The Ultimate Guide to Islamic Financial Literacy for Your Little Ones!

When I started thinking about launching my first business a few years ago, I had some aims similar to others in business; have some financial freedom so I could spend more time with my children, spend more time doing the things I loved, quit my job and secure finances for our family and their future.

One of the stark realities I realised at this point in my life, came from reading finance books, listening to business podcasts and watching talks. The reality was we aren't as children generally taught financial literacy in the UK. I know the same is true for friends and relatives across the world. Yes we are taught about currency and basic money in School. But not about financial literacy. The consequence of this is entire popualtions grow up and are financially struggling even when they have well paid jobs. Why? The cost of living has sent prices soaring, even basic necessities have become expensive and money is not being saved. 

Robert Kiyosaki, the author of the well-known personal finance book "Rich Dad Poor Dad", emphasizes the difference in mindset between what he calls his "Rich Dad" and "Poor Dad." One key concept he discusses is the idea of assets and liabilities.

Kiyosaki argues that wealthy people tend to acquire assets, which are things that put money in their pockets, such as investments, businesses, or real estate. On the other hand, he suggests that people who struggle financially often accumulate liabilities, which take money out of their pockets, such as consumer debt or excessive spending on non-appreciating items.

In essence, Kiyosaki's perspective is that building wealth involves focusing on acquiring income-generating assets rather than accumulating liabilities. This distinction in financial mindset is a central theme in his teachings about achieving financial success.

As a homeeducating Muslim Mum, I decided it was imperative my children were taught about Islamic financial literacy, understanding the fundamental concepts is akin to deciphering a treasure map leading to a secure and righteous financial future. 

What is Financial Literacy?

Financial literacy is the ability to understand and apply essential financial concepts, fostering informed and effective decision-making regarding money matters.

It involves acquiring knowledge about budgeting, saving, investing, and managing debt. Financial literacy goes beyond mere numerical competence; it encompasses the skills needed to navigate the complex landscape of personal and household finances. A financially literate individual comprehends the significance of making informed choices, understands the consequences of financial decisions, and is equipped to plan for both short-term needs and long-term goals.

It is an empowering skill set that enables individuals to build a secure financial future, make responsible financial choices in accordance with their values, and contribute positively to their communities.

In essence, financial literacy is the key to unlocking financial well-being and building a foundation for a prosperous and sustainable future.

The Basics of Islamic Financial Literacy

For our little ones, this map begins with key Islamic financial principles that form the foundation of their understanding. First and foremost, we introduce them to the concepts of Zakat and Sadaqah, illustrating the beauty of charitable giving and the responsibility to support those in need. We delve into the distinction between the Halal (permissible) and the Haram (prohibited), guiding our children to discern what aligns with Islamic principles in their financial choices. This knowledge becomes a compass, steering them away from unethical paths. As we define these fundamental terms, we unveil the significance of aligning financial decisions with our Islamic principles – not just as a matter of preference but as a pathway to righteousness and a source of barakah (blessings) in our wealth. Thus, our children not only grasp the meaning behind these concepts but also come to appreciate how their financial choices can be a means of earning Allah's pleasure.

Practical Tips for Teaching Islamic Financial Literacy

Now that we've talked about important money ideas in Islam, let's get into the fun stuff! Learning about money doesn't have to be serious and boring. It can be like going on an exciting adventure where we laugh and learn together. Teaching our kids about money is not just a serious thing; it's also a happy journey full of discovery and fun activities.

1. Zakat Jar Adventure: Create a Zakat Jar adventure where kids can actively participate in setting aside a portion of their allowances or gifts for charity. Decorate the jar together, and let them choose a cause they're passionate about. This hands-on experience not only teaches the importance of giving but also instills a sense of responsibility.

2. Financial Board Games: Introduce board games that weave financial concepts into play. Games like "Halal or Haram?" or "Sadaqah Stars" can make learning enjoyable. By making a game out of financial decisions, children learn through experience and playfully absorb the principles of what is permissible and what is not.

3. Visual Money Journals: Encourage the use of visual aids like money journals. Help your child create a simple journal where they record their allowances, track spending, and even note down instances of giving. Visualizing their financial decisions on paper makes the concepts tangible and reinforces the connection between actions and outcomes.

4. Grocery/Supermarket Store Lessons: Turn a trip to the grocery store into a real-life financial adventure. Discuss the concept of Halal as you choose permissible items, and show how decisions align with Islamic values. Let them handle small transactions at the cashier, fostering a practical understanding of money management.

5. Family Stories of Generosity: Share stories from your own family or the community about acts of generosity and the impact of charitable giving. These real-life examples provide relatable narratives that children can connect with, emphasizing the tangible effects of their financial choices.

By incorporating these practical tips into daily life, parents not only make financial literacy enjoyable but also set the stage for a lifelong understanding of Islamic principles in managing money.

Zakat and Sadaqah for Kids

Understanding the concepts of Zakat and Sadaqah is not just about giving; it's about instilling a sense of compassion and generosity in our little ones. Let's embark on a creative journey to make charity a joyful part of their lives.

1. Charity Jars: Introduce the idea of "Charity Jars" where kids can decorate their own containers. Encourage them to drop in spare change or a small portion of their allowances regularly. Watching their jars fill up becomes a tangible representation of their giving efforts.

2. Acts of Kindness Calendar: Create an "Acts of Kindness Calendar" where each day, kids engage in a simple act of generosity. It could be sharing toys, helping with chores, or expressing gratitude. This not only teaches kindness but also connects the concept of charity to daily actions.

3. Giving Games: Turn the act of giving into a game. Challenge your kids to find creative ways to raise small amounts of money, like a mini-bake sale or a handmade crafts booth. The proceeds can then be donated to a cause they care about.

4. Charity Shopping Trip: Take your children on a "Charity Shopping Trip." Let them choose items like toys or clothes that are in good condition but that they no longer need. Donate these items to a local charity or a family in need.

5. Planting Seeds of Generosity: Planting seeds is a metaphor for growth. Get your kids involved in planting a small garden or potted plants. As the plants grow, discuss how acts of charity can grow and bring positive change to the world.

These creative approaches not only teach the value of Zakat and Sadaqah but also make the experience of giving a delightful and memorable part of a child's upbringing. Through these activities, children learn that no act of kindness is too small, and everyone has the power to make a positive impact.

Setting up a Halal Allowance System

Introducing a Halal Allowance System for your children is more than just handing out money; it's about nurturing financial responsibility from a young age. Let's dive into practical steps for parents to create a system that aligns with Islamic principles and instills valuable money management skills.

1. Clear Guidelines: Establish clear guidelines for the allowance system. Explain to your children the purpose of the allowance, emphasizing that it is a means to learn about money, responsibilities, and the importance of making wise choices.

2. Weekly Budgeting: Encourage children to create a weekly budget. Help them allocate funds for different purposes, including savings, spending, and charitable giving. This not only teaches budgeting skills but also emphasizes the Islamic principle of responsible financial stewardship.

3. Savings Jar: Introduce a "Savings Jar" where a portion of the allowance goes toward saving for future goals. This hands-on approach instills the habit of saving and fosters patience and discipline.

4. Halal Spending: Guide children on making Halal spending choices. Discuss what is considered permissible in Islam and encourage them to make conscious decisions aligned with Islamic values when using their money.

5. Rewarding Responsibility: Consider implementing a reward system tied to responsible financial behavior. Acknowledge and praise them for saving, sharing, and making thoughtful spending choices. This positive reinforcement reinforces good financial habits.

Benefits of Teaching Budgeting and Saving from an Early Age:

1. Financial Discipline: Learning to budget and save instills a sense of financial discipline early on, laying the groundwork for responsible money management in adulthood.

2. Goal Setting: Budgeting encourages goal-setting behavior. Children learn to save for things they want, fostering a sense of patience and delayed gratification.

3. Charitable Values: Allocating a portion of the allowance for charitable giving teaches the importance of generosity and empathy towards those in need.

4. Lifelong Skills: The skills acquired through budgeting and saving are not just for childhood; they become lifelong tools for navigating financial decisions with wisdom and prudence.

Integrating Du'aas into Financial Practices

In the pursuit of financial well-being, the incorporation of supplications (du'aas) is a powerful and enriching aspect of Islamic teachings. Let's delve into why integrating du'as into financial practices is significant and explore specific supplications related to wealth, gratitude, and seeking blessings in income.

1. The Spiritual Connection: Incorporating du'aas into financial activities establishes a profound connection between the material and the spiritual. It serves as a reminder that wealth and sustenance are ultimately in the hands of Allah.

2. Gratitude and Humility: Du'aas instill a sense of gratitude and humility in financial matters. Expressing thankfulness for what one has and seeking Allah's blessings fosters contentment and a mindful approach to wealth.

3. Seeking Blessings (Barakah): Du'aas play a crucial role in seeking blessings (barakah) in income and endeavors. The Prophet Muhammad (peace be upon him) emphasized the importance of seeking Allah's blessings in wealth to ensure its abundance and purity.

Specific Du'aas:

1. Du'aa for Wealth (Rabbana Atina Fid-Dunya):

• رَبَّنَا آتِنَا فِي الدُّنْيَا حَسَنَةً وَفِي الآخِرَةِ حَسَنَةً وَقِنَا عَذَابَ النَّارِ
• "Our Lord, give us in this world [that which is] good and in the Hereafter [that which is] good and protect us from the punishment of the Fire." (Quran 2:201)

2. Du'aa for Gratitude (Alhamdulillah):

• الْحَمْدُ لِلَّهِ حَمْدًا كَثِيرًا طَيِّبًا مُبَارَكًا فِيهِ
• "All praise is due to Allah, abundant, good, and blessed praise." (Muslim)

3. Du'aa for Seeking Blessings in Income (Barakah):

• بِسْمِ اللَّهِ الرَّحْمَٰنِ الرَّحِيمِ
• "In the name of Allah, the Most Gracious, the Most Merciful." (Various contexts, including financial transactions)

Integrating these du'aas into our financial practices not only brings a spiritual dimension to our wealth but also aligns our efforts with the guidance of Islam, ensuring that our pursuit of financial well-being is grounded in faith and righteousness.

Examples From The Sahabah