Dr Lili Yulyadi Arnakim

Though Islamic financial planning has been introduced almost two years in Malaysia by the pioneer Hijrah Strategic Advisory Group SdnBhd, some people are still confused about the concept. What is financial planning? Is there an Islamic financial planning? What is the difference between Islamic and conventional financial planning? Do we need the Islamic one?… These questions disturb many people's mind.

Financial planning is an effort to render professional service to individuals, their family and their business, to provide impartial assistance in analyzing and organizing financial affairs in order to achieve financial and lifestyle goals. It is basically dealing with a man who engages in some forms of personal budget in term of wealth creation, wealth accumulation, wealth protection, and wealth distribution. The crux of a financial planning practice is the planning itself then the implementation of the plan and the monitoring of it. Terms such as man, wealth, and lifestyle goal that are used in the above definition are actually neutral and do not carry any value. These terms are known as generic concept of financial planning. The generic concepts are those concepts in a discipline, which identify the elements whose functioning and interrelationships form its subject matter. Definitely the generic concepts are free of philosophical underpinnings.

These concepts can not generate a world view as they are generic and lack a philosophical basis that defines the nature of their role, and the nature of their interrelationships in terms of the final outcome of their interaction. A worldview, on the other hands, is arrived at by giving a philosophical orientation to the generic concepts; when this happens the generic concepts are transformed into what the so-called "Primary Concepts". Therefore primary concepts redefine the nature, inter-relationships and the role of generic concepts in the system; predicting a unique universal outcome based on the chosen philosophical foundation. For instances: man, wealth or resources, lifestyle; are some of the generic concepts in financial planning but given the philosophical foundation of Laissezz Faire each of these concepts acquires a new meaning and identity; and their interrelationships deliver the final outcome which is different from that of dialectical materialism and Islam.

In the case of conventional that is either based on laissezz faire (capitalism), dialectical materialism and Islam, this is evident from the figure 1.:

As a result primary concept are actually the generic concepts with philosophical themes. When these primary concepts are stratified, they help develop a particular worldview.

Similarly by using the philosophical foundation of Islam, the generic concepts of financial planning are also refined and are transformed into the primary concepts that can be used to construct a worldview of Islamic financial planning.

Thus conventional financial planning is being value added with the specific philosophical underpinning. Consequently in the operational level, these concepts will be translated in the personal budget in every stage of creation, accumulation, protection and distribution of wealth.

Islam, on other hand, provides a worldview that is harnessed to private and public life of Muslims based on the revelation, qur'an and sunnah. Thus Islamic financial planning has been there since prophet Muhammad sent to this world to guide human beings. In Islam, a man has been respected and considered as vicegerent on the earth, as Allah says "Behold, thy Lord said to the angels: "I will create a vicegerent on earth"…(qur'an 2:30). As a vicegerent, a man has been ordered to serve Allah as He says "I have nonly created Jinns and men, that they may serve me" (Qur'an 51:56).

Every single deed and activity of man in Islam is considered as worship and thus should reflect rendering service to Allah. For this purpose Qur'an was revealed and the prophet was sent to be a model for ideal mankind and to guide and educate men to live in this world according to the injunctions of Allah. Both qur'an and sunnah that constitute shari'ah, become a significant parameter for the Islamic way of life. Thus, Islamic financial planning should comply the shari'ah. There is a need for all Muslims to understand their two basic roles and ensure that they carry out their roles well. As a servant of God, all the guidelines as prescribed in the qur'an and sunnah must be followed without any exception. There is no option for an individual Muslim to choose to follow some guidance and not others.

In Islam, wealth is considered as a bounty of God and thus it is not scarce, for Allah says, "God is rich but you are poor" (Qur'an 47:38). What is actually scarce is the ability of mankind to utilize (explore) the bounties of God, at any given point in time. On the other hand, God is rich, meaning that in actuality the bounties of God are limitless. As a result, being a servant of God, Muslims should be professionals in what ever they are in so that they may stretch their hands out over (whole) the world and all that is in it, since God made them His representatives on earth. Being professional, Muslims should follow the guidelines and injunctions of God in their respective profession. Undoubtedly whatever Muslims achieved in creation and accumulation of wealth will not trigger any bad feelings such as envy and jealousy among them. With regard to ownership, Islam considers it as a trust and thus Muslims should keep it in their minds that the trusts will be asked for. Muslims will be responsible for whatever they have done toward the trusts. In this point, Islam prescribes ways to carry out the trust. For example, how should Muslims spend their wealth in their lifestyles- in their clothing, dwelling, transportation, food, education and charity- and how should Muslims distribute their wealth (estate) after they passed away.

Finally, life goal of Muslims is not only to satisfy temporary needs and wants but it is to get falaah or prosperity that leads a good life in this world and the hereafter. Islam prescribes this life as place where Muslims prepare themselves for the next life and thus they should treat this life as test and trial. As a result, Muslims should plan and achieve goodness in this world and the hereafter. Thus Islamic financial planning should more comprehensive than that of the conventional in the sense it includes the creation, accumulation, protection, purification, and distribution of wealth based on shariah in order to get a good life in this world and the hereafter.

Department of Southeast Asian Studies
Faculty of Arts and Social Sciences
University of Malaya 50603 Kuala Lumpur
Malaysia