paylater schemes or online loans during crises. The largest portion, 50%-60%, is for essential consumption covering household needs, children’s education, nutrition, and work transport. A final 10% is allocated for controlled entertainment, allowing for holidays or dining out, provided it is not forced and paylater services are avoided.

The core of this management is a mental and spiritual reorientation. One should not be influenced by or envious of others’ achievements on social media, but instead practice qona’ah, or contentment with what one has. Zuhd in the modern context does not mean abandoning wealth, but rather positioning property and technology as productive tools without letting them inflate one’s ego. A person with zuhd views a house or vehicle purely by its function as shelter and transport, not as a status symbol. The principle of Hifzhul Maal is not meant to restrict happiness but to ensure safety, aiming to free the millennial generation from the bondage of consumptive debt that hinders productivity. True financial independence is not measured by social media displays, the number of houses owned, or luxury dining experiences, but by the strength of one’s financial management, freedom from usury, the ability to sleep peacefully without debt, and the blessings one’s wealth brings to humanity.