As we are about to enter the blessed month of Ramadan, we are all also dealing with the impact of the Coronavirus pandemic. Whilst Ramadan and the pandemic represent very different things; both prompt us to reflect on our lives, our relationship with our Creator and how we are conducting our affairs. A component of our reflections will undoubtedly centre around our finances.
Importance of Sharia Compliance in Our Financial Affairs
The following Islamic teachings illustrate the importance of how we earn and organise our Finances:
1. It was narrated from Ibn Mas’ood (may Allah be pleased with him) that the Prophet (peace and blessings of Allah be upon him) said: “The son of Adam will not be dismissed from standing before his Lord on the Day of Resurrection until he has been questioned about five things: his life and how he spent it, his youth and how he used it, his wealth and how he earned it and how he disposed of it, and how he acted upon the knowledge he acquired.”
(Narrated by al-Tirmidhi, 2422; classed as hasan by al-Albaani in Saheeh al-Tirmidhi, 1969)
2. Those who consume interest cannot stand [on the Day of Resurrection] except as one who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein. (Chapter 2, verse 275)
3. Believers! Have fear of Allah and give up all outstanding interest if you do truly believe. But if you fail to do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of the return of your capital; neither will you do wrong nor will you be wronged. (Chapter 2, verses 278 to 279).
Accessing Financial Help due to the Pandemic
Before talking about how Simply Ethical can help you, given the current situation it’s important to recognise many of us would have suffered a drop in income due to the Coronavirus pandemic. Hence clearly your first priority is to ensure you have sufficient funds to get through this crisis. This requires reviewing your finances – your income and expenses – and where there is a shortfall, you may have to consider ways to bridge this. The UK government has set out a range of measures to help people – the following link to the Money Advice Service provides a good level of detail of what Government help is available: https://www.moneyadviceservice.org.uk/en/articles/coronavirus-what-it-means-for-you
What Simply Ethical Can do to Help
Simply Ethical was set up in 2010 as a FCA Regulated and Authorised Financial Advisory firm precisely to help and advise Muslims in the UK live their lives in greater compliance with the teachings of Islam when it comes to their Finances, in particular pensions and investments.
With the aim of helping you financially plan for a healthy and blessed financial future, the following are things you may want to consider:
a. Pension Consolidation
Many of us may have several pension pots, often through the different employers we have worked for overtime. At Simply Ethical, through our Simplified Advice Online service you can consolidate all your previous pots into one pension, which will be invested and managed for you in a diversified, Sharia compliant portfolio. The service is designed to be totally online – easy to use, accessible and cost effective. This doesn’t need to involve any additional investment by you, it can just mean you tidy up your previous pensions by having it in one pot that is invested in halal investments. Of course, you may also add new funds should you wish, either as a lump sum or on a regular basis.
To learn more about pension consolidation, please click here.
b. Power of Regular Savings & Investments
The current crisis has made many of us realise the importance of planning for the future and having some savings and investments to fall back on.
As a financial adviser for nearly 15 years, I’ve seen the benefit of financial planning – those who started by putting as little as £100 per month into savings, have managed over the years to accumulate significant savings such that they’ve been able to put down a deposit on a house or send their child to University without taking on a Student loan or even to build a decent pension towards their retirement.
It’s all about taking the time out and making it a priority to do this. Many of us fall into the trap of thinking I’ll get around to it once I’ve made a bit of money, “we’ll cross that bridge when we have to and somehow things will work out”.
Yes, God does promise to help and provide for us; but our side of the contract is that we must make the necessary effort and “tie the camel”. By leaving things to chance and not planning, we can’t claim that we’ve fulfilled our side of the bargain.
To learn more about how regular saving can help you save for children’s education or other financial objectives, please click here.
c. Personal Financial Advice
For those whose financial affairs are relatively complex or need more tailored financial planning help – then our professionally trained Financial Advisers are here to help.
If you are interested in this, please email email@example.com with a brief description of your circumstances pertaining to the financial advice you are seeking and we will be in touch to arrange an appointment; while the rules around “social distancing” are in place, these appointments will be by telephone or video call.
To learn more about how we can help in this area, please click here.
Ramadan is a time when many of us will pay our zakat. This is the 5th pillar of Islam and such a very important obligation. Many people are often confused or lack knowledge when it comes to Zakat on investments and pensions. For all our clients we calculate the zakat due on their investments and pensions. The National Zakat Foundation (NZF) provide excellent educational material on how zakat should be calculated on different types of investments and pensions. For all your questions, consult NZF’s Knowledge Bank: https://nzf.org.uk/about-zakat/knowledge-bank/