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RizqWise: Episode 1 – The Problem with Letting Money Run your Life

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“An excellent, insightful podcast worth listening to if you want to manage your money in a purposeful, benefit-driven manner guided by Islamic values.”

– Shaykh Faraz Rabbani

The Problem With Letting Money Run Your LifeDo you run your money?
Or does your money run you?
Most people have a dysfunctional relationship with money. They try not to think about it because — let’s face it — it’s usually an uncomfortable topic. And they really only pay attention when there’s a major crisis (or purchase).
To make matters worse, there aren’t many places where Muslims can turn for help. There’s a lot of resources in the “mainstream” personal finance space. But the problem is, as a Muslim, there’s always a disconnect between what the experts say and what you believe.
Here’s the good news: there is a way to bring your financial life in line with your values as a Muslim. It begins by redefining your relationship with money and telling it who’s boss.
In this first episode of Rizqwise, you’ll discover:

  • Why we decided to build a personal finance resource just for Muslims
  • What role religion should play in defining your relationship with money
  • Why most people underestimate the role money plays in their lives
  • The problem with limiting the discussion to “avoiding interest”
  • Why most people go through life on auto-pilot and live to regret it
  • How to apply Prophetic advice that we’ve all heard to your finances

Click here to listen to the Podcast

Video: Ethics of Advancement: Understanding Islamic Economics – Shaykh Faraz at UTM’s IAW

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Ethics of Advancement: Understanding Islamic Economics – Shaykh Faraz at UTM’s IAW

Shaykh Faraz Rabbani explains the ethics and values underlying Islamic economics–going beyond the “minimums” that are the concern of much of “Islamic finance” to the higher purpose and transformative good that underlies Qur’anic teachings and Prophetic guidance related to matters of money and financial activity.

Topics of discussion included the ethics of interaction, self-reform, and mindfulness of others.

Do I Have to Move Out if My Parents Get a Home by Contemporary Mortgage?

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Answered by Shaykh Faraz A. Khan

Question: My parents recently bought a house on mortgage. I tried to advise them against it, but they won’t listen. Sheikhs I’ve asked have given me two main alternatives, (1) live with my parents and refuse to pay any of the mortgage payments, just paying the basic bills (my parents are fine with this) or (2) live alone (my parents are not so fine with this). I need further advice.

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

Your responsibility is to advise them with gentleness and wisdom, yet you are not obliged to move out. And if they are upset with your moving out, then it is definitely not advisable. Live with them and treat them with excellence. Show them the beauty of a life of piety (taqwa), through your behavior and character more than your words.

You can also direct them to viable shariah-compliant alternatives in the Islamic finance sector, by which they may still gain ownership of a home. Lastly, a scholar should be consulted to assess their personal situation and what options they might have.

And Allah knows best.
wassalam
Faraz A. Khan

Checked & Approved by Faraz Rabbani

Purchasing a Home Through a ‘Rent-to-Own’ Arrangement (Diminishing Musharaka)

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Answered by Shaykh Faraz A. Khan

Question: What is the shari’ah ruling concerning purchasing a home through a rent to own program. Is it haram or halal?

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health states.

Leading contemporary scholars state that ‘rent-to-own’ arrangements (diminishing musharaka) are permissible, provided that certain conditions are met.

The basic arrangement entails:

(1) Creating joint ownership of the property between the financier and the client.

(2) The financier leasing its share of the property to the client and charging rent for that.

(3) Actual purchase by the client of the units of the financier’s share over time. Each sale must be effected with a separate offer and acceptance at the actual time of purchase.

(4) Adjustment of the rental fee over time, based on the amount of share remaining under the financier’s ownership.

Each of the key elements (1-3) in this arrangement is itself permissible, yet all three cannot be joined together in one combined transaction, such that one element is a condition for the other.

Rather, in this arrangement, there is a separate and independent promise by the client (a) to lease the financier’s share of the property for rental payment, and then (b) to purchase units of the share of the financier over time. This promise is legally binding and enforceable in court, yet not part of the actual contract itself.

For a detailed discussion on this type of arrangement, as well as its requisite conditions, please see Mufti Taqi Usmani’s work, An Introduction to Islamic Finance.

Finally, one must ensure that the financier providing the ‘rent-to-own’ arrangement (diminishing musharaka) does so in a Sharia-compliant manner.

And Allah knows best.
wassalam
Faraz A. Khan

Checked &  Approved by Faraz Rabbani

Can I Offer an Incentive When I’m Seeking a Loan?

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Answered by Shaykh Faraz A. Khan

Question: What is a halal form of offering incentive to a loaner when requesting a loan. I am a small business owner seeking to purchase a building/shop and I am in need of start up money. Everyone is interested in investing in exchange for a continuous percentage of profit. I am more interested in one-time loans, but I do not know the best way to present it to them in a way they feel benefits them.

 

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

In Islam, a loan is considered a type of charity, that is to say, no benefit can be attached to it. One simply lends a particular amount of money, and then takes back that same amount of money upon the due date.

There can be no worldly incentive associated with the contract; the only incentive that can be offered is otherworldly, i.e., reward in the next life. Many Companions are reported to have said, “Any loan that comes with a benefit is a form of usury.” [Bayhaqi, Sunan Saghir]

Having said that, the otherworldly incentive is huge. A person who seeks a loan is often in grief or difficulty, and our Beloved Messenger (peace and blessings be upon him) said, “Whoever relieves a believer from a worldly grief, Allah will relieve for him one of the griefs of the Day of Judgment. Whoever provides ease to a person in difficulty, Allah will provide him ease in this world and the next… Allah continues to aid the servant so long as the servant aids his brother.” [Muslim]

Please also see this related answer, specifically dealing with the reward of giving a loan:

Loans Entailing More Reward than Charity and the Validity of an Estate’s Executor Being a Beneficiary in the Will

Finally, one could consider using Islamic alternatives such as financing mechanisms predicated upon profit and loss sharing, such as joint partnership (sharika/musharaka) and silent partnership [of capital and labor] (mudaraba). For more detail, please see An Introduction to Islamic Finance by Mufti Taqi Usmani.

And Allah knows best.
wassalam
Faraz

Checked & Approved by Faraz Rabbani

Is Leasing a Car Permissible?

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Answered by Sidi Salman Younas

Question: Is leasing a car allowed? ie you make monthly payments so that in essence you are renting a car.

Answer: In the Name of Allah, Most Gracious, Most Merciful

salamu `alaykum wa rahmatullah

I pray you are well and in the best of health.

Yes, leasing a car is permitted if:

(a) All the rules and conditions required by the shari`ah are met, and

(b) There is nothing stipulated in the lease contract that goes against the shari`ah (such as aspects of riba’).

In the terminology of Islamic Law, leasing is known as ‘Ijarah’ and many of the major scholars of Islamic Finance, such as Mufti Taqi Usmani, have written in detail regarding its rules and conditions. Some of the basic rules and conditions for leasing are:

(1) It is a contract wherein the owner transfers the usufruct of the item being leased to another person for an agreed period and at an agreed consideration,

(2) The leased property remains in the ownership of the seller, and only its usufruct is transferred to the person it is being leased to. (This implies that anything that is consumable – like food or money – cannot be leased)

(3) Since the corpus of the leased property remains in the ownership of the lessor, he is responsible for all the liabilities emerging from the ownership e.g. paying the property tax on a house leased out.

(4) All the liabilities related to the use of the property shall be borne out by the lessee e.g. electricity and water bills in a leased house.

(5) The lessee is liable for misuse and negligence – otherwise he is not as it is considered a trust.

(6) The period of the lease must be determined and stipulated. The amount of rent must also be determined for the whole lease period. The amount can differ for different ‘phases’ if specified clearly, otherwise the contract is considered corrupt. The upshot is to contractually stipulate things in a way that will avoid future dispute.

(7) The lessee can use the item for only the purpose it was stipulated for.

(8) There should be nothing in the contract that entails interest, such as late-payment fees.

Thus, it can be seen that the Islamic understanding of leasing differs somewhat from prevalent, conventional forms of leasing. One should ensure that all his/her actions are in conformity with what the shari`ah has prescribed before proceeding to do anything.

For a detailed introduction to the concept of leasing please refer to Mufti Taqi Usmani’s “Introduction to Islamic Finance”.

Wasalam
Salman Younas

Checked & Approved by Faraz Rabbani

Live Webinar: “Interest-Based Finance and Global Warming: Making the Connection” – Ethica Institute

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Live Webinar: “Interest-Based Finance and Global Warming: Making the Connection”

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How does interest-based finance contribute to global warming? And how does Islamic finance provide an alternative?

We explore these and other topics in this 40 minute presentation and follow up with your live Q&A.

Cost: FREE

Where: The comfort of your desk

When: 6pm Dubai time, Sunday, December 12, 2010

Register here: www.facebook.com/EthicaInstitute

What You Get:

* 40 minute presentation with slides

* Live Q&A

* Guidance on how to get active

* Free downloadable article providing step-by-step guidelines

We briefly look at how interest-based finance imposes unnatural demands on humans and nature, and explain how Islamic finance offers the more ethical alternative. Most importantly, we ask you to get involved and give you some simple steps to get started.

Across the globe, every summer gets hotter and every winter gets milder. Between 1980 and 2007, the summer Arctic ice area shrank from ten million square kilometers to four million square kilometers. At this rate, the Arctic will be almost free of ice within fifteen years and the sun, with no large ice sheet deflecting its light, will have free reign to warm our oceans at will.

Rising sea levels and increasing global heat are not part of a natural, glacial shift in the Earth’s weather patterns, as some of those in moneyed quarters might have us believe, but rather a dramatic environmental shift all happening in a blink of the Earth’s archaeological eye. It is caused by us. A fact easily measurable from carbon data in ice stratigraphy dating back millions of years.

Space is limited—register here!

We’re limiting registration to ensure that each attendee gets the best experience possible. For more details and to register join us on Facebook.

Career Options In Islamic Banking And Finance – Ethica Institute

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Career Options In Islamic Banking And Finance – Ethica Institute

A webinar recording on Islamic Finance courtesy of Ethica Institute. A transcript of the audio is also available. Ethica Institute also offer a variety of online resources and learning opportunities in the growing field of Islamic finance.

“If you are seeking a solid, Shariah-grounded Islamic finance training program, I would unhesitatingly recommend Ethica Institute of Islamic Finance™ over anyone else.”
Shaykh Faraz Rabbani, Shariah Scholar, StraightWay Ethical Advisory & Educational Director of SeekersGuidance

“The material on the Ethica Institute™ web site is terrific. Going through their online sessions will provide a solid understanding of the fundamentals of Islamic Finance.”
Mohammad Fadel, Assistant Professor of Law, University of Toronto Faculty of Law

A Meeting with a Great Scholar of This Age: Mufti Taqi Usmani by Ustadh Abdullah Anik Misra

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A Meeting with a Great Scholar of This Age: Mufti Taqi Usmani by Ustadh Abdullah Anik Misra

Last night, six members of the Seekers Guidance team who reside in Amman, Jordan had the opportunity to meet Shaykh Mufti Taqi ‘Uthmani. Considered by many people of knowledge to be one of the foremost scholars of our age, and especially known for his pioneering work in the field of Islamic Finance, the shaykh was visiting Amman to attend a conference of scholars regarding Islam and the Environment. Other scholars that the group had the chance of greeting that night included Shaykh Yusuf Qaradawi, Shaykh Abdullah bin Bayyah and Dr. Ingrid Mattson.

After some hours of anxious waiting, we had the chance to spend a few minutes with Mufti Taqi Uthmani in the lobby of his hotel after the day’s proceedings. Being aspiring students of knowledge, we asked what advice he had for those seeking to study the Islamic sacred sciences. He responded in Arabic, to the effect that:

1) Sacred knowledge is of no use or benefit to the aspiring student unless they act upon their knowledge and bases their works upon it. And the most beneficial of works is that which brings one closer to the obedience of Allah Most High.

2) A student must purify their intention as to why they are seeking knowledge. Their intention must be purely and sincerely for the sake of Allah Most High.

3) A student should firmly adhere to the Sunnah (life-example) of the Prophet Muhammad (peace and blessings be upon him) in every aspect and circumstance of their life.

4) A student must be constantly turning back to Allah Most High through their life journey, in all situations. Returning means to seek help from Allah against all difficulties and challenges, to seek to please Him, to seek protection and forgiveness from Him, and to be grateful and humble to Him.

5) A student of knowledge must be make lots of supplication (dua’) to Allah Most High, for every single one of his needs, whether they be needs of this world or the next.

Then, the Shaykh answered two questions briefly and returned to his room to rest for the next day’s events. We noticed how the greatest of scholars such as Mufti Taqi always gave the most comprehensive advice when asked, which was most relevant to everyone and reflected their deep wisdom. We were thankful for the opportunity to meet this erudite and wise scholar of our times, even if it was for a short time, and we hope that we can all act on these advices. We ask Allah Most High to bless all of the students of knowledge and give us tawfiq and sincerity.

—
Ustadh Anik Abdullah Misra is currently teaching Meccan Dawn: The Life of the Beloved Prophet Muhammad at SeekersGuidance this semester.

Pursing an Actuarial Career & Working in Takaful Companies

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Answered by Mufti Muhammad ibn Adam

Question: 1. If i pursue an actuarial career, I will be limited to working in takaful companies. However, scholars differ on what is permissible and impermissible in this regard. As I Hanafi, am I limited to working at a takaful company that have Hanafi scholars on their shari`ah board? 2. If I pursue an actuarial career, I would have to work with a conventional insurer first. Would this be permissible if my intention is to change to a takaful company as soon as I get a chance? 3. Due to the all these issues, I’ve though of switching to the field of chartered accountancy. I’ve read that Mufti Taqi permits external auditing. Do you feel it is best for me to switch fields? 4. Many Islamic finance professionals state that Islamic finance is not perfectly halal, but I should join in order to fully make it halal. Islamicly, is taking this view point correct (i.e. to earn income which isn’t strictly halal to achieve an Islamic ‘goal’)?

Answer: In the Name of Allah, Most Compassionate, Most Merciful,

It is heartening to know that you wish to pursue a Shari’ah compliant career and thus earn halal income, Al-Hamdulillah. May Allah Most High facilitate this for you in the best of ways, Ameen.

1) As you are aware that all forms of conventional insurance have been deemed unlawful by most contemporary scholars due to them containing elements of interest (riba), gambling and contractual uncertainty (gharar). As such, it is not permitted to work or develop a career in the actuarial industry where one’s job would entail calculating insurance premiums, calculating risks and costs of insurances, providing advice and statistical information on insurances and other similar activities.

Working in Islamic cooperative insurance (takaful) companies is indeed a viable alternative. There are undeniably differences in certain issues relating to Takaful between scholars who are experts in the Islamic finance industry, and not everything advertised as halal is halal. As such, my suggestion would be that you carefully consider the products offered by the financial institution you would like to work for as well as its Shari’ah Board scholars, and if you trust and are content with what the company has to offer, you may work for that company. You do not have to limit yourself to working for Takaful companies that have Hanafi scholars on their Shar’iah Board.

2) It would not be permitted to work for a conventional insurance company even with the intention of working for a Takaful company in the future, since ends do not justify the means, especially when, as you say, there is a risk of not finding work with a Takaful company.

3) Pursuing a career in accountancy is also an option. It is generally permitted to work as an external auditor, since one is not personally involved in interest-based transactions. As for what is preferred, if you can find a job in a Takaful company whose Shari’ah scholars you trust, then it may be better to work in the Takaful industry rather than in accountancy.

4) Like any industry, the Islamic finance industry is not free from flaws. But this does not mean that the various products offered as alternatives to conventional mortgages and insurance are un-Islamic and interest-based schemes in disguise. However, every Islamic financial institution and each Islamic finance product offered has to be studied on its own merit. Not everything declared as halal is halal, and neither is the whole Islamic finance industry haram. As such, when the time comes, carefully select which Takaful company you would like to work for, keeping in mind the credibility, knowledge and righteousness of the scholars who sit on its Shari’ah board.

And Allah knows best

Muhammad ibn Adam al-Kawthari

Darul Iftaa, Leicester, UK

www.daruliftaa.com