The Golden Rectangle Budget

1.618 The Golden Ratio

One of the reason why many stories and parables in the Quran are perfect when it comes to personal finance is because it is a reminder. Reminder that includes three aspects; the past, present and future. So, I have been thinking how we can put all three aspects in our money management since they play a part in our budget. Example, the past plays a part in things we consume now and pay later, things like credit or utility bills. The present is the food we eat. The future are for things like retirement, investments and emergency savings.

This goes back to our previous topic, budget percentages, what is an aesthetically pleasing distribution for those three aspects? I looked to the golden ratio to guide me since it seems to be a magical number. I came up with this:

We have a choice of making the last proportion as charity or the past. Should we choose to have charity rather than the past, the things we consume now and pay later like rent, electricity, water, trash, sewer bills, can be bundled in the present. If we have a mortgage, it should fall under the future, since it is an asset that fluctuates like an investment. A car loan however would only decrease in price, it should fall into the present.
In truth, charity actually falls under the future because it is our investment for both dunya and akhirat. It is your choice to make.

So, how should we distribute our income in percentages?

Present 62% (food, transportation-gas, rent)
Future 24% (investments, savings, mortgage, charity)
Charity or Past 14% (utility bill, car loan)

If we would like to have the past and charity as separate categories, it would result in:

Present 62%
Future 24%
Past 9%
Charity  5%

It still looks like an ideal budget. In this scenario, what should be categorized into the past would either be utilities or a car loan, as one or the other will fall into the present. Simple and aesthetically pleasing, right?