Managing Your Personal Budget The Halal Way

Do you find yourself asking, do I really need to budget the halal way? The answer is, yes, you do. You might think a halal budget is full of restrictions and limitations, but it’s actually not that different from a regular budget. In some ways, a halal budget is even more rewarding than a regular one. 

What is Halal Budgeting? 

Halal budgeting is essentially the same as regular budgeting. Within the Islamic finance context, halal budgeting requires you to manage your finances by following Islamic principles and teachings. That means you're required to prioritise needs over wants, avoid riba (interest) when transacting, and put money aside for religious obligations such as zakat. 

The concept of halal budgeting lies in building a mindset and actively practising healthy financial habits. The goal is to provide an adequate life for yourself – enough to fulfil your essentials and secure a comfortable future, but not too much to the point of overspending. 

Signs You’re Doing Halal Budgeting Right 

In principle, halal budgeting aims to create a comfortable life while staying true to Islamic laws. Meanwhile, in practice, halal budgeting requires you to do the following: 

Avoiding Riba 

The concept of riba or interest is strictly prohibited in Islam, therefore it's mandatory to avoid financial activities that might generate riba. You might ask, “How do I avoid riba in my personal budget?” One of the ways you could actively avoid riba is by subscribing to Shariah-compliant financial services, like Halal Money. As a Shariah-compliant financial institution, Halal Money employs strict halal standards for all its products. 

Keep Your Zakat in Check 

Zakat, one of the five pillars of Islam, requires Muslims who meet certain wealth standards to donate a portion of their assets to those in need. Regarding social welfare, zakat helps enforce wealth redistribution while also building and strengthening a sense of community within Muslims.  

By planning your budget, you can better fulfil this responsibility. Halal Money makes it easier by giving you real-time access to your account balance and transaction history, helping you understand your overall wealth clearly, set aside money for zakat, and avoid common mistakes like under- or over-calculating zakat obligations. 

It might not seem obvious at first, but when done right, halal budgeting has considerable effects on your overall wellbeing. Focusing on moderation, avoiding prohibitions like riba and excessiveness, and helping practice mindful spending are among the benefits of practicing halal budgeting. 

How to Practice Halal Budgeting: Step-by-Step 

Now that you’ve understood the concept of a halal budget, are you ready to start building a halal budget and sticking to it? Here’s how: 

Determine Your Budget 

Halal budgeting isn’t one size fits all, so take time to understand what really determines your budget: your lifestyle. Do you own personal vehicles, so you need to allocate for gas, or do you mostly get around by public transportation, so it’s better to invest in smartcards instead? Do you like to go out for fancy meals, or do you prefer cooking at home? These considerations will help you figure out how to allocate your money and create a rough estimation of your monthly budget.  

Match Your Income 

Once you’ve come up with an estimate, it’s time to fit your budget into your income. Ideally, your expenses should cover no more than 85-90% of your income, with the remaining 10-15% going to savings, investments, or unexpected costs. A general rule you can use is the 50-30-20 rule, where 50% of your income goes to needs (rent, bills, food), 30% to wants (hobbies, dining out), and 20% to savings or investments.  

Choose A Good Financial App 

A good financial app can make a huge difference in your budgeting experience. Choose an app with built-in features that can support your budgeting activities, like Halal Money. Read below to find out why Halal Money is the perfect financial app for your daily financial management! 

How Halal Money Helps with Halal Budgeting 

At Halal Money, we believe in making halal finance simple. Our features are designed to make financial management easier, because we understand how budgeting can be a bit overwhelming for some people. Here’s how you can use Halal Money features to manage your budget. 

Track Your Expenses with A Halal Budgeting App 

Ever feel like you’re going on the right track, but then your account balance says otherwise? Start tracking your expenses! Tracking prevents overspending, making it an essential part of budgeting. It’s never been easier to see your expenses in real time with Halal Money, as every transaction recorded will be accessible through your account dashboard. 

Pay Your Bills on Time 

That fleeting feeling of shock when your bills arrive? We know that a little too well. However, we recommend paying your bills as soon as they arrive to avoid late fees and the possibility of going into debt. Halal Money has a BPay feature, which you can use to pay your bills quickly and easily. 

One Step Further 

Did you know that with Halal Money, budgeting can also mean growing your money? Halal investing is now easier with Halal ETFs, the only Shariah-compliant ETFs available on the ASX. These ETFs can be traded right on the Halal Money app, a convenient option for Muslims who live a busier lifestyle. To guarantee you a faith-aligned investing experience, Halal Money’s ETFs are pre-screened and periodically audited to maintain their Shariah compliance. 

Remember to allocate a dedicated budget for investing. As an investment product, ETFs have relatively low risk due to their built-in diversification, which is why it's highly recommended for those who are also balancing a personal budget. You’re also free to invest as much or as little as you like, because Halal Money does not have a minimum amount per trade. 

Connect with Apple Pay and Google Pay 

Need a faster, more secure, and more convenient way to pay? Halal Money is also integrated with Apple Pay and Google Pay. Halal Money has high regards for your safety, but integration with Apple Pay and Google Pay further reduces transaction risks and therefore also decreases threats to your budget plan. 

Halal budgeting has never been easier to practice, especially when you have the Halal Money app to support you. Halal Money has all the features and resources you need to build healthy, mindful financial habits – why not start now? Download the Halal Money app for a better financial future!