Gifts, Not Money, For Charity

Sadaqah (charity), like zakat (alms),  is something we must hasten and the fastest way to give charity after a paycheck is by giving it in a form of money. There's nothing wrong with giving money as charity, but I'm trying to avoid it under certain circumstances. So, here's a couple of reasons why I'm not giving money as charity.

1. Giving money directly to a person is a big no-no. Money is a piece of paper that has no value than what is declared by the government to be accepted as a form of payment or simply a medium of exchange. If we give money to a person as charity then what are we exactly exchanging it for? Someone comes and ask for help, don't give money, give something that is tangible and needed.

If money is given, then the person will make decisions with that money that might not help them and might seek more money to repeat those poor decisions (i.e. getting wasted).

And do not give the weak-minded your property, which Allah has made a means of sustenance for you, but provide for them with it and clothe them and speak to them words of appropriate kindness. 4. Surat An-Nisa (Women; 5)

2. Charitable organizations need money to operate, so they would take percentages of money given to them to cover wages or any operating costs. If we give money as charity to organizations, its distribution shouldn't be a portion, but whole. Every time I'm asked whether I would like to give my change to charity, I'm suspicious, how much of my change will actually go towards the cause?

A charitable organization needs a for-profit business backing. It should be a Corporate Social Responsibility (CSR) wing, where volunteers are employees of its company(ies) and those working on that wing are paid by the company. Any other arrangements are unsustainable and unecessarily robbing from the people's charity.

And test the orphans [in their abilities] until they reach marriageable age. Then if you perceive in them sound judgement, release their property to them. And do not consume it excessively and quickly, [anticipating] that they will grow up. And whoever, [when acting as guardian], is self-sufficient should refrain [from taking a fee]; and whoever is poor - let him take according to what is acceptable. Then when you release their property to them, bring witnesses upon them. And sufficient is Allah as Accountant. 4. Surat An-Nisa (Women; 6)

This article was inspired by an ayat that I currently can't find....


but here's a sample of my doubt: http://m.csmonitor.com/Business/2015/0519/Cancer-charities-defrauded-donors-of-187-million-feds-say-video

In Search of the Way to Save

Looking to the stars - Calvin & Hobbes

Personal finance is personal. Rule-of-thumbs may be a good start, but it surely isn't for everyone. I certainly have my own way to budget, and out of all the apps I've looked through to help me, not one found to be a perfect fit. I then stumbled upon an iOS app, earmark. It's a social saving-spending app for you to set the top five things you'd like to buy and share it with everyone, including status updates when you forego spending to save for said five items. Pretty neat.

Three things I like about this:

1. Clarity. It would help me take a step back and remind myself that I have saving goals to achieve. In moments of need of clarity, I think this app would help me when my mind start playing the justifying-a-purchase games.
2. Motivation. We are social beings and our motivations sometimes require that social interaction. "Not buying this for that trip, proud of myself", and then receiving a supporting reply from a friend, "you go girl! let's make it to Makkah". Seriously, saving for hajj is hard...
3. Communication. Sometimes other people make our personal spending plans. Hanging out, do this, eat that. Those things add up.When we make it known to friends we're saving for something, it makes communicating personal intentions and rejecting an offer a lot easier.
4. Behaviour. People get easily hooked on social media outlets. If we get hooked on the app, we get hooked on our goals, we will achieve it.

What I don't like, but they might actually be right, is;

"We hate budgeting. 

So does everyone, ever.

We hate budgeting. So does 99.9% of the population.

We also like spending money. So does 100% of the population. 

Earmark helps people who hate budgeting save money while spending it."

I like that I've set myself a budget. It's life changing. But I guess for those who haven't, this app might actually work. For myself. I don't know. I don't have an iPhone. What I'm interested in most is whether I can apply earmarking [designate (something, typically funds or resources) for a particular purpose.] for myself.

So, what I'm proposing to do is to:

1. Unify my goals. I'm going to follow the findings that people become better savers when they have a single goal (pdf link). So I'll unify a single goal to the items I'd like to buy with a goal of higher calling or a long-term based goal like retirement.
2. Partition. Increase the chance of success of earmarking by separating the money physically, especially if the money has a visual reminder (pdf link). So, create a custom printed wristlet, or wallet (2), with a picture as my reminder.

Now, if I have a wallet for zakah, what are my visual cues...

"Is the description of Paradise, which the righteous are promised, wherein are rivers of water unaltered, rivers of milk the taste of which never changes, rivers of wine delicious to those who drink, and rivers of purified honey, in which they will have from all [kinds of] fruits and forgiveness from their Lord, [...]"

47.Surat Muĥammad (Muhammad; 15)

"He will forgive for you your sins and admit you to gardens beneath which rivers flow and pleasant dwellings in gardens of perpetual residence. That is the great attainment."

61. Surat Aş-Şaf (The Ranks; 12)

One way ticket to Jannah. Insha'Allah.

How to buy a car in 2 days

Last month I embarked on the car buying journey. Like any newly minted MBA graduate, I came prepared and ready to negotiate.

My criteria were pretty straight forward: small, four-door, hatchback, excellent gas mileage, reasonably priced.

Initially my boyfriend and I were going to buy the car together. We researched our options online...and also asked our Lyft driver for recommendations.

She suggested we download the app: TrueCar.  We did and we were super stoked about it at first. But, after a while the dealerships just bombard you with quotes.  If you have very specific criteria, this app can help you find the best dealer in the area. But, if you're more flexible and looking for the best deal, it's a little overwhelming.

All in all it helped in the research stage, because we could quickly get estimates on car prices throughout the Bay Area. However, we did not end up using it to make our final purchase.

The first day of actual car shopping was brutal...and not necessarily because of the dealerships. Mainly because when it came down to making a decision, we were not on the same page: I wanted automatic and my boyfriend wanted manual.

We would sit down with a sales guy having discussed our walk away point and our BATNA (best alternative to a negotiated agreement) beforehand. I would pull up my handy dandy spreadsheet. Here's a screenshot for reference (very useful for figuring out what package you want to negotiate):

[This spreadsheet will help you calculate monthly payments if that's most important to you, but also break down in total what you're paying in interest and principal. This helped me decide that I wanted to pay more now, so I have less interest to pay all together.]

But, then we wouldn't be able to commit because we couldn't get the price we were targeting. Now our target was pretty low for the type of car and features we wanted.

On the first day we passed by a used 2011 Ford Fiesta for $10,899 that caught my eye because it was in great condition and well priced. Finally, when we couldn't come to an agreement on the new ford cars, I decided to go for the used car on my own if I could negotiate a lower price, which I did!

So to recap, in order to buy a car in 2 days: do thorough research beforehand, figure out your budget, and commit.

Save Every Time You Spend!

Boy, that title sure does sound like a salesperson trying to sell a scam. I don't know about you, but when I hear programs that puts "save" and "spend" together, I sense trouble. The programs utilizing spending as a means to save available to you are:

1. Bank of America Keep the Change;
2. Wells Fargo Way2Save; and
3. A non-bank offerings from Saved+

They all have one thing in common, automatic saving. The Way2Save and Saved+ offer something similar, in every transaction you'll have money saved to your saving account. For Way2Save, it's a flat $1 put into your savings account per transaction. Saved+ gives more control to the consumer to set the percentage they want to save per transaction. So, if I set it to 10%, when I pay my bills of $100, it'll automatically save $10.

BoA's Keep the Change, on the other hand, applies the classic "save your change in a jar" to debit card transactions. 

There may be things that you may need to pay attention to, like fees for having the savings account, taxes for the matching incentives given, and so on. If you use Saved+, you'd have to pay attention to your budget closely, because it will add up. I'm not saying that these programs won't work for you, I'm saying these programs won't work for me. My way is the old school way of using jars/envelopes and saving before spending.

It is, however, possible to save by spending if spending becomes "spending". Meaning, you spend on your future self by purchasing securities, precious metals, and transferring payments to yourself as savings.

Higher Learning and Higher Earnings

What I learned so far in my life is that how well you do during your bachelors matter a lot on getting that first stepping stone. But what's also important is no matter what job you have, making the right financial decisions and having the discipline to save and invest is the stepping stone to a better financial life.

I was made aware of the Social Mobility Index from my university's Facebook page. It's an index that ranks university based on tuition, economic backgrounds, graduation rate, early career salary, and endowment. When it comes to making the correct financial decisions, we'd have to group ourselves to the university that we can afford. Once stepping out of the financial bounds is when we make the first mistake. The second decision is making sure we study for a profession that we want to be in, and consider the earnings made in comparison to the tuition paid. In other words, calculate your return on investment in getting that degree.

I made none of those considerations in the past, but I'm going to make sure my kids give it some thought.

What You Pay and What You Get

I'd like to apply the wise advice, "Price is what you pay; value is what you get", regarding the annual frenzy to buy the latest thing. In this case, an iPhone.

The price to acquire the iPhone is different for each individuals. The people who wait in line the week before pay the highest in price acquisition. There is a loss of income for the week decided not to work, so you factor in the opportunity cost, in addition to the price that you pay, and the total of the phone plan/contract if you'd like to include it. It becomes one expensive phone.

What do you get in value for the expensive purchase? You get a depreciating asset at a rate of:

• Two weeks after a new launch, old iPhones depreciate about 11%.
• Four weeks after launch, they depreciate about 15%.
• Six weeks after launch, they depreciate about 18%.
• By week seven, they lose about 21% of their value.

Can you buy an investment to balance the loss in 7 or more weeks? Probably not.
It's important to accept the truth about what you pay in price and get in value. If you position planned purchases as an investment, it will trigger motivation, help us make a decision, and sort the needs and wants.

Fasting And Binging

It's technically my daughters first Ramadan. She's 7 and she will have to fast the whole day. Starting around lunch time is when she starts to complain. Under normal circumstances, she never asks to eat. In fact, we have to insist that she eats. During Ramadan, she wants to break her fast as soon as she feels slight hunger. Then she made a plan for break time to eat everything in sight. Of course, once she did break her fast, she didn't act according to plan.

There are two things that are at play during fasting. Hunger and satisfaction. The combination of physical and emotional need to fill the void and feeling satisfied soon after. When we're going against food, we can probably win most challenges. But how can we win against objects, when we window-shop and have a sudden urge to buy?

It's very hard when you're going against yourself without a buffer (friend, family, spouse). I am almost always the loser when I am by myself. The quick answer if you've ever find yourself digging further emotionally to find justification to buy is to quickly remove yourself from the situation. You'll soon remove yourself from the emotions you experienced and quickly gain self-control.

PS.
Happy Ramadan.

During Ramadan, I will be taking a break from this blog, though not a complete break. I will be going through all my past posts and clean up on my poor writing to my abilities. I'll see you after Eid. Salaam.

Why We Can't Save

Blindly spending - Image from Wired.com

Based on my own experience, the one reason why I don't routinely save is because I didn't plan to save. Once I planned, I started saving though it's not a significant amount but it's still saving. Some people might feel that saving is only for people who are in a privileged position to do so, but that's very far from the truth. Everyone must save. Everyday I pass by beggars and I wonder how they they eat for the day. They save for it. And they probably budget too. They know how much they need to live for the day, and save the money they have for tomorrow.

So, if we feel like we can't save, there's probably an amount that we can save but seems too insignificant. In the end we choose not to save. Or, we actually lack the knowledge of how much we can actually save because, like I did for the past 10+ years I didn't plan to. Budgeting or planning is a duty implicitly mentioned in the Quran.

They ask you about wine and gambling. Say, "In them is great sin and [yet, some] benefit for people. But their sin is greater than their benefit." And they ask you what they should spend. Say, "The excess [beyond needs]." Thus Allah makes clear to you the verses [of revelation] that you might give thought.

2. Surat Al-Baqarah (The Cow; 219)

When people are asking how much they should spend on charity, the answer was "the excess". How much is excess? We wont know if we don't write it out on a piece of paper and break down our spending. Not planning is intentionally blindfolding yourself from your money. And if you blindfold yourself from your money, you are risking of going in circles doing what you've always done with your money. Which was not an ideal situation for me.

A Personalized Cash Based System

Forgot password?

I don't like to keep track of my expenses. I don't want to put on an app what I ate and how much I spent. Expense tracking is very tedious for me. I'm a very impulsive person, and I don't think I can change immediately to the ideals of how to manage money properly.

So, I've hacked a cash-based system to fit my personality. I spend very early in the month on any bills that I have to pay. Even money that I commit to save, I "spend" it by separating it quickly. The rest, is money that keeps me alive. My lunch money. I can do what I want with it. I have a baseline on how much I should spend everyday. Any day I overspend, I know that I will compensate on other days by spending less, or none.

It's worked well so far. I don't go to the ATM to pull out cash because I pulled all of it early. This month, I forgot my ATM PIN, entered the wrong PIN 3x and had my card blocked. Luckily, it was only for 2 days.

The Vehicle You Deserve To Have

I have a 20 (+/-) year old car and I've been thinking of purchasing a new one. It's time, maybe. The car is running fine with no issues, but the air conditioner and that it's a gas guzzler (Nissan Pathfinder). I've always been a firm believer that the car I need is the car that will get me from point A to B and fits my budget. The problem, I don't really know which car exactly fits my finances. Until I was given a recommendation to an article by the financial samurai about the 1/10 rule for car buying. It's simple, the vehicle you buy should be 1/10 of your gross annual income. If you make 50,000/year, you deserve a 5,000 vehicle.

And so, now I know that I am currently deserving a combination of public transportation and walking or a scooter.

The Gadget Purchase Rule

What's Next For YOU To Buy!

I'm an avid gadget-news follower, but I don't really buy them. I've mastered the skill of waiting. The wonderful thing about gadgets is if you know what's coming next, and the one after, you'll be able to delay gratification. I've wanted an Apple computer for a long time. Maybe since 5 years ago. Every year I've successfully waited for the next Intel chip, and the one after it. However, since all those years, I've not saved up any money for my purchase. Which is a terrible waste of time and money I could have saved.

I've created "The Gadget Purchase Rule" for people who, like me, love gadgets and would love to purchase them. The rule determines which gadget is affordable within your means.

It's a very simple rule;

price of gadget/20% = amount needed to save

After succeeding to save the amount, you will be able to take 20% of amount saved as a reward to purchase the gadget. Also an additional rule, if the gadget is updated yearly and you plan to update yearly, you'd have to save that amount yearly.

Example, An unlocked contract free iPhone, $649/20% = Save $3,245. You'll have a savings of around $2,596 and an iPhone as your reward. If you'd like to upgrade yearly to a new iPhone, you need to save $3,245 every year. If you can't do that, then it is not a phone within your means.

Another example, I'd like to purchase a Mac Mini. $799/20% = Save $3,995. I plan on using it for a good 3-5 years before upgrading. I'd need to save $3,995 in at least 3-5 years and finally deserve to have it.

It might sound too extreme at first, but really that is the challenge to not only delay gratification but also build up savings. Because we should treat our savings like trees, plant when there's too few, but when in abundance, it does not mean we can cut and use it all.

The Chosen Few

The Chosen One - image from fanpop

I have chosen the apps (android) that I will try out for a month for my budgeting needs;

Toshl Finance, YNAB, MoneyWise, and Pocket Budget

There are two honorable mentions that I eliminated from my testing;
Goodbudget (EEBA) and simplebudget

I will start with the eliminated apps.

Simplebudget have the simplest layout. The app uses an envelope budgeting system. You work your way from determining where you want your money to go. You create envelopes for mortgage, insurance, utilities and so on. You start by making a budget for everything you need. You'll realize at the end of the process, how much income you need to support your spending (cannot be negative number).

Then, track your spending and record it in the assigned virtual envelopes that you've set early on as your budget. One problem is that it doesn't meet my needs due to the fact that I go on business trips and acquire additional income. The amount differs from month to month yet once you've set an envelope, it'll become default as you swipe across months.

Goodbudget (formerly EEBA) is similar to simplebudget, I have problems setting additional income and how it would play to my overall picture of my spending and budgeting. The graphic user interface and flow of the app requires a learning curve much deeper compared to other apps.

So, with that out of the way remains the chosen few where one will rise above all and become the budgeting app to help me reach prosperity. I will update my progress of using the apps.

Tracking Your Spending

Black Bear Tracks

And everything they did is in written records. | And every small and great [thing] is inscribed.

54. Surat Al-Qamar (The Moon); 52-53

I first opened my checking account at 19. I've vague memories of using my checkbook register. Never using it would be more truthful. Which is sad, really, because keeping record of spending plays an important role in being successful financially.

Since my last month's paycheck, I've been trying to get into the habit of jotting all my income and spending. Perfect timing too, because 2 months ago I've finally bought my first smartphone (nothing fancy, an Acer Z2 Duo) to use a budget and spending tracker app. I thought it would be easy and with the convenience of the smartphone, I'll get everything down to the last penny.

I was wrong. I'm off. By a lot.

I've narrowed my mistake to one thing: Procrastination. I kept delaying myself to take out my phone, load the app, and record the transaction. Then whatever is delayed, it never gets recorded.

So, I'm renewing my niyyah. I am committed to take record of all my transactions as they occur.

What's next? I will report on which app works best for me. I apologize that I only have an android phone, so I will try to use apps that are both on iOS and Android.

Money Values: never regret a splurge ever again

A while back I created a page about things I splurge on.  But then I thought it would be just as important to delineate things I don't splurge on.  After all this is a money blog and I focus on wise spending.  Everyone has different money values, and there is no way I would tell someone what exactly they should spend their hard earned cash on.  But, remember that you can and should draw a line between splurges on random stuff and smart spending based on your values.  This will help you spend wisely and stop regretting those impulse buys (you may even have less!).

Write down your budget categories or "money values" on a piece of paper or take these "money values" and rank them:

• Entertainment 
• Outdoor Activities/Sports
• Social/Friends 
• Family/Significant Other
• Pets
• Clothes/Accessories
• Personcal Care/Spa
• Accommodations/Living Space
• Retirement & Savings
• Travel
• Education
• Philanthropy

Another version of this exercise is given in the book "Putting money in its place" by Ken Rouse, using these key words:

• Achievement
• Adventure
• Aesthetics and culture
• Authority/Power
• Financial security
• Friendship/Love
• Health
• Independence
• Integrity
• Philanthropy
• Recreation
• Service
• Spiritual growth
• Wisdom
• Work

Either way pick 5-10 and rank them. Use this information to guide future purchasing decisions! It's as simple as that!

Personally, that ranking translates to my drawing a line and deciding to spend less on these items:

• Personal care (make-up, massages, etc.)
• Basics (Clothes)
• Food / Dining out
• TV
• Concerts

because these items don't reflect my money values.  I'd rather spend money on anything social (making new friends, hanging out with old friends, going out), traveling, and a tiny bit of learning! Though on occasion I spend money on probably all the categories - that's why it's a ranking.

Of course money values change, just like people change as they grow older.  So revisit when necessary!

Spending money on a concert of sorts, but it was cheap and it counts as "hanging out with old friends"

Staying Motivated

Source: Wikimedia

I've tried to create a habit where I have a 20-minute exercise everyday. It worked. For a week. It was no different with money. So, I've kind of automated myself by spending on it immediately. Spend to save and invest. My money move immediately when it comes on payday. Then, I reward myself.

I spend on things like soda, strawberry smoothie ice cream and indulge after I do something for my financial well-being. The little things I love become rewards for myself. If you've seen animal trainers giving snacks as reward for the animals after they do something, this is basically using that technique.

The final two steps is about staying motivated, moving forward, and the importance of creating a healthy habit. And so, we have finally crossed the finished line, 30 steps to a better financial future. Let's go!

I Will Always Protect You

Do you need protection? Image source: http://www.bollywoodhungama.com

We're going to cover the topic of insurance, something I only know very little about and much less so on takaful but I'll give it a try.

Insurance is transferring risks to another party who chooses to absorb the risks whilst you have obligation to pay monthly premiums to said party. For example, I am exposed to many risks when I choose to drive. Risk of getting into an accident, injuring myself, injuring others, damage to vehicles or private/public properties, and so on. You can keep going on and on about associated risks you can think of whilst driving, risks that haven't occurred but might. The risk varies from each person through many variables, such as the town the person drives in, type of driver the person insured and profile of drivers in town. With insurance, I am given the ability to transfer that risk to a company in return that I am obligated to pay $70/month.

Insurance is about uncertainties. The three uncertainties mentioned in step 26 is auto, life, and disability. Life and disability is different to auto because the risk it focuses on is the risk of losing the ability to earn income through death or health. You may have a family that wants those risks covered because they depend on your income, because once you lose your income, things quickly spiral into a big pile of mess.

We now have a problem; the problem of risks and the religious obligation to avoid insurance because it is profiting from excessive risks due to gharar (uncertainty) . You can probably think of a million risk from driving. It is financially impossible for both individual and corporation to cover them all. So, the option we have is to seek takaful companies that are financially able to cover the risks you need covered at a monthly premium you can afford. 

The last part of step 26 is redistributing your wealth once you passes. This is a big topic that needs its own post and in series. And with that, we'll close this post that underlines the importance of protection as part of financial security, for ourselves and the family we leave behind.

And let those [executors and guardians] fear [injustice] as if they [themselves] had left weak offspring behind and feared for them. So let them fear Allah and speak words of appropriate justice. 

4. Surat An-Nisā' (The Women; 9)

Would one of you like to have a garden of palm trees and grapevines underneath which rivers flow in which he has from every fruit? But he is afflicted with old age and has weak offspring, and it is hit by a whirlwind containing fire and is burned. Thus does Allah make clear to you [His] verses that you might give thought. 

2. Surat Al-Baqarah (The Cow; 266)

Spend Less And Earn More, You Should. Yes.

Luke Skywalker and Yoda. Star Wars

Eid Mubarak everyone. I have been gone for too long, but I have not forgotten! My new job is a little too crazy for me and during the holidays I had to catch up with a new book that I'm really excited to be working on (though it turns out to be a really big project) with some editing on Du'a, A Definitive Guide to Supplications from Al-Quran.

Anyways! Let's get things started again with step 25, revisiting your finances and documenting your desired spending. We talked about taking control of our own finances mean being the Chief Financial Officer of our money. It's a weird position to be in since we're also occupying position of manager, accountant, producer (of income) etc. The gist of a CFO in personal finance is either to cut spending or raise income. Ideally you'd like to do both, but both never occur on a continuous basis. You don't get a wage increase every month or year. So, the only option is to look at spending. Once your income increase, you either can keep costs the same (more money left!) or costs increase by spending on higher priced needs or wants. It all depends on your goals and time frame to reach it. You are cutting spending on certain things because you have a reason to cut it, to achieve a goal by the end of the week, month, months, year, and 5 years.

Whilst browsing, I found an interesting CFO mentoring website that got me wondering if there are a personal finance mentor program. There probably is, but at cost. The next best thing to a mentor might be a family member who might not mentor, but can tell it like it is. Another potential, is the local Islamic center to have more discussions about money and build a support program that meets weekly, bi-weekly or monthly.

Just Right

Goldilocks and the Three Bears

And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate

25. Surat Al-Furqān (The Criterian; 67)

I believe that moderation is different for everyone. Take the story of Goldilocks and the Three Bears, we know that Goldilocks likes the things that are just right. For her. What's right for Goldilocks, apparently is right for the little bear. Maybe because they're the same age or height and so on. With money, we need to consider a few more things. For example, person A & B both makes $60,000/year but one lives in an expensive city and the other in a suburb with a lower cost of living. What's right for each of them will be very different.

Reducing spending in step 22 and saving money on groceries in step 23 is trying to find that sweet spot with our spending. We cut the things that we can actually live without for a while (or forever). It can be anything, we just have to pay attention to the things we spend on. With food, the main purpose of food is just to keep us alive. If we strip things down to the core of only needs, we will probably only need to fulfill our basic nutritious needs and stop eating Doritos (I can't!). We don't have to go to the extremes. Find what we really need, and budget in what your wants are, moderately.

Like Goldilocks, it's all about in finding what's just right.

It's too small, it's too big, it's just right?

Spend 'Til You Drop

Broke Monopoly

I had always been taught and told to save. Save for the things I want to buy. Save for my goals. I did exactly just that. I became proficient at saving. Once, I brought a bag of pennies to Toys R Us to buy a handheld game. You can imagine the horror that the clerk went through of counting pennies. By the time I was a young adult, I had developed a habit of saving and spending it all at once. But my spending was of useless spending and brought me to my financial demise. It is like a winning poker player who chooses to go all-in at his last hand and game, then ends up losing it all and being a loser. So, for a long time, I never saw the real lesson of spending when I always feel like a loser in the end.

And spend of your substance in the cause of Allah, and make not your own hands contribute to (your) destruction; but do good; for Allah loveth those who do good.

2. Surat Al-Baqarah (The Cow; 195)

And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate

25. Surat Al-Furqān (The Criterian; 67)

The focus should be balanced. Saving is important but, spending is equally as important. But the word that we all should be more focused on is "spend". The reason is, only through spending can we actually realize a benefit (or destruction!). Think about it. What benefit is there through saving if no spending actually occur? Even the money that WE SAVE in the bank, the BANK SPENDS for benefit. Benefit to the people working for the bank and society. It is the purpose of banks to gather money and redistribute them as loans. The bank profits, and those who borrow for purpose of business profits from income. Or if it is a car loan for example, the bank, the car dealership or person receiving the money benefits. The reminder of excessive spending is, as we all know, what happens on a bigger scale when everyone stretch themselves too thin.

Going back on the topic of step 17, saving for our goals. If you remember "The Priority Pyramid" teaches us the foundation and goals that we should build on; spending less than earned (no additional debt), consumer debt free (no credit card debt or car loans), and building an emergency fund. They are part of what Dave Ramsey calls "The Seven Baby Steps". All of these require spending, than actual saving. Now, there's nothing wrong with spending all your monthly income, if you spend it all your required expenses and the seven baby steps. Once you receive your paycheck, you automate yourself to start spending money to pay for your emergency and future expenses fund, debt, investment fund, college fund, a home, retirement fund and charity. In the end, you're left with nothing. You have spend 'til you drop. But this time, it's okay.

What benefits can you actually get from hoarding and not spending money anyway?

O you who have believed, indeed many of the scholars and the monks devour the wealth of people unjustly and avert [them] from the way of Allah . And those who hoard gold and silver and spend it not in the way of Allah - give them tidings of a painful punishment. | The Day when it will be heated in the fire of Hell and seared therewith will be their foreheads, their flanks, and their backs, [it will be said], "This is what you hoarded for yourselves, so taste what you used to hoard."

9. Surat At-Tawbah (The Repentance; 34-35)

Yikes! Okay, okay. That ayat is about embezzlement of funds, and not redistributing it. But, hopefully the importance of proper spending stands.

Six Simple Steps to Saving Successfully SSS

1. Make it automatic

The best advice I can give you is to make your savings automatic.  Find a savings account that lets you set up automatic deposits.  You may think you'll be adamant and alert and remember to transfer your monthly contribution, and that it'll be a piece of cake...but don't waste your time.  The end of the month will come along, and most likely you'll have spent that money or decide to put it off until next month, because it's 'too much of a hassle right now.'  But really, even if you can save monthly you're better off setting up an automatic deposit, if simply just to save time.

2. Time it right 
Either take it out of your paycheck immediately or schedule it to transfer right after you get paid. Don't wait until the end of the month when you've had all 30/31 days to spend your hard earned cash on something else.  As I mentioned before, once it's close to the end of the month you'll be a lot less likely to transfer money to your savings.

3. Have a goal
You know what makes someone a good saver? Wanting something he/she can't get.  Vacations or concert tickets are a great start.  Figure out how much it will cost and start allocating a little bit every month.  By the time you go on that vacation, you won't need to worry about credit card debt, expensive meals for your girlfriend, or skipping out on that cool snorkeling expedition because the funds are running low.

4. Make it a habit
I would much rather you save $5 every month than $1000 once a year.  Why? It's about making saving a habit, a part of who you are. Not a one time, 'I got my tax refund!' kind of act (though there is absolutely nothing wrong with putting your tax refund into a savings account)... Studies show (don't worry, I've seen 'em) that people who learn to save a little every month or every paycheck start saving more.  Somehow you start to realize how easy it is and you start 'risking' more and all of a sudden you can afford a freaking boat! (FYI that would be an awesome goal)

5. Make it a budget item
If you have a budget, great, add savings as an expense.  That money is gone! Buh-Bye. Well until you take it out to fulfill your goal...

6. Spend it! 
Unless your goal is an emergency fund, allow yourself to spend it.  That's why you were frugal and saved in the first place.

You ready to do this?
Here are some resources that'll help you get started right away:

• Smarty Pig (Great for getting started because it forces you to set a goal and timeline) 
• ING Direct (I currently have an account with them, though I started it way back in 2005 when the interest rate was a whole lot higher)
• Get Rich Slowly Blog This blog has a great summary of different savings accounts with high interest rates