2. Understanding Wealth and Money | Islamic Finance 101

[Music] asalam alikum and welcome to Islamic Finance 101 my name is almin cholan and I'm your instructor for this course today we are talking about Islamic perspective on wealth and money so let's get into it often I get asked what is wealth is money root of all evil how do we imagine this topic and sometimes I ask my student tell me something that comes to your mind when you think about wealth and money and people start often talking about all of the either on one side negative things associated with money and how evil and how bad people are who have it and they probably came to money by doing some corruption and so on or people would say oh money is the Fulfillment of my dream a source of ease um I can do all of these great things and so on it's interesting when we are looking at this situation I I often think that uh the way we look at it is basically by observing what's happening around us it's defines our relationship with money but also our experience and experience of people that we see in in possession of money because during the time of the Prophet sallallahu alaihi wasallam The Companions would look at those who are rich as people who are excelling in Good Deeds because the way that they would uh spend money to do good in their society and we see so many examples of companions doing great Deeds that really show that what the prophet sallallahu alaihi wasallam used to say that wealth in the hands of righteous is a blessing basically when you think about wealth really wealth is like a trial like a test it really as uh some Scholars say magnifies what is in your heart now what is in your heart well think about wealth as something that has uh levels on each of these extreme you would have either extreme wealth or extreme poverty extreme poverty is very dangerous it puts person in a very difficult circumstances where it is sometimes pushing people to deny God to to as as some of the scholars would describe in their book it's almost like the darkness that comes that invites people to disbelief and it can be a great source of Temptation for some people not for everybody but it is definitely a great trial for a lot of people so extreme poverty or poverty in general is not desirable state that is why the prophet sallallahu alaihi wasallam said that upper hand is the better because you don't want to be waiting for somebody to give you so that state of weakness is not desirable in Islam at the same time you see on Extreme and extreme wealth where person is giving up in entire lifetime uh every other aspect of life just chasing that that wealth for the sake of the wealth and that wealth is not used for any benefit of society or good it's just a measure in itself it's all about quantitative growth so what is the right way to think about Prophet uh uh about this particular topic well often I think about wealth as something uh that you sacrifice your time for so think about the skill the wealth on the lower end when you don't have much of it more wealth gives you much more utility you can do now much more you feel free you can do things opens the possibilities now the wealth accumulation come to the certain point where every additional dollar doesn't extract as much utility as as you think and so what you want to do is perhaps think about wealth in a sense that number one it's a trial for me when I have it I have to uh make sure that I do right think with it I don't allow wealth to possess me I possess the wealth I keep it in my hand not in my heart and remember we are here on this Earth to be tested because in the paradise we were given test where uh we had all of the wealth and everything that we wanted but we failed the test that that we were promised this little tiny corner of the paradise and we were told that this is also what we need to have in order to be content to be happy Shayan came as a sincere advisor and said this is the part you really need then you will be like Angels you don't you will have this insurance policy that you don't need to worry and this is the part of the human nature you see if in the paradise we wanted to have it 100% what about on this Earth which is nothing compared to paradise and the sallallahu alhi wasallam compared the situation that he said the son of Adam wish this wealth you know if he had the wealth of mountain of Ood he wants another one and another one what will satisfy him is the dust of his grave when he realizes in essence what is the wealth for so the wealth is really to be used to be mastered over to understand that you want to link your heart not to the material and to the wealth for the happiness for the full life but you want to link yourself to the Rope of Allah and to understand that he is the provider to him you link your fears dreams hopes duas not to the wealth the wealth you want to ear earn it you want to have it but not sacrifice entire of your time because the life is all of these other things your relationships your health time you spend reading your spirituality Faith all of these things you want to balance all of this the wealth there should serve you to serve God you don't want to be egocentric you want to be God Centric with your life and as some of people say the purpose of living is giving and you get a great weight and opportunity to master your heart when you are actually giving I remember uh one of the scholar uh gave example when he was establishing zakat in his area and the first time these business people who were paying zakat for the first time they were coming and they were shaking they couldn't separate themselves from the wealth but after few years when they got used to give money the next time they would come they would put zakat on the table and they were happy to give it they cure this something in the heart of us to attach ourself to that wealth so yes wealth is very useful in the hands of a righteous person is great but we also don't want to go over glorify the wealth where it's all about new car you have and where you are going where you are just obsessed about you and so we want to have a balanced way a righteous way and always think about why do we need that well what are we trying to do and this is why for some people wealth can be indeed trial can take them away so you have to know yourself how wealth is affecting you you need to structure your life around that with the right people right environment you need to take care of the heart but but at the same time you need to make sure that you don't go to any of extreme and the worst of extreme is not necessarily where you are on the gliding scale of how between these two extremes but how much of your time and life and energy you cons you spend to get to that stage there is no passive wealth there is no wealth that is just by itself generated these are just fake stories people who are selling get Qui get rich quick ways of living life there is a balanced way there is a way that you want to do good you are on the mission you want to impact this world do something that is righteous that is useful and at the end of the day cure yourself purify your soul so when you go to the paradise you're not same person who is connected to that wealth as if that wealth is the source of the happiness and joy and everything else so what can be legitimate wealth from Islamic perspective in general wealth or mal is anything that you consider from Sharia perspective is legal we could say has Sharia value so for instance would bottle of wine or alcohol be considered wealth or in a contract subject matter it has a value on a bottle like $200 value but from us that is only economic value it has zero Sharia value so for the Muslims this is not wealth and anything that doesn't have Sharia legal status or zero Sharia value cannot be wealth we are not allowed to buy it sell it profit from it or anything else to be wealth something has to be usable and useful and also as I said has material economic value you must be able to buy must be capable of owning you need to be able to to create inventory of it to account for it for example let's say if we want to sell oxygen in this room can we say can I say here is the oxygen it's yours can you take it can you put it in the Shelf what can you do with it is that a wealth oxygen is useful has Sharia Sharia doesn't say it's Haram or anything it's just there but is is it just because it's intangible you can't catch it so if I were to sell you just something like that which is very vague which you can't grab it wouldn't be exactly wealth or subject matter now if I do capture this in a cylinder as it is used in a hospital and so on then that oxygen could have some value in a sense is this something that is useful usable has real economic and Sharia value and is legitimate now this can be also physical item some sort of USF could be intellectual property anything that people customarily agree it's wealth it's specified and fulfill these conditions it's a valid subject matter uh in the contract and our Arrangements obviously big part of the wealth and also in our uh contract is what type of money or today what we call currency what is the uh money that we are using it's a forming today m major part of our wealth and it is also a payment method in all of or most of our contracts because we are not really doing barter anymore so if you go through the history people have used all kinds of things for money here there is a I remember the story of this Stone money of Y Yap known as Ray where people would carve this uh big stones from the mountains and they would transport them and they would put them in the streets of their Village and that everybody would be owner of some of these big huge stones and if you wanted to sell your house they would say now you own that stone and I own your house funny things one happened when they were transporting one of these stones and it sunk to the bottom of the ocean and the people who were transporting were sad that they lost the stone and then one of them must have been a banker he had a great idea he said well we lost the stone to to which is now at the bottom of the ocean but we know it's there so what we can do we can still use it to buy and sell we will just refer to it you are now the owner of that uh uh Stone and we will transfer it like that and we can still use it to buy and sell which is a funny story you know sometimes when I think about today's money at least in those days they had that stone and sometimes when you print the money you you wish you had that stone linked to your money but uh in Islamic history we also seen uh gold and silver for example very popular gold is known as dinar and silver coins would known as Durham so usually uh that was very popular at the time uh in here in Australia indigenous people would use sometimes shells in a prison you might see people use cigarettes as the money or during the War I remember in Bosnia soldiers were paid in cigarettes everybody was paid in cigarettes and um yes we don't believe in cigarettes in terms of they are very unhealthy they cause diseases shouldn't be done but at that time whether you believed in cigarettes or not everybody was using them I remember even one time in Bosnian War soldiers approached my father who went to the market with me to to to buy some supplies and soldiers started shooting about our head just to get to do cigarettes and we were guarding them with our life he didn't want to give to them so today we are using this money used to be linked with gold but you know the wars the pressures on that um uh commodity made it so that in last few decades um no one is really using any gold uh as as as anything so it's just basically money is now being printed it's by the rules that are in place and that affect how much money we have in circulation how much trust people have in it and it doesn't have any of these intrinsic value that we used to associate with money nevertheless we do use it these currencies we do use it in society and they do perform functions that they perform now there is an interesting saying by Hassan al-basri about the money and that goes to the function of the money that it performs in society and he says that money is such a friend of yours which benefits you only when it leaves you and this is such a beautiful way of capturing the money because the money is not designed for itself which is why you can't sell it money is what gazali says a judge of other Commodities it's there to judge what is what in society and how does it perform that judgment it has to go in circulation you have to depart from the money I want to buy the iPhone I I I value it at $500 do or we agree with offer and acceptance this is what it is and so money must leave you to benefit you how the money benefits you not by staying with you and that's why in Islam hoarding of money is not good economic principle of Islam is that money should circula in society not just stay in the pockets of you and so you do it by circulating it or through partnership and investments in the businesses and so when you spend that money to get something this is when money benefits you because you get things that you need to benefit you so money is not meant for itself so from that we have several key function of the money number one to understand that money is really made to be source of ease in transactions so we don't have to do B transactions anymore it's therefore used as a medium of exchange it is something that facilitates the trades it is also used as a unit of account in order to facilitate the trade you need to know what is the worth of these Commodities that you are buying so it's a it's a use for pricing goods or services and to really be good at buying and selling by the time you earn that money and you spend it or you pay it in future you want that money to be trusted to keep the value over time especially in the third uh sales so money must be storable portable recognizable and visible and it is based on the confidence and Trust in its value today when we look at how our money today perform this function and usually people often in the comment section write everything is Haram only this money that money uh this Fiat money Haram we can't do anything we can't start doing anything until we get the right money first of money to tell you the truth money is the follow is not the leader when you are constructing economy my advice for everybody is consider what you are producing in that economy what is the subject matter that you are involving money is just the serving part money is just facilitating transactions if you think of the first bigger picture if on one side you have all the production in one hand let's say you divide people in half two halves and the production ction is on one side and all of the money gold and crypto is in the other part after a few years where is all the money going to be with producers so I often see people focusing when it comes to economy on what the money is yes money is very important because it facilitates the transactions but it's only facilitator serving the economy it's other ruler what is economy GDP P production so think of yourself or your economy or business in those terms number one what is it that you are producing number two when it comes to the function of money and how much trusted or good ethical or unethical and so on yes Fiat money today has no that intrinsic value that allows government to easily print it which leads to the risk of inflation and potentially misuse and this weakness in governance of supply of money and how it is then multiply once it go through the banking sector through the interest is why a lot of people at least would consider it to some degree unethical some countries more unethical as it is more volti and abused than the other but in a sense there is a major weakness regarding the Trust In Those policies that are attached to this supply of money and particularly when uh let's say different types of money start going in certain weaker economy and we have effects like dollarization and instabilities and so on so this is a big topic maybe for another discussion on economy and how to strategically think about it but the gold that we often would like to see money linked to or reference we do value gold because it has certain properties which intrinsically valuing it and makes it hard for the government to manipulate remember in the past even um in early Islamic history gold and silver were becoming very expensive which is why government would make uh copper coins other materials and even consider skin of a camel or some some other forms uh for smaller transactions to make life more easier but largely today we have abandoned these things and you know quality of money I'd say often depends on the quality of the honesty of your government a lot of people then bring about cryptocurrencies to be honest I'm not a great believer in cryptocurrencies they are also not used in um daily transactions sure you can transfer it and so on but basically the let's be frank the reason why people engage in this is not to buy and sell something that they really need it's basically they are thinking that if the price of the Bitcoin or anything is today $1 tomorrow will be true and I'm going to be hoarding it and holding it and so on so so as long as that cycle is there uh it's very expensive there is some other issues with it uh I I do not think that this is a great or much better than Fiat money this privately made money that is actually linked with incentives that reward creation of the money and this is why I I prefer even Tamia stake that money should be something that is uh financed by public it shouldn't you shouldn't make money from money which is interest but he also said to the Muk Sultans don't make creation of money for profit activities and that creates very bad incentives for the government and I think for the to to the miners and speculators and you know those people who are into the crypto uh creation of money became for profit activity I think for us if we want to have a sound money it has to be something that is financed by the people in a government that is trusted to preserve its value and have a policies to make it really trusted medium of exchange but in any case whatever that is today your major marker of wealth and the medium of exchange is whatever currencies that we are using and I would say it is what it is that's what you have I wish we have something better but let's not fall into the mistake and say that rules of Islam don't apply to it rules of RBA rules of zakat equally apply to this money whether we like it or whether we don't like it and I think what we should be focusing on is what is it that we are using money for in our society what benefits are we creating and that is why when you look at the companions uh if you look at the sah bukari you know uh some of the the first narration in the book of business transaction is talking about life in Medina the companions who are busy in Market trading dealing in property and even Imam bukari brings the Hadith of ABD Rahman in the beginning who is coming to Medina as a migrant having nothing people offering to give him charity and he says no may Allah bless you in these things show me where is the market show me where is the business conducted and he soon goes He engages he become very very uh wealthy and he helps the society he gets married and these this sort of entrepreneurial activity this sort of leadership economically is what we need today like what YF alisam did in his time we need to see where we are as economy especially the Muslim majority countries what are we producing what are we making can we feed ourselves this is the real core of wealth what can you do this is how I define economy I would say even forget about money what can you do because if whatever you do whatever you produce money will come to those people who are the biggest companies in the world those who solve the biggest problem who produce and money goes to them money is the follower if you are the leader money will follow you money is not going to be attracted just because you want it so think of yourself as economy what am I doing producing what skills do I have and this is going to become even more important for the future you have Global uh breakdown in Supply chains end of globalizations more and more economies are reassuring they're bringing capacity back home strategically important that you don't have to rely on somebody else far away to produce basic things that you need to consume in your life or people are getting more into regionalization where at least we cooperate and build something in our region but it's very strategic that the way we think about wealth or money or is capacity to do something my wealth is what I can do my economy is what can we solve problem and so on and so task for this time that I want you to to to write in the comments is what do you think why the prophet sallallahu alaihi wasallam said that wealth in a righteous hand is a blessing can you give examples of how righteous believer would use wealth today in a right way that is productive and also generous and what would you do with the wealth thank you very much I'll see you in the next episode Salam Alik [Music]

In this episode, we explore wealth and money from an Islamic perspective. Learn why wealth is both a blessing and a trial, the role of money in society, and how to use it in a way that benefits both yourself and others. For additional resources, course assessments to test your understanding, and to earn the Islamic Finance 101 certificate, join the Muslim Money Matters platform. ➡️ Join MMM platform at https://www.muslimmoneymatters.com Key topics: 0:00 Introduction 1:40 Islamic perspective on wealth 8:23 What can be wealth 10:45 Money: Historic perspective 14:20 Functions of money 24:44 Task for you ------- Playlist of all episodes: https://youtube.com/playlist?list=PL648OdKhWVX_8PeSlT112XSaVtErfX8w2&si=hlQ5vTduS5uB_ngJ 📲 Connect with Almir on social media: 🔗 Links: https://www.almircolan.com/links 📩 Subscribe to Almir's email updates: 🌍 Website - https://www.almircolan.com