Part of the Series — Money: The Arms Turn Wings Way
Disclaimer: This content is provided for educational and informational purposes only and reflects the author’s personal views, research and experience. It is not personalized financial, investment, legal or religious advice, nor a recommendation to buy or sell any investment. Readers should do their own research and, where appropriate, seek advice from qualified professionals or scholars.
Now that you are earning, or even receiving an allowance from your parents, the next question is simple and unavoidable.
How should you spend this money?
First, know this: you will be asked about your money and how you spent it. The Prophet, peace be upon him, said: “The feet of the son of Adam will not move from before his Lord on the Day of Judgement until he is asked about five things: about his life and what he did with it, about his youth and how he spent it, about his wealth and how he earned it and spent it, and what he did with what he knew.” So how you spend is not a minor matter. It is something you will answer for.
Second, never be spendthrift, wasteful, extravagant, a squanderer. God tells us in the Quran, “Give the relatives their (due) right, as well as the needy and the traveler, but do not squander wastefully. Indeed the wasteful are brothers of satans, and Satan is ungrateful to his Lord.” (17:26-27) This is a clear prohibition, not a suggestion.
Third, be balanced. Here is a simple framework you can start with:
- One third for needs — food, transport, bills, essentials
- One third for yourself — the things you enjoy, within reason
- One third for savings and emergencies
If that feels tight, you can adjust:
- 50% needs, 30% yourself, 20% savings
- 70% needs, 20% yourself, 10% savings (if money is very tight)
The percentages matter less than the habit. Every time money comes in, some of it should go somewhere other than spending.
Of course, if your needs increase because you have more responsibility — a wife and children you support fully, or parents you now help — your needs percentage goes up, and your “yourself” percentage goes down. That is not a failure of the plan. It is the plan adjusting to your life. The habit stays the same: money comes in, some of it goes somewhere other than spending.
If you are young and live with your parents and have not much responsibilities yet, you can save even more — up to 70% of your income in your first few years of making money. How? By making smart choices in how you enjoy yourself. Free activities, sports, time outdoors with friends, reading, learning a skill. All of this can be cheap or even free, and it builds you at the same time. You do not need to spend money to have a good life. You need to be creative about how you enjoy it.
The problem almost everyone has
Here is the trap. No matter how much money a person makes, their expenses have a way of rising to match it.
A raise comes in. A new phone appears. A nicer apartment. A bigger car. The money goes up, and the spending goes up with it. Nothing is left over.
This is not a money problem. It is a spending problem.
Rich Dad Poor Dad describes it this way: people keep buying liabilities and never build their asset column.
When your income increases, that is your chance to increase your investing amount, not your spending. Keep your expenses as if you never got the raise. Or at least split the increase between investing and spending. Know that if you spend it all, you will arrive later than someone who built their investments from a young age.
Assets and liabilities
This is the single most important idea in this post.
An asset puts money in your pocket.
A liability takes money out of your pocket.
That is the whole definition. Simple and usable.
Now test the things people buy:
A new car. You pay for fuel. You pay for maintenance. You pay for insurance. It brings no cash in. It is a liability.
A new home you live in. You pay for finishing and furnishing. You pay for electricity, water, gas, internet, telephone, and maintenance. It brings no cash in. It is a liability.
This is not a moral judgment. Cars and homes can be good things. But they are not assets. They are expenses. Knowing the difference is the whole game.
The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets.
Pay yourself first
Here is the practical rule that changes everything.
Imagine you get paid $100 per month. Taxes may take $20. You are left with $80.
Most people spend the $80. Then they say, “I have nothing left to save for future crisis or invest.”
The person who builds wealth does the opposite. They pay themselves first. Before anything else, they take a portion and put it into assets. Then they live on what is left.
Pay yourself first. Invest first. Live on the rest.
What to buy instead
Here are the real assets to acquire:
- Businesses that do not require your presence (you own them, but others manage them)
- Shares (stocks)
- Sukuk (alternative to bonds)
- Sharia-compliant mutual funds
- Income-generating real estate
- Murabaha and Ijara contracts (alternative to notes and lending agreements)
- Royalties from intellectual property — music, scripts, patents
- Anything else that has value, produces income or appreciates, and has a ready market
Acquire assets you love. If you don’t love it, you won’t take care of it.
Buy luxuries last
Rich people buy luxuries last. The poor and middle class buy luxuries first.
The poor and middle class buy big houses, diamonds, jewelry, boats, appliances, clothes, bags, consumables, and they buy them on installments. They want to look rich. They look rich, but in reality they go deeper into debt on credit.
To be clear: it is not a problem to buy a car or a house on installments if your assets generate the income that pays those installments. The problem is buying things on installments when your only income is your salary, and you have no assets. That is the trap.
An example: Maybe in your life you need a car. You already have some money. Why buy a luxury car with all of it? Buy a brand new regular one, or even a used one that will do the job. With the rest of the money, buy a real asset that generates income. The asset will grow. The luxury car will lose value the moment you drive it off the lot.
Assets first. Luxuries later.
Wealth: the real definition
Here is a question that changes how you think.
If I stopped working today — or got sick and could not work — how long could I survive?
That is wealth. Not how much you earn. Not how much you have. How long your money would keep you alive if the income stopped.
This is not about leaving your job. As I said in Money 102, earning is very important. The point is this: if your asset column can generate more income than what you earn, then you are safe. If you get sick, you still have the same income.
Wealth is the measure of the cash flow from your assets compared to your expenses. As long as your expenses are less than the cash flow from your assets, you grow richer, with more and more income coming from sources other than your physical labor.
This is what it means to get out of the “Rat Race” and onto the “Fast Track.”
What is the Rat Race? It is being stuck at work only to cover your expenses. You have no way out. If you stop working, you cannot survive. That is the trap. It is not humiliating — it is just a reality that many people live in without realizing it. The goal is to build a way out.
Four areas of financial knowledge
If you want to build wealth, you need to learn four things.
1. Accounting. The ability to read and understand financial statements. This is financial literacy. It lets you identify the strengths and weaknesses of any business.
2. Investing. The science of making money with money. It involves strategies and formulas. It uses the creative side of your brain.
3. Understanding markets. The science of supply and demand. Does an investment make sense based on current market conditions?
4. Law. Knowledge of tax advantages and legal protection. You need to know: if you are a person, what are your tax advantages? If you open a company, what are the tax advantages? Compare them. Each country and every situation is different. The point is to know the rules where you live, and to use them wisely.
You do not need to master all four at once. But you should start learning them.
Pay yourself first, again
Three management skills matter most if you want to run your own business:
- Management of cash flow
- Management of people
- Management of time
And two rules to remember:
- Do not get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first. Then buy the big house or the nice car. Being stuck in the rat race is not intelligent.
- When you come up short, let the pressure build. Do not dip into your savings or investments. You only take a small portion to invest, so do not lean on it whenever you have a shortage. Only go for it when there is a real disaster or emergency. Taxes that got deducted from you will never be back. But your investment will be back after you build it for years. It will start generating income. If you re-invest that income, instead of using it as other income, it will grow bigger and faster. Then you can buy luxuries from the income your investments generate, instead of using the income that built those investments in the first place.
The rich know that savings are only used to create more money, not to pay bills.
A note for younger readers
If you are still at school, this post is for you too.
You may not have a salary yet. But you already handle money. Allowance. Birthday money. Feast money. Money your grandparents pressed into your hand for no reason.
The same rules apply, just in smaller amounts.
Know the difference between an asset and a liability. A toy that breaks is a liability. A book that teaches you something is an asset. A game you play once and forget is a liability. A skill you learn is an asset.
Pay yourself first. If you get 100 pounds, put some aside before you spend. Even a small amount. The habit matters more than the number.
Buy luxuries last. If you want something expensive, save for it. Do not borrow. Do not ask your parents to buy it just because you want it now.
Here is how to do it. Make a plan. Know how much it costs. Know how much you can save each week. Then calculate how many weeks you need. If you save 20 pounds a week and the thing costs 200 pounds, you need 10 weeks. Write it down. Mark the weeks off. When you reach the end, buy it with money you actually have. That feeling of buying something you saved for is better than the thing itself.
Ask your parents to teach you. If they know about money, ask them. If they don’t, learn together. This is one of the most valuable things a family can do.
You do not have to wait until you are grown up. You can start with the next pound that comes into your hand.
A must-read
Rich Dad Poor Dad by Robert Kiyosaki.
This is not just a book to start with. It is a book you must read. It teaches the difference between assets and liabilities, the importance of paying yourself first, and why so many people earn more but never get ahead.
Read it with an open mind. Some of the advice is debated. Some of it is American-specific. But the core ideas are powerful, and they apply anywhere.
Where this goes next
Next, we look at charge cards (credit cards): how to use them without falling into the trap, and how to benefit from the 30-day float if you are disciplined enough. We will also cover tracking and optimizing your spending.
You will be asked about your money and how you spent it. So spend it wisely. Buy assets. Pay yourself first. Buy luxuries last. That is how you build a life where money works for you, instead of you working for money.
Further Reading
- Waste Not, Want Not (English) — Dar Al-Ifta Egypt’s article on wastefulness and overconsumption. It includes the key Quranic verses on moderation and the hadith about leaving your heirs rich rather than poor. It also explains how waste harms society and why Islam calls us to use resources sensibly.
- Respecting Time (Arabic) — Dar Al-Ifta Egypt’s reminder on the value of time. It includes the hadith that you will be asked about your life, your youth, your wealth, and your knowledge. This is the source for the line about being asked how you spent your money.
- Moderation in Living (Arabic) — Dar Al-Ifta Egypt’s article on balanced spending. It discusses the Quranic command to eat and drink without excess, and the prohibition of wastefulness. It is the source for the verse about the wasteful being brothers of the devils.
- Moderation in Spending (Arabic) — Dar Al-Ifta Egypt’s fatwa on finding the middle path between miserliness and waste. It explains that spending should be neither stingy nor extravagant, and that your first obligation is to yourself and those you support. It includes the hadith “Begin with those you support.”
