Session 3

Wealth Management and Financial Planning

-An Islamic Perspective Within The Context of

Maqasid Al Shariah Prof. Dr. Mohamad Akram Laldin, Executive Direc tor of ISRA

Introduction

Wealth in Islamic Perspective

Understanding Maqasid al-Shari’ah

Maqasid al-Shari’ah guidelines in Wealth Management

and Financial Planning

Conclusion

Wealth (Mal, pl. Amwal)

Nature of Wealth

Human Attitude towards Wealth

Wealth in Islamic Perspective

Al-Quran provides comprehensive insights and principles on the nature of wealth and wealth spending and planning by human being.

Nature of Wealth

1. Wealth is Fadl Allah to human being (al-Jumu’ah: 10):

لوة فٱنتشروا فى ٱألرض وٱبتغوا من فإذا قضيت ٱلص كثيرا لعلكم تفلحون فضل ٱلل وٱذكروا ٱلل

“And when the Prayer is finished, then may ye disperse through the land, and seek

of the Bounty of Allah: and celebrate the Praises of Allah often (and without stint):

that ye may prosper”.

2. Wealth is described in Al-Quran using the word al-khayr which means Good (al-

Baqarah 272-273):

يوف إليڪم وأنتم ل تظلمون خير فلنفسڪم وما تنفقون إل ٱبتغاء وجه ٱلل وما تنفقوا من خير وما تنفقوا من

Whatever of good (khayr) you give, benefits your own soul and you shall only do so

seeking the "Face" of Allah. Whatever good (khayr)you give, shall be rendered back

to you, and you shall not Be dealt with unjustly.

Al-Maraghi (1946: Jld.2, p 129): Al-Quran describes al-mal as al-khayr to show

that wealth is not only naturally good but it should be utilized for good purposes

only.

Nature of Wealth

3. Wealth as Amanah (al-Hadid: 7):

ا جعلكم آمنوا ورسوله وأنفقوا مم كبير فالذين آمنوا منكم وأنفقوا لهم أجر مستخلفين فيه بالل

“Believe in Allah and His messenger, and spend of that whereof He hath made you trustees

(mustakhlafina fihi); and such of you as believe and spend (aright), theirs will be a great

reward.”

Wealth is essentially belongs to God alone

Human being are granted wealth as amanah to play their role as Khalifah on

earth. It, at the same time, is a test (ibtila’) to him.

Human being should be responsible in utilizing and managing wealth.

4. Wealth as Ibtila‘ (test) (ali-'Imran: 186):

إن وأنفسكم ولتسمعن من الذين أوتوا الكتاب من قبلكم ومن الذين أشركوا أذى كثيرا و لتبلون في أموالكم

قوا فإن ذلك من عزم األمور تصبروا وتت

“Ye shall certainly be tried and tested in your possessions and in your personal selves; and ye shall

certainly Hear much that will grieve you, from those who received the Book before you and from those

who worship many gods. But if ye persevere patiently, and guard against evil,-then that will be a

determining factor in all affairs.”

ISRA األكاديمية العالمية للبحوث الشرعية International Syariah Research Academy for Islamic Finance

UNDERSTANING MAQASID

AL-SHARI’AH

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The Meaning of Maqasid al-Shari’ah

The ultimate objective of Maqasid al-Shari’ah is to serve the interests (jalb

al-masalih) of all human beings and to save them from harm (daf al-

mafasid).

Al-Ghazali (d. 1111 CE) defined maqasid al-Shari’ah as

“The very objective of the Shari’ah is to promote the well-being of the people, which lies in

safeguarding their faith (din), their lives (nafs), their intellect (‘aql), their posterity (nasl), and their

wealth (mal). Whatever ensures the safeguarding of these five serves public interest and is

desirable, and whatever hurts them is against public interest and its removal is desirable”.

MAQASID AL-SHARI’AH

DIMENSIONS:

(A). Din (Religion); (B). 'Aql

(Intellect); (C). Nafs (Life); (D). Nasl

(Lineage); (E). Mal (Property).

MAQASID AL-SHARI’AH

HIERARCHY:

(1) Daruriyyat (the essentials

needs); (2). Hajiyyat (the comforts

needs); and (3). Tahsiniyyat (the

embellishments needs).

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The Dimensions and Hierarchy of Maqasid al-Shari’ah

Ibn al-Qayyim al-Jauziyah

ة على مصالح العباد “ ريعة مبني .”الش

DARURIYYAT

HAJIYYAT

TAHSINIYYAT

Masalahah

Facilitation

Mafsadah

Prevention

Hifz al-Mal (Wealth Protection)

ISRA األكاديمية العالمية للبحوث الشرعية International Syariah Research Academy for Islamic Finance

GUIDELINES OF MAQASID AL-

SHARI’AH IN WEALTH

MANAGEMENT AND

FINANCIAL PLANNING

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Wealth Management &

Financial Planning

Positive Imperatives

Negative Prohibitions

Maqasid al-Shari’ah in Wealth

Management & Financial Planning

Realising Maslahah

Preventing

Mafsadah

Negative Prohibitions towards Wealth

1. Prohibition of Tabzir (Wastefulness) (al-Isra‘, 26-27):

ر تبذيرا آت و بيل ول تبذ رين إن )( ذا القربى حقه والمسكين وابن الس كانوا المبذ

ه كفورا يطان لرب ياطين وكان الش إخوان الش

“And give the relative his right, and [also] the poor and the traveler, and do not

spend wastefully. Indeed, the wasteful are brothers of the devils, and ever has Satan

been to his Lord ungrateful. “

Mausu’ah al-Fiqhiyyah al-Kuwaitiyyah (vol. 4, p. 177) defines tabzir as to

spend wealth not in a purposive thing or spending on the place that is not

needed.

This action refers to two meanings:

(1) spending wealth not in what is needed and unnecessary, and

(2) spending wealth not in appropriate way as desired by Shari’ah.

Negative Prohibitions towards Wealth

2. Prohibition of Israf (Excessiveness) (7:31).

ه بنى ءادم خذوا زينتكم عند كل مسجد وڪلوا وٱشربوا ول تسرفوا إن ـ ۥ ل يحب ي

ٱلمسرفين

O children of Adam, wear your beautiful apparel at every place of

worship, and eat and drink but be not excessive; indeed, He does not like

the excessiveness.

Israf means spending wealth more than what is necessary or beyond the

sufficient level of what is needed.

Al-Mawardi in his tafsir (2/218) says, Israf means “a wilful overspending of

wealth or overuse of property when the actual purpose may be served by

lesser spending or use.”

Negative Prohibitions towards Wealth

3. Bukhl (Stinginess) (al-Nisa’: 37):

من فضله وأعتدنا اس بالبخل ويكتمون ما آتاهم للا الذين يبخلون ويأمرون الن للكافرين عذابا مهينا

Who are stingy (bukhl) and enjoin upon [other] people stinginess and conceal

what Allah has given them of His bounty - and We have prepared for the

disbelievers a humiliating punishment

The meaning of bukhl refers to three things:

It is an attitude that would prevent wealth to be spent in its proper use in

fulfilling individual needs or the needs of his family.

It is an attitude of unwillingness to share wealth with others.

It is also an attitude that would prevent individual doing what Allah has ordered

to do. In this case, bukhl character will prevent someone from spending his

wealth in the way of Allah (fi sabilillah).

Positive Imperatives towards Wealth

1. Wise and Moderation in Spending (al -Furqan: 67):

إذا أنفقوا لم يسرفوا ولم يقتروا وڪان بين ذٲلك قواماوٱلذين

And [they are] those who, when they spend, do so not excessively or sparingly but

are ever, between that, [justly] moderate (al-Furqan: 67)

Tawassut / wasatiyyah is between two extrem attitudes: ifrat dan tafrit.

Ifrat: too stingy in spending wealth even in necessary things.

Tafrit: too loose in spending wealth even in unnecessary things

Positive Imperatives towards Wealth

2. Priority in Wealth Spending: Self and Family (al-Baqarah: 215):

بيل اك يسألونك ماذا ينفقون قل ما أنفقتم من خير فللوالدين واألقربين واليتامى والمس ين وابن الس

به عليم وما تفعلوا من خير فإن للا

They ask thee, (O Muhammad), what they shall spend. Say: that which ye spend for good (must

go) to parents and near kindred and orphans and the needy and the wayfarer. And whatsoever

good ye do, lo! Allah is Aware of it (al-Baqarah: 215).

رون ويسألونك ماذا ينفقون قل العفو لكم اليات لعلكم تتفك كذ لك يبين للا

They ask thee what they should spend (in charity). Say (Spend) what is beyond your needs (al-

‘afw).

The word al-‘afw according to al-Maraghi (2/146) means something extra (al-fadl

or al-ziyadah) above one’s needs and his family and after spending the obligatory

spending (such as zakāh and others).

Positive Imperatives towards Wealth

3. Spending for Good Purposes (Fi Sabil Allah) (al-Hadid: 10:

ماوات واألرض ل يستوي منكم من أنف ميراث الس ولل من قبل ق وما لكم أل تنفقوا في سبيل للا

الحس بما نىالفتح وقاتل أولئك أعظم درجة من الذين أنفقوا من بعد وقاتلوا وكلا وعد للا وللا

تعملون خبير

And what cause have ye why ye should not spend in the cause of Allah?- For to Allah belongs

the heritage of the heavens and the earth. Not equal among you are those who spent (freely)

and fought, before the Victory, (with those who did so later). Those are higher in rank than

those who spent (freely) and fought afterwards. But to all has Allah promised a goodly

(reward). And Allah is well acquainted with all that ye do.

Imam al- Zamakhshari (1407H: vol.4, p. 473) reminds that wealth is a test (ibtila’)

whether it is spent in the way of Allah (fi sabilillah) or in the evil way (fi sabil al-

syaitan).

Positive Imperatives towards Wealth

4. Spending Wealth in accordance with the Hierarchy of Needs (al-maqasid

al-Shari’ah):

Spending for Daruriyyat Needs:

Spending in the essential needs that are important to normal order in

society as well as to the survival of individuals, in their religious and

worldly affairs.

The Daruriyyat constitutes all-encompassing needs of human being that

should be satisfied for a sustainable life and wellbeing.

Failure to spend wealth in Daruriyyat needs would lead to life

destruction, chaos and collapse of normal order in individuals’ lives

and/or society

Spending for Hajiyyat

Spending in the complementary needs that supplement the essential

needs.

Spending in Hajiyyat would facilitate people’s affairs in a better

way and removing severity and hardship in their life.

The absence of spending in Hajiyyat needs does not pose a threat to

the very survival of normal order of life. It only brings hardship or

inconvenience in human life.

Spending in Hajiyyat should be done only if the Daruriyyat needs are

preserved.

Spending for Tahsiniyyat Needs

Spending in the embellishments needs whereby the realisation of those

needs leads to life’s improvement (tahsin), beautification (tazyin), and

perfection (kamaliyyat).

Islam enjoin human being to satisfy all Tahsiniyyat needs which are

desirable without any violation of good moral standards (makarim al-

akhlaq) or an excessive or extravagant lifestyle (mahasin al-‘adat)

Conclusion

Wealth is perceived in Islam as something which is good in nature and being created

for human wellbeing in pursuing his role as khalifah of Allah.

To preserve the nature of wealth as al-khayr and fadl Allah, human being is expected

to follow the guidelines in wealth spending and management and financial planning.

In maqasid al-Shari’ah perspective, the objective is to achieve benefits (maslahah) and to

prevent harms (mafsadah) in wealth spending and management and financial planning

The Negative attitudes needs to be eliminated such as excessiveness (israf),

wastefullness (tabzir) and stinginess (bukhl) in wealth spending and management and

financial planning.

Some Positive Attitudes in wealth spending and management and financial planning

such as:

Spending in wise and moderate way (tawassut / wasatiyyah)

Spending in the way of Allah (fi sabilillah)

Priority to the self and family

Spending in accordance with the hierarchy of needs, daruriyyat, Hajiyyat and Tahsiniyyat.

This presentation should not be regarded as offering a complete explanation of the matters

referred to and is subject to changes in law. It is not intended to be a substitute for detailed

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