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

islamic financial literacy ultimate guide to islamic financial literacy Dec 04, 2023
Islamic Financial Literacy

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

Introducing children to the exemplary lives of the famous Sahabah (companions of Prophet Muhammad, peace be upon him) who achieved financial success provides them with inspiring role models rooted in Islamic values.

  • Abu Bakr al-Siddiq (may Allah be pleased with him): The closest companion of Prophet Muhammad (peace be upon him) and the first Caliph of Islam, Abu Bakr was a successful merchant known for his honesty and integrity in trade. His financial contributions to the community were profound, and his selflessness became legendary, as he spent his wealth to free slaves and support the early Muslim community.

  • Uthman ibn Affan (may Allah be pleased with him): The third Caliph of Islam. Uthman was known for his exceptional business acumen and wealth, earned through honest trade and hard work. His success, however, was distinguished by his unwavering commitment to charity and the betterment of the Muslim community.
  •  Sa'id ibn Zayd (may Allah be pleased with him): Sa'id was a prosperous merchant in Mecca before accepting Islam. Known for his business acumen, he became a respected figure in the Muslim community. Despite facing persecution for his faith, Sa'id's commitment to Islam remained unwavering, and his financial success continued to benefit the community.

  • Talha ibn Ubaidullah (may Allah be pleased with him): Talha was a successful merchant in Mecca known for his wealth and business expertise. After embracing Islam, he dedicated his resources to support the Prophet (peace be upon him) and the Muslim community. His financial contributions were pivotal during times of need, reflecting his deep commitment to the Islamic cause.

  • Abdullah ibn Ja'far (may Allah be pleased with him): A nephew of Ali ibn Abi Talib (may Allah be pleased with him), Abdullah was known for his wealth and generosity. His financial support was instrumental in various expeditions and initiatives for the welfare of the Muslim community.

  • Abdur-Rahman ibn Awf (may Allah be pleased with him): Another illustrious Sahabi renowned for his financial success and benevolence within the Muslim community. Prior to embracing Islam, he was a prosperous trader in Mecca. After accepting the faith, his commitment to the Prophet Muhammad (peace be upon him) and the community became unwavering. Abdur-Rahman's wealth allowed him to make significant contributions to the early Muslim society, particularly during critical moments. His exemplary life showcases not only financial success but also the profound impact that wealth, when used for the sake of Allah, can have on the well-being of the community.

 Further Resources 

Online Resources:

  1. Islamic Finance Guru (IFG) Kids: IFG offers a section specifically designed for kids, providing informative articles and resources on Islamic finance in a child-friendly format.

  2. Islamicity: Islamic Finance for Kids: An online platform offering basic lessons on Islamic finance tailored for children, including topics like Zakat, Sadaqah, and budgeting.

  3. twinkl UK: provides downloadable resources for parents and educators, including worksheets and activities that teach children about charity and financial responsibility.

Educational Platforms:

  1. Muslim Kids TV: An online streaming platform with a variety of Islamic educational content, including videos on Islamic finance and money management for children.

  2. Noor Kids: While primarily focused on Islamic character education, Noor Kids often includes stories and activities related to financial responsibility and generosity.



As we conclude our exploration into Islamic financial literacy for children, we recognise the profound impact that early education can have on shaping not only their financial habits but also their character and values. Instilling Islamic principles in financial practices empowers our little ones to navigate the complex world of money with wisdom, generosity, and responsibility.

Together, we sow the seeds of financial wisdom, ensuring a future where our children navigate the world of wealth with integrity, compassion, and a steadfast connection to their faith.

I hope you found this blog useful, if you did why not share with your family and friends?

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