Congratulations! You’ve got your bonus, or you got a cash-filled envelope for the holidays or inherited some funds from a distant relative. Whatever the windfall, you suddenly find yourself with an abundance of money and tons of ideas on how to spend it. If the word spreads, you’re soon going to have friends and family throwing suggestions around, and you might get tempted into buying yourself a new car, indulging in some technology products, or booking yourself that holiday you’ve been craving. Pampering yourself is one way to spend your hard earned money, but it isn’t the wisest. If you want to get the most out of your extra dough, here are a few ways you can put it to use without compromising on your religious beliefs.
Credit card debts, student loans, car loans, mortgages, EMIs, the list of debts one can accrue is endless. When you come by a little bit of extra money, the first thing in your mind should be to cut down your dues and get out of the red. It’s not just for financial reasons, but also helps to reduce stress. In the off chance that you have debts that also garner interest, it’s best to clear those first as interest laden debts are considered to be Riba.
Cut down on your tax dues
Extra money in the bank also means more tax to pay on said income. The best way to reduce your tax liability is to invest a part of that money in tax saving funds. Retirement plans, provident funds, and some mutual funds, all fall into this category – however, you should keep an eye out for funds that comply with halal investments – and do not support any industries or corporations that would be considered haram or Riba.
Save for a rainy day
By “save for a rainy day” we are not saying put your money in safekeeping. You can do a lot more with your money while keeping it in wise investments that are also available in case of an emergency. An emergency fund can be a separate bank account, although a Halal account isn’t allowed to earn on interest so your emergency account will remain static. Instead, consider mutual funds that have a short lock-in period, or if you’re really adventurous, cryptocurrencies are also considered to be halal investments!
The idea is to set some money aside in case you lose your job, or unexpected expenses arise at home – like roof repairs or recovery from natural disasters.
Invest in halal stocks
We have already covered the investment opportunities that are Riba compliant so we won’t dive into the details again, but the important point to note is that investing in the stock market is not against Islamic investment rules, as long as the company that you are purchasing stocks from meets the ethical practices outlined by your faith. An anecdote shared by Wahed’s CEO Junaid Wahedna in an interview with Techcrunch makes for an interesting read.
“He tells the cautionary tale of a Bangladeshi cab driver he met who illustrates the potential pitfalls for religious Muslim investors. The man had moved to the U.S. with $100,000 and asked his imam what he should do with it. “He didn’t want to keep it in the bank and he didn’t know what to do. The leader of the mosque told him Apple stock was Sharia compliant… so he put all of his savings in Apple stock.”
Reach out to robo-advisors
All of the above-mentioned points can be a really daunting task for the uninitiated. Finding funds, stocks, and halal investment options are easier said than done. Fortunately for you, halal investment has become a lot easier with robo-advisors like Wahed Invest who ensure your money grows by putting it in a variety of different investments, all that are compliant to the Islamic investment rules. Using AI to make sure your financial growth is at its optimum level and giving you the peace of mind, knowing that your money is earning you more money, without impacting your religious views.
Invest in yourself
Of course, the best investment any individual can ever make is to invest in themselves. Put your excess money to good use by signing up for an educational course, learn new skills, hone your talents, and build your professional and personal profile. The more skills you have, the wider your prospects with growing in the workspace. Also, don’t forget to invest in your health and wellbeing – sign up to a gym or yoga classes, or start slow with a magazine subscription for healthy living – the opportunities are endless!
While all of the above points are the best way to put your extra money to good use, don’t forget to use some of it to pamper yourself too. It is important to keep yourself active, entertained and happy. Go on a small holiday, buy yourself something new, just make sure you’ve set some money aside first and don’t end up blowing it all away!