MARGINALIA: Newlywed couple and personal finance

MAKATI CITY (MindaNews / 13 March) – (A message delivered at the wedding reception of the writer’s high school batchmates on March 12, 2016.)

The first time I read your wedding announcement on Facebook, this was the first thing that came to my mind: contrary to the clichés that it is an avenue to do the wildest things undone before and having the tendency to disrupt family ties, high school batch reunion is meant to strengthen family ties, foster cooperation among old friends and render services to the community.

Ahmad and Albeah, you are a living proof that high school reunion is indeed meant to build families.

Let me take this rare opportunity to share some thoughts on this new stage of your life journey. I shall not touch on the philosophical, religious and legal aspects of marriage as these are expected to have been tackled in the khutbat al-nikah (wedding sermon) and marriage counseling sessions you were supposed to attend.

Instead, let me focus on an aspect which is hardly given attention, yet a daily affair; that is, personal finance or money management.

On a daily basis, we handle money yet we hardly think of the need to manage it. Or, we assume that using it is identical with managing it. Or, to think of managing it is tantamount to becoming materialistic. We always say, “Bahala saging basta loving,” yet many marital conflicts and splits are money-related; either the lack of it or the improper use of it.

Formula

Personal finance experts give this formula: Income minus Savings equals Expenses. This means that as soon as we get our income, we immediately allocate a certain amount for savings before spending what we earn for the (other) expenses.

This is the opposite of the formula we usually follow: Income minus Expenses equals Savings. What usually happens is that since the amount of our expenses is equal to, if not more than, that of our income, nothing remains as savings. In fact, we often incur debts because our income is not enough for our expenses.

But by following the experts’ formula, the amount for savings is automatically allocated by considering it to be part of the expenses, nay the most priority. And after allocating the amount for savings, we adjust our expenses (lifestyle) by following the corollary precept of “spending below your means.”

Income

The first element in the above formula is ‘income’. No doubt, multiplying the streams of income is the primary recipe for financial self-sufficiency. The key is just to identify your passions – the things that you enjoy doing – and then look for the ways to monetize them.

Just give real value or love to the product or service you want to offer, and then profit will follow. Simply put, ‘passion’ plus ‘value’ equals ‘profit’.

Savings

The second element in our formula is ‘savings’. Saving is to set aside money to be spent later, and we do and must save for many reasons, viz. unforeseen (emergency) and future (retirement) expenses. But letting our money sleep for a while (saving) is not smart enough because of inflation. If the annual inflation rate is 4 percent, it means that the purchasing power of our P100 today is just P96 tomorrow.

So, we need to invest our saved money. Investing is to let our saved money grow and not just sleep. It is to let our money work for us while we are sleeping.

There are many available shari‘ah-compliant investment instruments you can choose: business venture, real estate, mutual fund, stock market, etc. Be that as it may, don’t forget the primary investment: to invest in yourselves; to invest in the enhancement of your knowledge and skills in everything you are passionate of.

Expenses

The last of the three elements in the formula is ‘expenses’ but it does not mean that it is the least important. In fact, managing it is as important as managing ‘income’ and ‘savings’ to ensure a financially successful marriage life. Multiplying streams of income must always be coupled with keeping one’s lifestyle below the income level.

Among the tips in managing one’s expenses are to distinguish ‘needs’ from ‘wants’ and to give priority to the former in matters of spending, to look for ways to save in spending, to separate ‘shopping day’ from ‘buying day,’ and to list what you must buy before buying, among others.

The details of each of these elements in the formula will be given in the book I’m currently writing – “Muslim Couple and Money: Personal Finance for Newlywed Muslim Couple.”

In closing, we, your batchmates, wish you financial success in the new stage of your life journey!

[MindaViews is the opinion section of MindaNews. Mansoor L. Limba, PhD in International Relations, is a writer, educator, blogger, and translator (from Persian into English and Filipino) with tens of written and translation works to his credit on such subjects as Islamic finance, international politics, history, political philosophy, jurisprudence (fiqh), theology (‘ilm al-kalam), Qur’anic sciences and exegesis (tafsir), hadith, ethics, and mysticism. He can be reached at [email protected] or http://www.mlimba.com.]